9911796707
TMI Blog1982 (4) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; Amount of Date of No. forward sale sale forward transaction proceeds &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; Gupta Cotton 1,55,131.38 20-12-1976 (Narma) Mandidabwali J-34 20-12-1976 28-8-1976 3. 65 Bales &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Profit/ Remarks purchase purchased value Loss --------------------------------------------------------------------------------------------------------------------------------------------------- 8 9 10 11 12 --------------------------------------------------------------------------------------------------------------------------------------------------- 18-3-1976 Ganga C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tem was treated by the ITO as ready business and profit of Rs. 9,284.55 on that account was subjected to tax, whereas Item Nos. 2, 3 and 4 were considered as speculative business and the net result of the said transactions being loss of Rs. 33,146 (Rs. 23,269.79 loss+Rs. 11,657.96 loss---Rs. 1,782.31 profit) was ignored and the said loss was not allowed as per unnumbered para 2 of his order. 3. When the issue was carried by the assessee before the Commissioner (Appeals), he observed that it is not the addition of Rs. 32,750 as taken in the grounds of appeal by the assessee but Rs. 33,146 and upheld the said addition as per paras 1 and 2 of his order. 4. It is this action of the Commissioner (Appeals) which is contested by the assessee before us. The learned counsel for the assessee, Shri D.S. Gupta, at the outset submitted that what is to be seen is whether the three transactions considered to be of speculative nature by the revenue, are hit by section 43(5) of the Income-tax Act, 1961 ('the Act'). He submitted that under the Indian Income-tax Act, 1922 ('the 1922 Act'), it is Explanation 2 to section 24(1) vis-a-vis in the 1961 Act it is section 43(5) (sic). He submitted that wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst case and entered into a forward transaction of sale to Gupta Cotton. In the second case the assessee entered into a forward transaction of purchase from Ganesh Traders and forward transaction of sale to Chiranji Lal Madan Lal. In the third case, the assessee entered into forward transaction of purchase with Jindal Cotton & General Mills and forward transaction of sale in respect of the same with Chiranji Lal Madan Lal. But there is no dispute about the fact that the assessee neither took delivery from the persons from whom it purchased nor effected delivery to those to whom it sold. The Supreme Court decision in the case of Raghunath Prasad could squarely support the assessee's contention because in that case, their Lordships held: "... that to effect a valid transfer of any commodity it was not necessary that the transfer in question should be followed up by actual delivery of the goods to the transferee. Even if the goods were delivered to the transferee's transferee the first transfer would also be a valid transfer and would not be a speculative transaction. In these cases one had to see whether the ultimate purchaser of the pucca delivery orders had taken actual delivery o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be taken into account except to the extent of the amount of profits and gains, if any, in any other business consisting of speculative transactions: Explanation 1: Where the speculative transactions carried on are of such a nature as to constitute a business, the business shall be deemed to be distinct and separate from any other business. Explanation 2 : A speculative transaction means a transaction in which a contract for purchase and sale of any commodity including stocks and shares is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips." Whereas section 43(5) reads as under: "(5) 'speculative transaction' means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips:" From a reading of the two provisions it is absolutely clear that they are identical with the only difference that the word 'and' in the 1922 Act is replaced by the word 'or' in the 1961 Act. To our mind, this change has enlarged the powers of the revenue authorities even to rope in a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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