High Seas Sale not speculative [Sec 43(5) of ITA'61 - Sec 66(31) of ITA'25]

Incase of High Seas sale, the seller neither takes nor gives delivery of goods. It is all executed vide a High Seas Sale agreement. Hence the question arose whether High Seas Sale profit was to be considered as speculative or non-speculative. In this regard it is to be proved that delivery of the goods actually took place to the purchaser in the High Seas Sale. Document need to be produced such as High Seas Sale agreement, bill of lading, BoE filed, Foreign Party's invoice, IGM, Out of Charge, copy of purchased account along with 'high sea sale' accounts as per books of account, copy of invoice showing import made by the assessee from outside party as per purchase account and 'high sea sale' made on as per sale account, etc which prove that that the said goods are duly taken delivery by the purchaser during the course of purchase from seller. These would prove that it is not a paper transaction or the transfer of the goods before taking the delivery.

Thus, when the goods are not taken by the delivery the entire issue is treated as speculative transaction. But incase the entire transaction is going through by proper delivery of the goods during purchase and the documents are provided for evidence of delivery of goods related to high sea sale, it is non-speculative. The same was held in the case of Dy. Commissioner of Income Tax, Circle-I, Bathinda. Versus M/s G.G. Continental Traders Pvt. Ltd. And M/s G.G. Oil & Fats Pvt Ltd. Versus Dy. Commissioner of Income Tax, Circle-I, Bathinda. And M/s G.G. Continental Traders Pvt. Ltd. Versus Dy. Commissioner of Income Tax, Circle-I, Bathinda. And Dy. Commissioner of Income Tax, Circle-I, Bathinda. Versus M/s G.G. Oil & Fats Pvt Ltd. And Dy. Commissioner of Income Tax, Circle-I, Bathinda. Versus M/s Gurdas Agro Pvt Ltd. And (Vice-Versa) And Dy. Commissioner of Income Tax, Circle-I, Bathinda. Versus M/s Gurdas Garg And (Vice-Versa) - 2023 (7) TMI 226 - ITAT AMRITSAR