Actual delivery test in share transactions: absence of real transfer rendered the loss speculative under income-tax law.

Loss from share dealings was treated as speculative because the transactions lacked proof of actual and effective delivery. The relevant test under income-tax law is whether the contract is settled otherwise than by actual delivery or transfer, and actual delivery means real, not notional or constructive, delivery. As the shares were routed through brokers but not shown to have been transferred into the assessee's name or settled by genuine delivery, the loss was not allowable as a normal business loss and was characterised as speculative loss.

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Issues: Whether the loss arising from the purchase and sale of shares was a genuine business loss or a speculative loss within the meaning of the income-tax law.

Analysis: The transaction was found to lack proof of actual and effective delivery of the shares. The shares were bought and sold through brokers, but the surrounding circumstances, including the absence of evidence of transfer into the assessee's name and the manner in which the transactions were settled, showed that the dealings were not completed by real delivery. The definition of speculative transaction under section 43(5) turns on whether the contract is settled otherwise than by actual delivery or transfer, and the authoritative interpretation relied upon treats actual delivery as real delivery, not notional, constructive, or symbolic delivery.

Conclusion: The loss was correctly treated as a speculative loss and was not allowable as a normal business loss.

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