1982 (8) TMI 118

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..... She had, meanwhile, entered into the following forward contracts of sale : -------------------------------------------------------------------------------------------------------------------------------------------------- Date of contract Qty. in Q. Rate Rs. Due date of Date of Rate at which settlement settlement settled Rs. -------------------------------------------------------------------------------------------------------------------------------------------------- 27-4-1976 50 285.50 31-10-1976 13-7-1976 378.00 28-4-1976 50 290.50 31-10-1976 13-7-1976 378.00 29-4-1976 50 295.25 31-10-1976 13-7-1976 378.00 -------------------------------------------------------------------------------------------------------....

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....ed that the forward contracts being of a hedging nature they are saved by the proviso. 3. We have carefully considered the records as well as the assessee's arguments in writing both before the ITO and the AAC. The amount of Rs. 13,293 is settled otherwise than by actual delivery or transfer of commodity. It is, therefore, a speculative transaction under clause (5) of section 43. The only question is whether, it is covered by the proviso to the said clause which 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 : ....

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.... to find. The fact remains that the assessee had the stock and had consigned it for sale. She had 172.5 qtls. of turmeric while the forward contracts related to a quantity of 150 qtls. The contract was entered into at a time when the stocks had already come to her constructive possession through her commission agent, Chaganlal Mavji & Co. There was no firm contract of sale of the ready goods at the time she entered into the forward contract. The assessee was no doubt in error in relying upon clause (a) of the proviso, the benefit of which is available only where there is already a pre-existing contract either for actual delivery or sale. However, the assessee would come under clause (b) which covers a case of forward contract 'in respect of....