1979 (10) TMI 4

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.... to Rs. 1,01,51,225 and the total sales during that year were shown at Rs. 1,03,27,208. The purchases and sales included certain transactions with Messrs. Kesardeo Shyamsunder. Under Contract Nos. 96 dated November 11, 1959, 108 dated November 12, 1959, 643 dated April 27, 1960, and 836 dated May 25, 1960, the assessee claimed that 5,700 bales of gunny bags were purchased for Rs. 22,05,000. The assessee says that he sold them to the same party under Contract Nos. 520 dated March 30, 1960, 540 & 541 dated April 1, 1960, and 610 dated April 19, 1960, for Rs. 19,79,550. The result was a loss of Rs. 2,25,450. The contracts were transferable specific delivery contracts falling within the scope of the bye-laws of the East India Jute & Hessian Exc....

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....d delivery, the full amount was paid by cheque, and similarly when the assessee sold forward the full sum was also paid through cheque. It referred to the trade usage that cheques were paid when bills were received and on payment thereof the pucca delivery orders changed hands. Therefore, said the Tribunal, in form it was a transaction of delivery for cash, and was not a speculative transaction. At the instance of the revenue, the Appellate Tribunal referred the following question to the High Court at Calcutta : " Whether, on the facts and in the circumstances of the case, the loss of Rs. 2,25,450 was a loss in speculative transaction within the meaning of Explanation 2 to s. 24(1) of the Indian Income-tax Act, 1922 ? " The referen....