AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
1973 (4) TMI 5
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....ng accounting periods being calendar years 1956, 1957 and 1959), the assessee claimed Rs. 35,578, Rs. 20,665 and Rs. 3,849 respectively, as losses in its business in the sale and purchase of gunny bags. The Income-tax Officer treated those losses as speculative losses. He held that the contracts in respect of the gunny bags said to have been sold were settled only by delivery of pucca delivery orders (in short P.D.Os.) and not by actual delivery of the goods covered by those documents. He accordingly refused to set off those losses towards the profits made by the assessee in its non-speculative business. The assessee appealed against those assessment orders. The Appellate Assistant Commissioner found that the assessee had purchased the P.D.Os. from various parties after paying the full price of the goods mentioned therein and transferred those P.D.Os. to his buyers after receiving the price fixed for the sale of those goods. The Appellate Assistant Commissioner opined that the transactions in question represented purchases and sales of jute goods. The Appellate Assistant Commissioner consequently held that the losses claimed by the assessee were losses from the ready business in ju....
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....eculative 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 is important for our present purpose. It says: " 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." The remaining part of that section is not relevant for our present purpose. We have now to see whether, on the facts found by the Tribunal, it can be said that the transactions with which we are concerned can be said to have been "periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity". The Tribunal has found that when the assessees transferred the P.D.Os. to their buyers they had not actually delivered to the buyers the goods covered by the P.D.Os. That conclusion was not challenged. But, it was urged on behalf of the assessee that the Tribunal's finding by itself is not conclusive. They complain that the Tribunal has not gone into the question whet....
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....lize the long chain of contracts in which the defendant's contract is one of the connecting links. The defendant buys from its immediate seller and sells to its immediate buyer. As seller it is liable to give and as buyer it is entitled to take delivery. As seller it receives and as buyer it gives shipping instructions. Similar shipping instruction is given by each link until it reaches the mills. The mills deliver the goods alongside the steamer. Such delivery is in implement of the contract between the mills and their immediate buyer. But eo instanti it is also in implement of each of the chain contracts including the contract between the defendant and its immediate buyer and the contract between the defendant and its immediate seller. Not only does the mill give and its immediate buyer take actual delivery but so instanti each middleman gives and takes actual delivery. Simultaneously, the defendant takes actual delivery of possession of the jute goods from its immediate seller and gives actual delivery of possession of jute goods to its immediate buyer. Prima facie, at the moment of the delivery alongside the steamer there is appropriation and the passing of the property in t....
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....Rules, 1939. Therein, the Government served an order of requisition on the mills which was in possession of the goods sought to be acquired. The validity of that order was challenged by the purchaser of the goods through a P.D.O. He claimed that he was the owner of those goods and as no notice of acquisition had been served on him, the order acquiring the property was invalid. This court upheld the validity of the order of acquisition. It held that as the goods were in the possession of the mills at the time the acquisition order was served, the title in those goods had not passed to the holder of the P.D.O. The rule laid down in that decision has no relevance for deciding the question of law that arises for decision in these cases. Herein, we are concerned with the question whether the assessees have transferred the commodity covered by the P.D.Os. to their buyers. For answering that question, we have to see whether the goods purported to have been sold under the P.D.Os. were actually delivered to the last buyer of those P.D.Os. This position in law is made clear by the decision of this court in State of Andhra Pradesh v. Kolla Sree Ramamurthy. It was a case arising under the Madr....
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....ce at the relevant time and whether the last buyers of the P.D.Os. have taken actual delivery of the goods covered by those P.D.Os. They concentrated their attention solely on the question whether the assessees had given delivery of the goods covered by the P.D.Os. to their transferees. That was not the relevant issue. The crucial question of fact to be decided was whether the last buyers of the P.D.Os. had taken actual delivery of the goods covered by the P.D.Os. Mr. Sen relying on the decision of this court in Duni Chand Rataria's case urged that we should accept the trade practice pleaded by him and straightaway allow the appeals. But, no such trade practice appears to have been put forward before the authorities under the Act. That apart, the transactions effected by the assessees cannot be considered as valid "transfer of the commodity" within the meaning of Explanation 2 to the proviso to section 24(1) of the Act until the actual delivery of the commodity in question takes place. Under the circumstances, it is not possible to answer the questions referred to the High Court. All that we can do is either to call for a supplementary statement from the Tribunal or to remand these....