AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1975 (7) TMI 3
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....bales and M/s. Mahadeo Ramkumar for 600 bales. The corn sacks were all purchased from Tulsidar Jewaraj under three contracts for 800 bales, 1,000 bales and 700 bales respectively. On June 18, 1958, the assessee entered into a contract with M/s. Lachhminarain Kanoria & Co. to sell the aforesaid quantities of B-Twill and corn sacks. The assessee had no godown for keeping the goods and had not handled them. The goods were in the godown of the mills and only the delivery orders addressed to the mills changed hands. The amount realised on sale to M/s. Lachhminarain Kanoria & Co. came to Rs. 10,49,865. The assessee had, however, purchased the corn sacks and B-Twill for Rs. 11,48,399. The transactions thus resulted in a loss of Rs. 98,534 to the assessee and the assessee claimed adjustment of this loss in the computation of its income for the assessment year 1959-60. The Income-tax Officer held that the transactions involving mere transfer of delivery notes and not actual delivery of the goods were of a speculative character as contemplated in Explanation 2 to section 24(1) and the loss could be set off only against speculation profits, and as there were no speculation profits in that yea....
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....than by the actual delivery or transfer of the commodity or scrips. (The rest of the section is also not relevant.) " Before us both sides admitted that the question is covered by the decision of this court in Raghunath Prasad Poddar v. Commissioner of Income-tax, where it was held that such transactions were not speculative transactions within the meaning of Explanation 2 to section 24(1). The learned counsel for the revenue, however, prayed for reconsideration of the decision on a fresh examination of the problem. In Ragunath Prasad Poddar v. Commissioner of Income-tax , the assessee, a company dealing in jute and jute goods, purchased pucca delivery orders (in short P. D. Os.) in respect of gunny bags from various parties after paying the full price of the goods covered by the delivery orders and transferred those P. D. Os. to buyers after receiving the price fixed for the sale of those goods. The Tribunal following the decision in D. M. Wadhwana v. Commissioner of Income-tax, held that the sales in question were speculative and consequently the losses suffered by the assessee in these transactions could not be set off against the profits made by the assessee's non-specula....
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....ellant and the respondents could be called contracts involving actual delivery of possession of the goods concerned. Referring to the definition of " delivery " in section 2(2) of the Indian Sale of Goods Act, 1930, it was observed that this would include actual delivery as also symbolic or constructive delivery, and having regard to the mischief which was sought to be averted by the promulgation of the Ordinance---to prevent persons who dealt in differences only and never intended to take delivery under any circumstances---it was held that the intendment of the Ordinance was that " actual delivery of possession " was actual delivery as contrasted with mere dealings in differences and such actual delivery included within its scope symbolic and constructive delivery of possession. With respect, these observations made in quite a different context do not appear to us to be of assistance in interpreting Explanation 2 to section 24(1) of the Indian Income-tax Act, 1922. The other decision referred to is Ragunath Prasad's case. Bayyana Bhimayya v. Government of Andhra Pradesh was a case under the Madras General Sales Tax Act, 1939. The appellant in that case who dealt in gunnies ente....
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....fected from the mills. The mills having received a part of the purchase money in terms of the contract issued delivery orders directing the delivery of goods as per the contract. Instead of taking delivery himself, the respondent endorsed the delivery orders and these passed through several hands before the ultimate holder of the delivery orders presented them to the mills and obtained delivery of the gunnies on payment. The question that arose for decision was whether the transactions entered into by the respondent were mere sales of delivery orders or sales of goods so as to bring them to charge under section 3 of the said Act. At the date of the contract for purchase by the respondent, the goods which were the subject-matter of the purchase were not appropriated to the contract so that there was no completed sale since no property passed, but only an agreement for sale. In considering the effect of the position that the property in the goods passed to the ultimate endorsee of the delivery orders, Mr. Justice Ayyangar, speaking for the court, relied on an English decision, Butterworth v. Kingsway Motors Ltd., to hold that though the respondent and his transferees had not acquired....