TaxTMI 
TaxTMI 
1967 (6) TMI 17
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.... now really the first proviso, because the Explanation explains the expression "speculative transactions " used in that proviso. We should, therefore, read the question in a somewhat changed manner and instead of the words " Explanation 2 to the third proviso to section 24(1) " read " Explanation 2 to section 24(1) ", in order to obviate all criticism. This was agreed upon by the learned counsel appearing for the parties. The above question of law arises in circumstances hereinafter stated in brief. The assessee, a private limited company, entered into a contract,dated July 6, 1953, with Messrs. Iwai and Co. Ltd. of Tokyo, Japan, and agreed to supply 52,000 long tons of Indian iron ore. This contract was leter or varied by mutual consent and the supply of the agreed quantity of iron ore was split up into three parts, namely, a consignment of 24, 0000 long tons to be supplied by way of first delivery, thereafter a delivery of 8,000 long tons, and lastly, a delivery of 20,000 long tons. The agreed basis of payment was by an irrevocable letter of credit in pound sterling at the rate of 71 shillings per dry long ton. In terms of the contract, as varied the assessee completed the fir....
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.... concerned with the other points argued before the Tribunal, regard being had to the nature of the question referred to us. This contention was sought to be repelled on behalf of the revenue with the argument that since there was a clear intention on the part of the assessee to give delivery of the commodity and, on the part of the purchaser to take delivery, the receipt could only be treated as damages for breach of contract and not as speculative profit. The Tribunal quoted the language of Explanation 2 and observed : " The transaction in question having been settled otherwise than by the actual delivery of the commodity, it was a transaction of speculative nature. It was then submitted on behalf of the department that it was only a portion of the contract which was settled otherwise than by actual delivery and therefore, the aforesaid explanation of speculative transaction was inapplicable inasmuch as the said explanation talked of a contract as a whole. We are unable to agree with this contention because under the said explanation a contract may consist of several transactions and if all or any one of them is settled otherwise than by actual delivery of the commodity, to tha....
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....ansactions and the loss incurred by the assessee could not be set off against the other business income under section 24(1). His Lordship observed : " The Explanation to section 24(1), however, does not prevent persons from entering into contracts in which the buyers and sellers may not actually hand over the goods physically. The Explanation is only designed at segregating for income-tax purposes loss sustained in transactions of a certain kind. It may be that the said transaction are not speculative in the light of section 30 of the Contract Act. It is well-settled that to make a contract wagering within the meaning of section 30 of the Contract Act, there must be a common intention of both the parties to the contract not to give or take delivery but only to deal in differences. The Explanation to section 24(1) goes a step further and takes the transaction out of the domain of intention altogether ; only there must be actual delivery or transfer of commodity. The word ' actual ' means ' real ' as opposed to ' theoretical or probable '....... In enacting the Explanation 2 of section 24(1) of the Income-tax Act, the legislature did not intend to effect any transaction of sale wh....
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....reed upon. A promise may also be dispensed with or remitted, within the meaning of section 63 of the Indian Contract Act, which reads as follows : " Every promise may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit. " If a contract be neither performed nor dispensed with nor remitted nor otherwise satisfied, there happens a breach of the contract, the consequences of which are to be found in section 73 of the Contract Act, which reads as follows : " When a contract had been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. " We need not concern ourselves with other consequences of breach, namely, where a party, instead ....