1998 (2) TMI 51

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.... sum of Rs. 40,687 claimed to have been paid by the assessee for cancelling the contracts for purchase of cotton is not in the nature of a speculation loss ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that the assessee was not carrying on a speculation business and that the contracts entered into for purchase of cotton and the subsequent settlement of the contracts otherwise than by actual delivery of goods, will not constitute a speculation business ?" The assessee had entered into contracts during the previous year relevant to the assessment year in question for the purchase of cotton required for the manufacture of yarn. Two of those contracts had to be cancelled becaus....

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....ted that these transactions must be regarded as speculative transactions, in view of the definition of speculative transaction set out in section 43(5) of the Act. That provision defines speculative transaction as one for the purchase or sale of any commodity, including stocks and shares, which is periodically or ultimately settled otherwise than by the actual delivery of the commodity or scrips. The proviso to section 43(5)(a) provides that a contract in respect of raw materials or merchandise entered into by a person in the course of his manufacturing or merchanting business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or merchandise sold by him, shall....