1996 (4) TMI 107

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....stituted loss of a speculative business and could not be set-off against the income from business ? (ii) Whether, on the facts and in the circumstances of the case, the disallowance of Rs. 19,685 is in accordance with law ? " The relevant facts are as under : The assessee, a registered firm, deals in hardware. The previous year relevant to the assessment year 1970-71 ended on March 31, 1970. The assessee filed its return of income declaring income at Rs. 71,332. The assessee claimed a loss of Rs. 19,685 on the purchase and sale of 400 bales of Desi cotton through Pyare Lal and Sons, commission agents, Rampura Phul. These 400 bales had been pressed in different factories during the months of December, 1969, January and February, 197....

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....sioner and sustained the order passed by the Income-tax Officer holding the loss to be speculative, therefore, disallowable. However, the Tribunal did not accept the contention of the Revenue as recorded by the Income-tax Officer that the loss was a bogus loss. Counsel appearing for the assessee contended that the Tribunal has misdirected itself while determining whether the loss of Rs. 19,685 was incurred in ready business or was speculative as it overlooked and ignored the crucial evidence present on record. Reliance was placed on the affidavit filed by Pyare Lal and Sons to the effect : " That the firm, Chaman Lal Madan Lal, Moga, had purchased and sold cotton bales (ready delivery) through us and we had charged a sum of Rs. 387.84....

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....dity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips. Actual delivery of the goods is, therefore, a must. The assessee is a dealer in hardware and is claiming a loss of Rs. 19,685 in purchase and sale of 400 bales of Desi cotton. The sequence in which sale and purchase of the cotton bales has been made clearly indicates that the same is speculative in nature. Basant Lal Banarsi Dass first sold these bales on different dates to Pyare Lal and Sons, commission agents. The books of account of Pyare Lal and Sons disclosed that they purchased the aforesaid goods on account of Ram Lubhaya and Co., Ludhiana, and then sold the same to the assessee who....