TaxTMI 
TaxTMI 
1993 (5) TMI 14
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....ding that the amount of Rs. 16,426 is a business loss and not a speculation loss ?" The brief facts of the case are that the assessee had shown a loss of Rs. 16,426 in the cotton account and the entry was passed through the "Nakal Bahi" on the last date of the accounting year. This difference was paid on account of purchase and sale of 100 cotton bales which were through Messrs. Basant Kotak and Bros., Bombay. The Income-tax Officer held that it is a speculative transaction and as such cannot be adjusted against the business income and has to be carried forward for adjustment in the subsequent years against speculation profits. An appeal was preferred against the said order, where an objection was taken that this was only one forward tra....
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.... In accordance with the definition of business as given in section 2(13) of the Act, "business" includes "any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture". The definition is not exhaustive but is inclusive. "Business" contemplates organised efforts on accepted commercial lines resulting in an activity. The Madhya Pradesh High Court in CIT v. Bhikamchand Jankilal [1981] 131 ITR 554, examined the definition of "business" and Explanation 2 to section 28 and came to the conclusion that the object of the said Explanation was to declare that speculation business shall be treated differently as distinct and separate from any other business. While applying the provisions of section ....
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....ls 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 ; or (b) a contract in respect of stocks and shares entered into a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations ; or (c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member; shall not be deemed to be a speculative transaction;"....
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....e Bombay High Court in CIT v. Indian Commercial Co. P. Ltd. [1977] 106 ITR 465 has also examined this aspect in the light of Explanation 2 to section 28 and came to the conclusion that there is nothing on the record to show that it was a systematic or organised course of activity or conduct on the part of the assessee-company not to fulfil its contracts, and to settle the same with the other parties thereto, with the result that, even according to ordinary notions and common sense principles, it could not be said that a transaction of the nature of the transaction in question as in the present case amounts to "speculation business". It was also held in this case that even a single or isolated transaction can, in a conceivable case, amount t....