1974 (10) TMI 10

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....e Income-tax Act, 1961, the following question has been referred to this court : "Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the loss incurred by the assessee by payment of Rs. 14,001 as compensation or damages for non-delivery of the part of the goods under the various contracts by way of difference on the basis of prevailing market pr....

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....r. The claim was, however, allowed by the Appellate Assistant Commissioner. The revenue preferred an appeal before the Tribunal. The Tribunal found that in most of the contracts substantial delivery of jute goods during the various periods had been effected and only in the case of one or two contracts the goods had not been delivered in lieu of which payment on the basis of difference had been mad....

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....n in which contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips. The proviso to that definition provides certain Explanations with which we need not concern ourselves in this reference. Therefore, in order to be a speculative transaction it should be a t....

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....fore breach. After the breach of the contract the cause of action was no longer based on the contract itself but on its breach. Where the money which the assessee received was in settlement of the amount of damages suffered by the assessee by reason of the breach of the contract to deliver, it was held that the receipt was not a receipt from a speculative transaction as defined in Explanation 2 to....