TaxTMI 
TaxTMI 
1991 (1) TMI 186
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.... transaction of purchases and sales of sugar effected through brokers on ex-factory delivery basis. The ITO and the IAC, however, noted that the transactions of purchases and sales were effected on one and the same day and after passing the relevant entries regarding the purchases and sales the resultant loss had been recorded in the books. They, therefore, held the view that the contracts were settled otherwise than by actual delivery or transfer of the commodity and, hence, the transactions were speculative in nature. The ITO accordingly refused to allow the loss in question to be set off against other income of the assessee. In appeal the CIT(A) agreed with the ITO's findings and conclusions and upheld his order. 3. Mr. K.H. Kaji, the....
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....k's arguments. 5. Sec. 43(5) denies the term" speculative transaction" as meaning a transaction in which a contract for the purchase of any commodity, including stock and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrip. The use of the adjective 'actual' qualifying the nouns "delivery" or "transfer" in the language of s. 43(5) clearly indicates the intention of legislature that physical movement of the commodity from the possession of the seller to that of the purchaser should take place in order to constitute actual delivery or transfer of the commodity. Property in the goods may remain with the seller while the property in the goods may pass to the purchaser with ....
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....ssion, as distinguished from actual possession, through a tenant or agent. 7. To sum up, we are of the opinion that the phrase "actual delivery or transfer of the commodity" used in the language of s. 43(5) no doubt embraces the concept of 'constructive' delivery or transfer of the commodity within its fold but, as stated above, by the above phrase the physical movement of the commodity from the possession of the seller to that of the purchaser has clearly been intended by the legislature. Therefore, to take a transaction of purchase or sale of a commodity out of the net of 'speculative transaction', as defined in s. 43(5), actual delivery or transfer of the commodity direct or constructive shall have to be proved in the context of perio....
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.... : Statement of Purchase of Sugar —S.Y. 2037 Date of Date of Name of . . Sauda Bill/No Seller/Town Bags Rate Amount 11.8.81 27.8.81 Tala Tal. Sah. Khand . . . . 876 Udyog Mandli 50 648.51 32,425.50 . . Ltd./Talala .. . . 24.8.81 31.8.81 Tala Tal. Sah.Khand .. . . 1122 Udyog Mandli 50 495.00 24,750.00 . . Ltd./ Talala . . . 21.8.81 31.8.81 Billeshwar Khand . . . . 4560 Udyog Sah. Mandli . . . . . Ltd./Khodinar 50 600.00 30,000.00 5.9.81 12.9.81 Billeshwar Khand . . . . 4700 Udyog Sah. Mandli . . ....
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...., admittedly on the very same date, on which those were purchased from the sugar factories, as is evident from the above statements. The above facts have been tried to be supported with Dalal's purchi dt. 20th Aug., 1981 showing booking of assessee's order for purchase of 50 bags from Billeshwar Khand Udyog Sah. Mandli Ltd., same Dalal's purchis dt. 24th Aug., 1981 and 29th Aug., 1981 booking M/s Amratlal Shamjibhai's orders for purchase of 50 bags of sugar on each date from the assessee, copy of bill dt. 31st Aug., 1981 issued by the assessee to the said M/s Amratlal Shamjibhai for sale of 50 bags, and two bills, issued to the assessee by the said sugar factories, asking the payments of the bills. The purchies issued by the Dalal contain a....