G.P. Singh, C.J.
1. The question of law referred by the Income-tax Appellate Tribunal in this case is as follows :
' Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that even if the transaction of loss of Rs. 13,500 was a speculative transaction, that being a solitary speculative transaction, that loss could not be regarded as loss from speculative business and, therefore, could be set off against the business income , of the assessee?'
2. The assessee is a dealer in cotton. It purchases raw cotton, gins the same and sells cotton and seeds. On 29th November, 1969, the assessee entered into two contracts for sale of 200 cotton bales to M/s. Rallis India Ltd. The rate in respect of one contract was Rs. 1,381 per candy of 784 lbs. For the other contract, the rate was Rs. 1,380 per candy. The cotton bales, were to be delivered under both the contracts on 15th January, 1970. The assessee did not deliver the bales in accordance with the contracts on which M/s. Rallis India Ltd, asked the assessee by two notices dated 28th January, 1970, and 6th February, 1970, to supply thecotton bales. The assessee offered 200 bales of cotton on 6th March, 1970,but as they were of inferior quality, M/s. Rallis India Ltd. rejected the offer of the assessee (and refused) to take delivery. Later on M/s. Rallis India Ltd. by letter dated 13th March, 1970, asked the assessee to settle the contracts by paying damages at the rate of Rs. 150 per candy for breach of contract. The assessee agreed to this proposal and made a payment of Rs. 13,500 to M/s. Rallis India Ltd. on 6th April, 1970. At the time of entering into the contracts the assessee had 194 quintals of raw cotton which is equivalent to 65 quintals of ginned cotton or 38 fully pressed bales. The assessee had contemplated to purchase extra quantity of cotton needed for supplying to M/s. Rallis India Ltd., but as the market went up, the assessee could not purchase the same and thus failed to perform its part of the contract. The ITO took the view that the two contracts with M/s. Rallis India Ltd. constituted speculative transactions as defined under Section 43(5) of the I.T. Act, 1961, and consequently he disallowed the set-off of the loss of Rs. 13,500 against the other business income of the assessee. On appeal, the order of the ITO was confirmed by the AAC. In the appeal before the Tribunal it was argued that the transaction in which the assessee incurred the loss of Rs. 13,500 did not amount to a speculative transaction. The Tribunal did not decide this question. Assuming that the transaction amounted to speculative transaction, the Tribunal held that the transaction being a single transaction did not amount to a speculation business within the meaning of Section 73(1) of theAct and there was no bar for setting off the loss incurred in the saidtransaction against the income of the same year from the other businessof the assessee.
3. Section 2(13) of the Act defines ' business ' to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. Explanation 2 to Section 28 provides that:
'Where speculative transactions carried on by an assessee are of such a nature as to constitute a business, the business (hereinafter referred to as ' speculation business ' shall be deemed to be distinct and separate from any other business. '
4. The expression 'speculative transaction' is denned in Section 43(5) to mean a transaction in which a 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. Section 73(1) of the Act then provides that any loss, computed in respect of a speculation business carried on by the assessee, shall not be set off except against profits and gains, if any, of another speculation business.
5. The question whether the transaction in which the assessee settled the contracts by paying Rs. 13,500 to M/s. Rallis India Ltd. was a speculative transaction or not has not been referred to us for the obvious reason that it was not decided by the Tribunal. The Tribunal proceeded upon the assumption that the transaction was a speculative transaction and we have also to answer the question referred on this assumption. A speculative transaction would amount to speculation business if it fulfils the definition of ' business ' under Section 2(13); in other words, if it amounts to an adventure or concern in the nature of trade. It is now well settled that neither repetition nor continuity of similar transactions is necessary to constitute a transaction an adventure in the nature of trade and that even a single transaction may constitute business. The contracts for supplying cotton to M/s. Rallis India Ltd. were normal trading transactions. The dealer who contracts to supply a commodity in such contracts has an eye on profit. Having purchased a commodity at a cheaper rate or expecting to purchase it at a cheaper rate, the selling dealer contracts to sell a specified quantity of that commodity at a higher rate to the purchasing dealer who, in his turn, hopes to re-sell it at a further higher rate. The quality of these transactions being trading transactions did not change simply because the market rose and the assessee could not fulfil the contracts and had to settle them by paying the difference of Rs. 13,500 as damages. The transaction under which the assessee paid Rs. 13,500 to M/s. Rallis India Ltd. was a continuation of the adventure of trade which began on entering into the contracts. It is immaterial that by this trans-action the assessee could not make any profit and suffered a loss. A Wading transaction very often results in loss to one party and profit to the other party but the transaction cannot be viewed in one way for the party who makes a profit and in a different way for the party who suffers the loss. If the transaction is a trading transaction or an adventure in the nature of trade, it will amount to business whether it results in loss or profit. Viewed from this angle and having regard to the definition of 'business' in Section 2(13), the transaction under which the assessee paid Rs. 13,500 to M/s. Rallis India Ltd. must amount to a speculation business assuming that the transaction was a speculative transaction as denned in Section 43(5). Our attention was drawn to the fact that Expln. 2 to Section 28 which provides that speculation business shall be deemed to be distinct and separate from any other business, uses the expression ' speculative transactions' in plural and thereby implies that a single speculative transaction cannot constitute a business. The Bombay High Court in CIT v. Indian Commercial Co. P. Ltd. : 106ITR465(Bom) has taken this view. We are, however, unable to agree with this line of reasoning. The object of Expln. 2 to Section 28 was not to substitute a different definition of 'business' from that contained in Section 2(13) of the Act. The object was merely to declare that speculation business will be treated as distinct and separate from any other business. The opening words, no doubt, say that the enacting provision in the Explanation will apply where 'speculative transactions ' carried on by an assessee are of such a nature as to constitute a business. But much significance cannot be attached to the use of the expression 'speculative transactions' in plural, for, as enacted in Section 13(2) of the General Clauses Act, 1897, the words in the singular include the plural and vice versa. Consistent with the presumption contained in Section 13(2) of the General Clauses Act, the expression 'speculative transactions ' should be read to mean ' speculative transaction or transactions'. There is nothing in the context of Expln. 2 to show that to constitute a speculation business a different definition of ' business ' from that as given in Section 2(13) should be applied and that a single speculative transaction, though it is an adventure in the nature of trade, cannot amount to a speculation business. Contrary intention to exclude the operation of the rule that the plural includes the singular is not readily inferred. The rule is not excluded merely because the relevant provision is drafted in the plural and the subsidiary and ancillary provisions follow the same pattern and use plural words or words implying the plural. It is only when the substance and the tenor of the legislation as a whole suggests to the contrary that the rule, that the plural includes the singular and vice versa, can be taken to be excluded. [See Sin Poh Amalgamated (H.K.) Ltd. v. Attorney-General  1 All ER 225 (PC), Blue Metal Indus-tries Ltd. v. R. W. Dilley  3 All ER 437;  41 Comp Cas 833 (PC) and Floor v. Dams (Inspector of Tuxes)  2 All ER 677 (HL)]. Applying these principles, we do not find anything- in the Explanation or in any other provision of the Act to show an intention to exclude the operation of the rule that the plural includes the singular. Therefore, the expression 'speculative transactions' as is issued in, Expln. 2, to Section 28 must, as earlier stated by us, be construed to mean '-speculative transaction or transactions'. Our conclusion, therefore, is that if the transaction under which the assessee paid Rs. 13,500 to M/s. Rallis India Ltd. amounted to a speculative transaction it also amounted to speculation business attracting the operation of Section 73(1) and the loss of Rs. 13,500 could not be set off against the profits of the other business of the assessee.
6. We answer the question referred, in the negative, in favour of the department and against the assessee. The Tribunal will still have to decide the question whether the transaction was really a speculative transaction. There shall be no order as to costs of this reference.