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Nirmal Trading Co. Vs. Commissioner of Income Tax (Central), Calcutta - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtSupreme Court of India
Decided On
Case NumberCivil Appeal No. 2310 of 1972
Judge
Reported inAIR1980SC234; (1979)13CTR(SC)178; [1980]121ITR54(SC); (1980)1SCC119; [1980]1SCR900; 1980(12)LC187(SC)
ActsIndian Income Tax Act, 1922 - Sections 24(1) and 66A(2)
AppellantNirmal Trading Co.
RespondentCommissioner of Income Tax (Central), Calcutta
Appellant Advocate P.V. Kapoor,; Anil Sachthey,; Bina Gupta and;
Respondent Advocate T.A. Ramachandran and ; A. Subhashini, Advs.
Cases ReferredRaghunath Prasad Poddar v. Commissioner of Income
Prior historyFrom the Judgment and Order dated December 11, 1970 of the Calcutta High Court in Income Tax Ref. No. 101 of 1962--
Excerpt:
.....requisitioning the room by one, and allotting the room to k by the other. the appellants moved the high court under art. 226 for quashing these orders but were unsuc- cessful. in appeal to this court, it was contended by the appellants that : (i) since the appellants obtained an ejectment decree on the ground that they wanted the room for their own use and they did not intend to let it out at the time of requisition, the room would not be 'premises' under s. 4(3) of the act of 1948 which could be requisitioned; and (ii) the order of requisition was passed mala fide. held: (i) (by full court) : the room was 'premises' within the definition of that word in the act of 1948 and could be requisitioned. [327 h; 338 f] per sarkar j : the expression "let or intended to be let separately" in the.....r.s. pathak, j.1. this, appeal by certificate under section 66a(2) of the indian income tax act, 1922 relates to the application of explanation 2 to section 24(1) of the indian income tax act.2. the assessee deals in paper, hessian and b. twill. after assessment by the income tax officer for the assessment year 1955-56, and there after an appeal disposed of by the appellate assistant commissioner, the income tax appellate tribunal in second appeal found that certain transactions entered into by the assessee could not be described as 'speculative transactions' within the meaning of explanation 2 to section 24(1) of the indian income tax act, 1922 and allowing the appeal it directed that the loss suffered by the assessee should be set-off under section 24(1) of the act. at the instance of.....
Judgment:

R.S. Pathak, J.

1. This, appeal by certificate under Section 66A(2) of the Indian Income Tax Act, 1922 relates to the application of Explanation 2 to Section 24(1) of the Indian Income Tax Act.

2. The assessee deals in paper, hessian and B. Twill. After assessment by the Income Tax Officer for the assessment year 1955-56, and there after an appeal disposed of by the Appellate Assistant Commissioner, the Income Tax Appellate Tribunal in second appeal found that certain transactions entered into by the assessee could not be described as 'speculative transactions' within the meaning of Explanation 2 to Section 24(1) of the Indian Income Tax Act, 1922 and allowing the appeal it directed that the loss suffered by the assessee should be set-off under Section 24(1) of the Act. At the instance of the Revenue, the Appellate Tribunal referred the following question to the High Court at Calcutta for its opinion :-

Whether, on, the facts and in the circumstances of the case, the loss of Rs. 1,03,688/- was the result of speculative transactions within the meaning of Explanation 2 to Section 24(1) of the Indian Income Tax Act, 1922, and therefore, was not allowable to be set off under Section 24(1) of the said Act

The High Court has answered the question in favour of the Revenue.

3. It appears the assessee entered into several transactions of sale and purchase with different parties, and the transactions were settled by handing over delivery orders. There is no evidence that actual delivery of the goods was ever effected either to the assessee or to subsequent purchasers from him. All that passed were the delivery orders and payment by cheque. The High Court has taken, the view that in the absence of actual delivery the transactions attracted Explanation 2 to Section 24(1) and must be regarded as 'speculative transactions.' It seems to us that the High Court is right having regard to the law laid down by this Court in Davenport & Co. P. Ltd. v. Commissioner of Income-Tax, West Bengal II [l975] 100 I.T.R. 715. It is urged on behalf of the assessee that the case falls under Raghunath Prasad Poddar v. Commissioner of Income-Tax Calcutta : [1973]90ITR140(SC) . But that decision has been overruled by this Court in Davenport & Co. P. Ltd. (supra), and in any event no question of invoking that decision arises because in the present case there has never been any suggestion that actual delivery of goods was ultimately effected. The case of the assessee throughout has been that handing over of the delivery orders was sufficient as constituting actual delivery of the goods.

4. In the result, the appeal fails and is dismissed with costs. S.R. Appeal dismissed.


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