Shiv Narain Karmandra Narain vs Commissioner of Income Tax

This is a reference u/s 256(2) of Income Tax Act, 1961. Three questions have been referred but in this reference we are concerned only one question which read as under :

"Whether on the facts and in the circumstances of the case, the learned Tribunal was correct in holding that the loss of Rs. 31,000 constituted speculation loss".

Heard Sri V.K. Upadhaya for the assessee and Sri A.N. Majahan, for the revenue.

This case is fully covered by the judgment of Hon''ble Supreme Court in Jute Investment Co. Ltd. Vs. Commissioner of Income Tax, West Bengal, , wherein it has been held that since there was no actual delivery or transfer of goods and the contracts were settled between the parties by the transfer of Pucca delivery orders, transaction were speculative transaction within the meaning of Explanation 2 to section 24(1) of the Indian Income Tax Act, 1922, the loss therefrom could not be set off, against other income as an ordinary business loss and had to be treated as speculative. The said provision of section 24(1) of 1922 Act analogous to the provision of section 43(5) of the 1961 Act.

We, therefore, answer the question in the affirmative, i.e., against the assessee and in favour of the revenue.

So far as the question Nos. 2 and 3 are concerned, they will be separately dealt in the reference made on behalf of the revenue.