# ··- DAVENPORT & CO. PVT. LTD v. COMMISSIONER OF INCOME-TAX, WEST BENGAL

- **Citation:** [1976] 1 S.C.R. 180
- **Court:** Supreme Court of India
- **Decided:** 1975-07-31
- **Case number:** Civil Appeal No. 2034 of 1970
- **Bench:** V. R. Krishna Iyer, R. S. Sarkaria, A. C. Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/davenport-co-pvt-ltd-v-commissioner-of-income-tax-west-bengal-6483
- **Pages:** 8

## Headnote

lncome~tax Act·, 1922,
Explanation
2
to
section 24( 1 )-Tra11sactidn
irivolving mere transfer of delivery noks-Loss sustained by the assessee, if
as a result of speculati1•e transactions.
Indian Sale of Goods Act, 1930, sec. 2(2)-Contract Act, Sec. 30.
A
B
The appellant company which carried on busines3 in tea i:arden tools and
requisites and also acted as agents for selling tea, denved the bulk of it5
income from selling commission on tea. The assessment year in question is
C
1959-60.
In the relevant previous year which ended on June 30, 1958, the
assessee for the first time in its history entered into certain tr"ansactions in
jute. On April 17, 1958 the_ assessee bad contracted to purchase 1100 bales
of It-Twill and 2500 baleo of corn sacks; the contract for B-Twill was with
two parties, M/s. Raghunath Sons (P) Ltd. for 500 bales aod M/s. Mahadeo
Ranlkumar for 600 bales. The corn sacks were all purchased from Tulsider
Jeweraj under three contracts for 800 bales, 1000 bales and 700 bales respectively.
On June 18, 1958 the assessee entered into a contract
with
M/s.
D
Lachhminarain Kanoria & Co. to sell the aforesaid quantities of B-Twill and
corn sacks.
The assessee had no godown for keeping the goods and had not
handled them. The goods were in the godown of the mills and only the
delivery orders addressed to the mills changed hands. The amount realised on
sale to M/s. Lachhminarain Kanoria & Co. came to Rs. 10,49,865/-. The
assessee had however purchased the com sacks and D-Twill for Rs. 11,48,399/-.
The transactions thus resulted in a loss of Rs. 98,534 /- to the assessee and
the ahsses.see claimed adjustment of this loss in the computation of its income
... ,
for t e assessment year 1959-60. The Income-tax Officer held th~t the Iran-
.c.
sactions involving mere transfer of delivery notes and not actual delivery of
the· ·goods were of a speculative character as contemplated in explanation 2
to sec. 24( 1) and the loss could be set off only against speculation profits, and
as there were no speculation profits in that year, he held that the loss would
be carried forward and set off against speculation profits in the future.
The
a,p~Uate Commissioner on appeal by the assessee held that the transactions
were not speculative and the loss should be treated as business los&
In appeal
by the ·Department, the Tribunal held that this case came within th& scope
of sec. 24( 1) read with explanation 2 and restored the order of the Incometax Officer.
In reference, the High Court answered the question formulated
by the Tribunal in the affirmative and against the assessee.
Section 24(1) of the Indian Income-tax Act, 1922, provides 1that where
nu assessec sustains a loss under any of the heads of income chargeable to
income-tax as enumerated in s. 6 of the Actl in any year, he shall be entitled
to have the loss set off against his income, profits or gains under any other
head in that year. This general provision is qualified by the first proviso which
permits the set off of a Joss in speculative business against the assessee's profit
and gains, if any, in -a similar business only. Explanation 1 says thatt where
the speculative transacti6ns aJe of such a nature as to constitute a business, the
business shall be deemed to be distinct and separate from any other business.
Explanation 2 defines a speculative transaction as a transaction in which a
contract for purchase and sale of any commodity is periodically or ultimately
settled otherwise than by the actual delivery or transfer of the commodity.
This appeal has been preferred by the assessee con1pany after obtaining
special Jeave from 'this court,
Dismissing the appeul,
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DAVENPORT & co. v. C.I.T. (Gupta, J.)
181
HJ?LD : T~e words actual ~delivery in explanation 2 means real as opposed
to notional dehvery. For the income-tax purposes speculative transaction means
.,,·hat 1J?.e d_efinition o! that expression in explanation 2 says.
Whethe

## Text

180
··-
DAVENPORT & CO. PVT. LTD.
v.
COMMISSIONER OF INCOME-TAX, WEST BENGAL
July 31, 1975
[V. R. KRISHNA IYER, R. S. SARKARIA AND A. C. GUPTA, JJ.]
lncome~tax Act·, 1922,
Explanation
2
to
section 24( 1 )-Tra11sactidn
irivolving mere transfer of delivery noks-Loss sustained by the assessee, if
as a result of speculati1•e transactions.
Indian Sale of Goods Act, 1930, sec. 2(2)-Contract Act, Sec. 30.
A
B
The appellant company which carried on busines3 in tea i:arden tools and
requisites and also acted as agents for selling tea, denved the bulk of it5
income from selling commission on tea. The assessment year in question is
C
1959-60.
In the relevant previous year which ended on June 30, 1958, the
assessee for the first time in its history entered into certain tr"ansactions in
jute. On April 17, 1958 the_ assessee bad contracted to purchase 1100 bales
of It-Twill and 2500 baleo of corn sacks; the contract for B-Twill was with
two parties, M/s. Raghunath Sons (P) Ltd. for 500 bales aod M/s. Mahadeo
Ranlkumar for 600 bales. The corn sacks were all purchased from Tulsider
Jeweraj under three contracts for 800 bales, 1000 bales and 700 bales respectively.
On June 18, 1958 the assessee entered into a contract
with
M/s.
D
Lachhminarain Kanoria & Co. to sell the aforesaid quantities of B-Twill and
corn sacks.
The assessee had no godown for keeping the goods and had not
handled them. The goods were in the godown of the mills and only the
delivery orders addressed to the mills changed hands. The amount realised on
sale to M/s. Lachhminarain Kanoria & Co. came to Rs. 10,49,865/-. The
assessee had however purchased the com sacks and D-Twill for Rs. 11,48,399/-.
The transactions thus resulted in a loss of Rs. 98,534 /- to the assessee and
the ahsses.see claimed adjustment of this loss in the computation of its income
... ,
for t e assessment year 1959-60. The Income-tax Officer held th~t the Iran-
.c.
sactions involving mere transfer of delivery notes and not actual delivery of
the· ·goods were of a speculative character as contemplated in explanation 2
to sec. 24( 1) and the loss could be set off only against speculation profits, and
as there were no speculation profits in that year, he held that the loss would
be carried forward and set off against speculation profits in the future.
The
a,p~Uate Commissioner on appeal by the assessee held that the transactions
were not speculative and the loss should be treated as business los&
In appeal
by the ·Department, the Tribunal held that this case came within th& scope
of sec. 24( 1) read with explanation 2 and restored the order of the Incometax Officer.
In reference, the High Court answered the question formulated
by the Tribunal in the affirmative and against the assessee.
Section 24(1) of the Indian Income-tax Act, 1922, provides 1that where
nu assessec sustains a loss under any of the heads of income chargeable to
income-tax as enumerated in s. 6 of the Actl in any year, he shall be entitled
to have the loss set off against his income, profits or gains under any other
head in that year. This general provision is qualified by the first proviso which
permits the set off of a Joss in speculative business against the assessee's profit
and gains, if any, in -a similar business only. Explanation 1 says thatt where
the speculative transacti6ns aJe of such a nature as to constitute a business, the
business shall be deemed to be distinct and separate from any other business.
Explanation 2 defines a speculative transaction as a transaction in which a
contract for purchase and sale of any commodity is periodically or ultimately
settled otherwise than by the actual delivery or transfer of the commodity.
This appeal has been preferred by the assessee con1pany after obtaining
special Jeave from 'this court,
Dismissing the appeul,
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DAVENPORT & co. v. C.I.T. (Gupta, J.)
181
HJ?LD : T~e words actual ~delivery in explanation 2 means real as opposed
to notional dehvery. For the income-tax purposes speculative transaction means
.,,·hat 1J?.e d_efinition o! that expression in explanation 2 says.
Whether a
transactlon 1s speculative in the general sense or under the Contract Act is
~ot relevant for the purpose of this explanation. The ~efinition of "delivery"
m s. 2 ( 2) of the Sale of Goods Act which has been held to include both
actual and c.onstructive or symbolical delivery has no bearing on the definitiOn
of s_peculative transaction in the explanation. A transaction which is otherwise
speculative would not be a specuJative · transaction within the meaning of
,explanation 2 if actual delivery of 1he commodity or the scrips has taken
place; on the other hand, a transaction whjch is not otherwise speculative in
nature may yet be speculative according to explanation 2 if there is no actual
delivery of the commodity or the scrips, The explanation does not invalidate
speculative transactions which are otherwise legal but gives a special meaning
to that expression for purpose of income-tax only. The question referred to
the High Court in the present case has been correctly ans'W'ered.
[186E-G;
187D]
D. M. Wadhwana v. Comn1ission.e1· of lnco1ne·tox. ~1.est. Bengal, [1966] 61
l.T.R. 154, approved.
Ras:hunath Prasad Poddar v. Con1n1issioner di I~1co1ne-tax, Caldutta [1973]
90 I.T.R. 140, over.ruled.
Duni Chand Rataria v. Bhuwalka Brothers Ltd: [1955] 1 S.C.R. 1071, Bayana
Bhimayya and Sukhdrevi Rathi v. The Government of Andhra Pradesh, [1961]
3 S.C.R. 267 and The Sta"te of Andhra Pradesh v. Kalla Sreeramamurthy, [1963]
I S.C.R. 184, held inapplicable.
Manalal M. Varnia & Co. (P) Ltd. v. Commissioner of Income-tax, [196.9]
73 J.T.R. 713 and Butterworty v. Kingsway, [1954] 2 All. E.R. 694, referred
to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2034 of 1970.
Appeal by special leave from the Judgment and order dated the
8th July, 1969 of Calcutta High Court in I.T.R. No. 60 of 1968.
D. N. Gupta, for the appellant.
G. C. Sharma, 0. P. Dua and S. P. Nayar, for the respondent.
The Judgment of the Court was delivered by
, GUPTA, J.-This appeal by special leave tur!fS dn the true meaning and scope of expfanation 2 to sec. 24 (1) of the Income-True Act,
1922.
The appellant (hereinafter referre~ to as the assessee) is a pr!v.ate
limited company carrying on business m t~a garden tools and. re9ms1tes
and also acting as agents for selll.1g tea; m fact the bulk of. its mco!11e
was from selling commission on tea.
The assessment year m question
is 1959-60; in the relevant previous year which ended on June 30, 1958,
the assessee for the first time in its history entered into certain tra!llsactions in jute.
On April 17, 1958 the assessee had contracted to purclmse 1100 bales of B-Twill and 2500 bales of corn sacks; the contract
for B-Twill was with two parties, M/s. Raghunatl) & Sons (P) Ltd. for
500 bales and M/s. Mahadeo Ramkumar for 600 bales. The corn
sacks were all purchased from Tulsider J eweraj under three contracts
for 800 bales, 1000' b>ales and 700 bales respectively.
On June 18,
18 2
SUPREME COURT REPORTS
[1976] 1 s.c.R.
1958 the assessee entered into a contract with M/s. Lachhminarain
Kenoria & Co. to sell the aforesaid quantities of B-Twill and corn sacks.
The assessee had no godown for keeping the goods and had not Jrandled them.
The goods were in the godown of the mills i1,1d only the
delivery orders addressed to the mills changed hands.
The amount
realised on sale to M/s. Lachhminarain Kanoria & Co. came to Rs.
10,49,865/-. The ussessee had however purchased the corn sacks
and B-Twill for Rs. 11,48,399. The transactions thus resulted it1 a
loss of Rs. 98,534/- to the assessee and the assessee claimed adjustment of this loss in the computation of its J,1come for the assessment
year 1959-60. The Income-tax Officer held that the transactions involving mere transfer of delivery notes und not actual deliveri of the
goods were of a speculative character as contemplated in explanation 2
to sec. 24( 1) and the loss could be set off only against speculation
profits, and as there were no speculation profits in that year, he held
that the loss would be carried forward and set off against speculation
profits in the future. The Appellate Assistant Commissioner on appeal
by the assessee held that the transactions were not speculative and the
loss should be treated as business loss relying on two decisions of this
Court: Bayana Bhimayya and Sukhdevi Rathi v. The Govt. of Andhra
Pradesh (') and Duni Chaiul Rataria v. Bhuwalke Brothers Ltd. (2)
The Department took an appeal to the Tribunal and the Tribunal relied
on the decision of the Calcutta High Court in D. M. Wadhwana
v.
Commissioner of Income-tax, West Bengal(') to hold that this case
came within the scope of sec. 24 ( 1) read with explanation 2 and restored the order of the Income-tax Officer.
On the application of the
;issessee the Tribunal referred to the High Court the following question
uf law :
"Whether on the facts and in the circumstances of the
case the Tribunal was right in holding that the transactions
described above entered mto by the assessee were speculative
tmnsactions within the meaning of explanation 2 to section
24(1)''.
The High Court answered the question in the
affrmativc
and
ngainst the assessee.
The correctness of that decision is challenged in
this appeal.
Sectiaa 24(1) so far as it is material for the purpose of this appeal
is in these tcfll1s :
"Where any assessec sustains a loss of profits or gains in
any year under any of the heads mentioned in section 6, he
shall be entitled to have the amount of the loss set off against
his income, profits or gains under any other head in that
year,
Provided· that in computing the profits and gains chargeable under the head 'profits and gains of business, profession
or vocation', any loss sustained in speculative transactions
(I) (1961] 3 S. C.R. 267.
(2) [1955] i S. C. R.1071.
(3) (1966) 61 I. T. R. 154.
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DAVENPORT & co. v. C.1.T. (Gupta, J.)
183
which are in the nature of a business shall not be taken into
account except to the extent of the amount of profits and
gains, if any, in any other business consisting of speculative
transactions :
(The second proviso is not relevant for
the
present
purpose.)
Explanation 1 : Where the speculative transactions carried
on are of such a nature as to constitute a business, the business shall be deemed to be distinct and separate from any
other business.
Explanation 2 : A speculative transaction means a ftansaction in which a coatract for purchase and 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 rest of the section i:; also not relevant.)"
Before us both sides admitted that the question is covered by the
decision of this Court in Raghunath Prasad Poddar v. Commissioner
uj Income-tax, Calcutta l') where it was held that such transactions
were .10t speculative transactions within the meaning of explanation
2 to sec. 24(1). The learned counsel for the revenue however
prayed for re-consideration of the decision on a fresh examination of
the
problem. In Raghuna:h Prasad Poddar v. Commissioner
of
Income-tax, Calcutta (supra) the assessee, a company dealing in jute
and jute goods, purchased pueca delivery orders (in short P.D.Os.)
in respect of gunny bags from various parties after paying the full price
of the goods covered by the delivery orders and transferred those
P.D.Os. to buyers after receiving the price fixed for the sale of thOse
goods.
The Tribunal following
the decision in D. M. Wadhwana
v. Commissioner of Income-tax (supra) held that the sales in question
were speculative and consequently the losses suffered by the assessee
in these transactions could not be set off against the profits mado by
the assessee's non-speculative business. The High Court on reference
following its earlier decisions in D. M. Wadhwana's case and Manalal
M. Verma & Co. (P) Ltd. v. Commissioner of Income tax( 2) answered the questions referred to it, which are similar to the question formulated in this case, in favour of the revenue. This Court reversed
the decision on appeal.
The view taken in Rashundth Prasad' s case appears to be based
on three earlier decisions of this Court. Duni Chand Rataria v.
Bltuwalke Brothers Ltd. (supra) Beyanna Bhimayya and Sukhdevi
Rathi v. The Gover1U11e11t of Andhra Pradesh (supra) and State of
Andhra Pradesh v. Ko/la Sreeramamurthy( 8).
The
reasoning
in
ll
Raghunath Prasad's case proceeds like this :
(I) (1973) 90 I. T. R. 140.
(2) (1969) 73 I. T. R. 713.
(3) [19631 IS. C.R. 18
184
SUPREME COURT REPORTS
[1976] 1 S.C.R.
To effect a valid transfer of any commodity, it is not necessary
that the transfer in question should be followed up by actual de.livery
of the goods to the transferee.
Even if the goods are delivered .to the
transferee's transferee, the first transfer also will be a valid transfer.
What has to be seen in such cases is whether the ultimate purchaser
of the P.D.Os. has taken actual delivery of the goods sold. It is erroneous to think that if any transfer of the P .D.Os. is not followed up by
actual delivery of the goods to the transferee, that transaction is to be
considered as speculative. The following observation in Duni Chand
Rataria v. Bhuwalke Brothers Ltd. (supra) was relied on in support of
·the; view taken :
"Th~ sellers handed over these documents (like delivery
A
B
orders) to the buyers against cash payment, and the buyers
C
obtained these documents in token of delivery of possession
of the goods.
They in turn passed these documents from
hand to hand until they rested with the ultimate buyer who
took physical or manual delivery of possession of those
goods.
The constructive delivery of possession which was
obtained by the intermediate parties was thus translated into
a phvsical or manual delivery of possession in the ultimate
D
analysis eliminating the unnecessary process of each of the
intermediate parties taking and in his turn giving
actual
delivery of possession of the goods in the narrow sense of
physical or manual delivery thereof."
In Duni Chand Rataria's case this Court was interpreting the words
"actual delivery of possession" occurrinq in sec. 2(1) (b )(i) of West
Bengal Jute Gootls Future Ordinance, 1949. The question for determination in that case was whether certain contracts between the appellant and the respondents could be called contracts involvin~ actnal
delivery of possession of the goods concerned. Referring to the definition of "delivery" in sec. 2(2) of the Indian Sale of Goods Act, 1930
it was observed that this would
include
actual deliverv
as
also
symbolic or constructive delivery, and having regard to the mischief
which was sought to be averted by the promulgation of the Ordinance-
-to prevent persons who dealt in differences only and never intended
to take delivery under any circumstances-it was held that the intendment of the Ordinance was that "actual delivery of possession" was
actual deliverv as contrasted with mere dealin~s in differences and
such actiral delivery included within its scope symbolic and contructive
delivery of possession.
With respect, these observations made
in
quite a different context do not appear to us to be of assistance in
interoreting explanation 2 to sec. 24(1) of the Indian Income-Tax Act,
1922.
The other decision referred to in Raghunath Prasad' s case, Bayanna
Bhimayva and Sukhdevi Rathi v. The Government of A ndhra Pradesh ( sunra) was a case under the Madras General Sales Tax Act,
1939,
The appellant in that case who dealt in gunnies eiatered into
contracts with two mills agreeing to purchase gunnies at a cermin rate
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DAVENPORT & co. v. C.I.T. (Gupta, J.)
18 5
for future delivery and also entered into agreements with third parties
by which they charged something extra from the third parties
and
handed over to them the delivery orders described as kutcha delivery
orders.
The mills however did 11ot accept the third parties as contracting parties but only as agents of the appellants. The tax authorities treated the transaction between the appellants and the third parties
as a fresh siale and sought to levy sales tax on!this as well, to.which
the appellants objected saying that tljere was Only one sale.
It was
held that a delivery order being a document of title to the goods covered by it, possession of the document no( only gave one the right to
recover the goods but also to transfer them to another by endorsement
or delivery, and that there being two separate transactions of sale, one
between the mills and the original purchasers, and the other between
the original purchasers and the third parties, tax was payable at both
the points. fa reaching this conclusion the court observed :
"At the moment oi delivery by the mills to the third parties, there were, in effect, two deliveries, O~(> by the mills to
the appellants, represented, in so far as tbe mills were concerned, by the appellants' agents, the third' parties, and the
other, by the appellants to the third parties as buyers from
the appellants. These two deliveries might synchronise in
point of tlme, but were separate, i\:l point of fact and in the
eye of law."
Here also the only question was whether on the facts of the case there
were two separate transactions of sale so that iax was payable
at
both the points under the Madras General Sales Tax Act, 1939.
The
observation made in this context does not also seem to us relevant to
the question under consideration i\:l the appeal ibefore us.
Another authority on which the decision in "Rtighunath Prasad's
(supra) case relies is State of Andhra Pradesh v. Kol/a
Sreeramamurthy, (supra) which is also a case under the Madras General Sales
Tax Act, 1939. The respondent in that case, a dealer in gunny bags,
purchased gunnies from the mills on terms of written contracts which
were on printed forms.
These contracts were entered into by brokers
acting for the respondent who sent him 'Bought-Notes' setting out the
terms upa,1 which the purchases had been effected from the mills. The
mills having received a part of the purchase money in terms of the
contract issued delivery orders directing the deliyery of goods as per
the contract. Instead of taking delivery himself, the respondent endorsed the delivery orders and these passed through several hands
before the ultimate holder of the delivery orders presented them to
the mills and obtained delivery of the gunnies on payment.
The
question that arose for decision was whether the transactions entered
into by the respondent were mere sales of delivery orders or sales of
goods so as to bring them to charge under sec. 3 of the said Act. At
the date of the contract for purchase by the respondent, the goods
which were the subject matter of the purchase wer~ not appropriated to
the cmtract so that there was no completed sa)e since no property
passed, but only an agreement for sale. In COnfidering the effept of
'
186
SUPREME COURT REPORTS
[1976] l S.C.I\.
the position that the property in the goods passed to the ultimate endorsec of the delivery orders, Mr. Justice Ayyangar speaking for the
Court relied on an English decision, Butterworty v. Kingsway(I)
to
hold that though the respondent and his transferees had not acquired
any title to the goods, the title acquired by the ultimate endorsee of
the delivery orders went to feed their previously defective titles and
ensured to their benefit.
His Lordship further observed that this was
the principle that formed the basis of the decision in Bayanna Bhimeyya's (supra) case.
Here again, the question that was considered
has hardly any connection with sec. 24 of the Indian Income-Tax Act
1922, and the observations made in this case cannot be a guide to the
solutim1 of the problem arising in the case before us.
Sec. 6 of the Indian Income-Tax Act, 1922 enumerates the heads of
income chargeable to income-~ax. Sec. 24(1) of the Act provides
that where an assessee sustains a loss under any of these hea<rs
in
any year, he shall be entitled to have the loss set of!' against his income,
profits or gains under any other head hi that year.
This general provision is qualified by the first proviso which permits the set off of a
loss in speculative business against the assessee's profits and gains, if
any, in a similar business only.
Explanation 1 says that where the
speculative transactions are of such a nature as to cm1stitutc a busihcss.
the business shall be deemed to be distinct and separate from any
other business.
Explanation 2 defines a spe.culativc transaction as a
tra'.1saction in which a contract for purchase and sale of any commodity
is periodically or ultimately settled otherwise than by the actual <leli-
''cry or transfer of the commodity.
The words actual delivery
in
explanation 2 means real as opposed to notional delivery. For incomctax purposes speculative transaction means what the defimlion of that
expression in explanation 2 says.
Whether a tnmsaction is specul\J.-
tive in the general sense or under the Contract Act is not relevant for
the purpose of this explanation.
The definition of "delivery" in sec.
2(2) of the Sale of Goods Act which has been held to include both
actual a:ud constructive or symbolical delivery has no bearing on the
definition of speculative transaction in the explanation.
A
transaction which i> otherwise speculative would
not
be
a speculative
transaction within the meaning of explanation 2 if
actual delivery
of the commodity or the scrips has taken place; o>,1 the other hand, a
transaction which is not otherwise speculative in nature may yet
be
speculative according to explanation 2 if there is no actual delivery
of the commodity or the scrips.
The explanation docs not invalidate
speculative according to explanation 2 if there is no actual delivery
meaning to that exprcssida for purposes of income-tax , only.
In
D. M. Wadhwana v. Commissioner of Income-tax (supra) on which
the Tribunal's decision in 'this case is based, the Calcutta High Court
observed :
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"The explanation to sec. 24(1 ), however, does not prevent persons from entering into contracts !,1 which the buyers and sellers may not actually hand over the goods physiH
cally.
The explanation is only desigi11!d at segregating for
(!) [1954) 2 All E. R. 694.
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DAVENPORT & CO, v. C.l.T, (Gupta, J.)
income-tax purposes loss sustained in transactic:lns of a certain kind. It may be that such transactions are not speculative in the light of sec. 30 of the Contract Act .......... In
enacting the explanation 2 of sec. 24 ( 1) of the Income-Tax
Act, the legislature did not intend to affect any transaction
of sale wherein the goods were not physically delivered by
the seller to the buyer but only laid down that if there was
no actual or physical delivery, the loss, if any, would be a
loss in a speculative transaction which could be allowed to
be set off only against a profit in a transaction of the same
nature. . . . . . The object of the explanation is not to invalidate the transaction which are not completed by actual delivery of the goods but only to brand them as speculative transactions so as to put them in a special category for incomctax purposes."
187
In our opinion this is a correct statement of the law.
This.
aspect 0£ the matter was not considered in Raghunath Prasad Poddar v.
Commissioner of Income-tax, Calcutta. (supra) we think the law on the
point was correctly stated in D. M. Wadhwana v. Commissioner of
l11Come-tax, (supra) and in our opinion the question referred to the
High Court in the present case has been correctly ((nswered.
The
appeal is llccordingly dismissed but in the circumstances of the case
ll'ithout any order as to costs.
Appeal dismissed
V.M.K.