SUKH RAM DASS TELU RAM Vs. INCOME TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
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F.C. Rustagi, Judicial Member -
(1.) THE only ground in this appeal, preferred by the assessee, Sukh Ram Dass Telu Ram, Mandi Dabwali, is in respect of the addition of Rs. 33,750 made by the 1TO and confirmed by the Commissioner (Appeals). THE assessment year involved is 1977-78 for which the relevant 'previous year' ended on 31-3-1977.
(2.) The assessee had claimed a loss of Rs. 22,925 in cotton (rui) account and there were four transactions in the said account, details of which are tabulated as under :
In the course of assessment proceedings, the first item was treated by the ITO as ready business and profit of Rs. 9,284.55 on that account was subjected to tax, whereas Item Nos. 2, 3 and 4 were considered as speculative business and the net result of the said transactions being loss of Rs. 33,146 (Rs. 23,269.79 loss + Rs. 11,657.96 loss-Rs. 1,782.31 profit) was ignored and the said loss was not allowed as per unnumbered para 2 of his order.
When the issue was carried by the assessee before the Commissioner (Appeals), he observed that it is not the addition of Rs. 32,750 as taken in the grounds of appeal by the assessee but Rs. 33,146 and upheld the said addition as per paras 1 and 2 of his order.
(3.) IT is this action of the Commissioner (Appeals) which is contested by the assessee before us. The learned counsel for the assessee, Shri D.S. Gupta, at the outset submitted that what is to be seen is whether the three transactions considered to be of speculative nature by the revenue, are hit by Section 43(5) of the Income-tax Act, 1961 ('the Act'). He submitted that under the Indian Income-tax Act, 1922 ('the 1922 Act'), it is Explanation 2 to Section 24(1) vis-a-vis in the 1961 Act it is Section 43(5) (sic). He submitted that when the two provisions are put to comparison there is a minor change but a very significant change. He submitted that in the 1922 Act the expression used is 'purchase and sale' whereas in Section 43(5) the expression is 'purchase or sale'. He was fair enough to admit that the Supreme Court decision in the case of Raghunath Prasad Poddar v. CIT  90 ITR 140 which could well support the contention of the assessee, had been overruled by the Supreme Court itself in the case of Davenport & Co. (P.) Ltd. v. CIT  100 ITR 715. But he vehemently argued that the said two decisions were under the 1922 Act and in the light of the change effected in Section 43(5) putting word 'or' instead of the word 'and' in Explanation 2 to Section 24(1) of the 1922 Act, the asses-see is on a very strong pedestal. He submitted that in the present case, none of the transactions is either of purchase alone or of sale alone which was settled at any time and in any way other than by actual delivery and, therefore, is not hit by Section 43(5). He also submitted that forward business and forward transactions are two different things. He submitted that this is a case where settlement has not been made but payments are made by cheques. He also drew our attention to the Madhya Pradesh High Court judgment in the case of CIT v. Bhikamchand Jankilal  131 ITR 554 in support of his contention.;
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