SEKSARIA RISWAN SUGAR FACTORY LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference at the instance of the assessee under S. 66(1) of the Indian IT Act, 1922. The assessee before us was at the relevant time a public limited company owning and working a sugar factory and we are concerned with the asst. year 1953 54. The assessee company had in the said year debited Rs. 1,68,731 to sugar sales account in forward transactions in sugar. These transactions were entered into between 9th June, 1952, and 20th June, 1952, for August 1952 delivery. The ITO observed that, as the assessee was not able to fulfil its obligations on the delivery date, the contract was settled by payment of difference between the ruling rate on the settlement date and the rate at which delivery was promised. The aggregate amount came to Rs. 1,68,731. This difference was treated by the ITO as a speculation loss to be allowed against similar profits in future.

(2.) THE assessee then appealed to the AAC. The contentions of the assessee were rejected by the AAC who confirmed the conclusion which the ITO reached earlier.

(3.) IT appears that being aggrieved by that decision the assessee wanted the Tribunal to make a reference by an application under S. 66(1) of the Indian IT Act, 1922, which was rejected by the Tribunal. The assessee then moved the High Court and the High Court by its order dt. 22nd Aug., 1961, directed the Tribunal to draw up a statement of the case under S. 66(2) and raise and refer the question as mentioned in the said order to the High Court. In accordance with these directions, the Tribunal stated a case which was subsequently numbered as IT Ref. No. 95 of 1962. In that reference the High Court held that the assessee had not been given an opportunity of being heard and the matter was sent back to the Tribunal for proper disposal in accordance with the directions of the High Court.