ADDITIONAL COMMISSIONER OF INCOME TAX Vs. MAGGAJI SHERMAJ

JUDGEMENT

(1.) THESE two references, though relate to separate assessees, raise two identical questions and, therefore, they may be conveniently disposed of by a common judgment.

(2.) FOR the purpose of answering the references, we may refer to the statement of the case in R. C. No. 165/76 and the questions referred therein. This reference is at the instance of the revenue and relates to the assessment year 1968-69. The assessee is a partnership firm carrying on business in purchase of groundnuts, turmeric, etc. The firm came into existence on October 30, 1967, and it was dissolved on March 31, 1968, On November 4, 1967, it entered into a contract with M/s. Mudiam Oil Company, Prodd-atur, for purchase of 1,000 bags of groundnuts at the rate of Rs. 358 per kandi equal to 250 kgs. The delivery of the goods was tq be made in the month of February, 1968. The other terms of the contract are not relevant. On December 16, 1968, there was a fall in the price of groundnuts. and the assessee, therefore, thought fit not to purchase the groundnuts in view of the difference in price. He, therefore, paid Rs. 20,833.33, the difference in value, i.e., at the rate of Rs. 62'50per kandi, to the other contracting party. The other contracting party, M/s. Mudiam Oil Company, received that amount on February 16, 1968, evidenced by a receipt passed by it. It is recited in that receipt:

(3.) IT cannot be said, having regard to the meaning of speculation business, that the transaction in question was such as to constitute a speculation business. There was only one such transaction in both the cases, and they) were isolated instances. Therefore, having regard to the meaning of speculation business, we agree with the finding recorded by the Tribunal that it is a loss in business and not a loss in speculation business.