C I T Vs. SHREE TEXTILES

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal Jaipur Bench, Jaipur has referred the following question of law for opinion of this Court under Section 256 (1) of the Income-tax Act, 1961 arising out of its order dated 22. 07. 1980 for the assessment year 1974-75 :- "whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the amount of Rs. 16,426/-is a business loss and not a speculation loss?"

(2.) THE brief facts of the case are that the assessee had shown a loss of Rs. 16,426/- in cotton account and the entry was passed through 'nakal Bahi' on the last date of the accounting year. This difference was paid on account of purchase and sale of 100 cotton bales which were through M/s. Basant Kotak & Bros. Bombay. THE Income-tax Officer held that it is a speculative transaction and as such cannot be adjusted against the business income and has to be carried forward for adjustment in the subsequent years against speculation profits.

(3.) ANDHRA Pradesh High Court in Additional CIT vs. Maggaji Shermal (supra) on the basis of the Explanation-2 to Section 28 came to the conclusion that in order to constitute a speculative business there could be more than one speculative transaction carried on by the assessee and the isolated instance of a single transaction would not constitute a business and no reasoning was given in this case in as much as the definition clause 2 (13) of the Act and the provisions of General Clauses Act as contained in Section 13 (2) were also not taken into consideration.