COMMISSIONER OF INCOME TAX Vs. SURAJMAL SARDARMAL

JUDGEMENT

(1.) HEARD learned Counsel for the parties.

(2.) THE issue raised in this appeal is whether there is a case of speculation loss.

(3.) THE learned Tribunal has appreciated these facts in para 5 of its order. For ready reference that reads as under: We have considered the rival submissions and perused the material on record. After considering the submissions and the material on record, we find that AO could not understand the case of the assessee. In a mistaken belief, the AO understood that the assessee has made some purchases from two Calcutta parties whereas assessee purchased goods from the, local market on behalf of these two Calcutta parties and after instruction of these two parties, the material was sold to other parties and after realising the money from the other parties to whom the material was sold, the balance payment, which was excess of sales and purchases were sent to these two Calcutta parties. The detailed accounts of these two parties are placed in 2nd paper book filed by the learned Authorised Representative at pp. 1 and 2. At p. 1, the purchases made on behalf of M/s Surya Coconut Oil Industries are shown and these purchases were made on 6th March, 1990. The sales were effected on 27th March, 1990 and 30th March, 1990 and details of sales are also mentioned below the purchase entries on the same page i.e., page number one of the paper book. Details of purchases and sales made on 13th March, 1990 and 28th March, 1990, are shown on p. 2. These purchases were made on behalf of M/s Behari Lal Mahesh Kumar, Calcutta. The difference i.e., excess of sales and purchases are also mentioned i.e., Rs. 1,51,469.06 and Rs. 1,57,229.15, respectively. In case of both the parties, these payments were sent to these parties by DD No. 490134, dt. 15th Sept., 1990 of PNB for Rs. 1,51,469 and DD No. 588464, dt. 31st Aug., 1990 of Bank of Baroda for Rs. 55,000 DD No. 588465, dt. 1st Sept., 1990 of Bank of Baroda for Rs. 38,000 and DD No. 490132, dt. 11th Sept., 1990 of PNB for Rs. 64,229 totalling Rs 1,57,229. There is no dispute in regard to these payments. We have also seen the purchase vouchers in original. Copies of the same are enclosed in the paper book. These original purchase vouchers were shown to the learned Departmental Representative also. He examined one purchase voucher minutely. Cross entries were also test -checked by the learned senior Departmental Representative. He found that the purchases are duly recorded in the purchase account as well as in stock register. Payments made by the assessee were also examined and it was ascertained that there is no difference in purchase account or in sale account. Further, we noted that assessee's relation is not of a seller and purchaser with the Calcutta parties. The relations with the Calcutta parties are of the nature of commission agent. Assessee is a commission agent who purchased the goods on behalf of the Calcutta parties and sold the goods on behalf of the Calcutta parties. Assessee earned commission on both the transactions i.e., purchases and sales. We further noted that assessee also earned interest income on delayed payments made on behalf of purchasing parties and these earnings are duly shown in P&L; a/c and in respective accounts of the respective parties. Therefore, there is no question of showing any speculation loss or profit by the assessee and when any loss or profit has not (been) shown by the assessee then there is no question of disallowing or making addition of these amounts.' Assessee has shown only commission income and interest income and duly entered in the respective accounts and mentioned in the P&L; a/c properly. Therefore, we do not see any justification in making the addition on account of speculation loss. There is no case of Department that assessee has reduced its profits by claiming the speculation loss. Assessee has not shown any speculation loss. If there is any effect on this account then the effect is on the account of purchasing parties i.e., of Calcutta parties, in no way there is any effect in the accounts of the assessee. Therefore, we are satisfied with the submission of the learned Authorised Representative. Accordingly, we allow these grounds of the assessee and delete the addition made by the AO and confirmed by the CIT(A).