LexRAGHUNATH PRASAD PODDAR ETC. versus COMMISSIONER OF INCOME TAX, CALCUTTA
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A B c RAGHUNATH PRASAD PODDAR ETC. v. COMMISSIONER OF INCOME TAX, CALCUTTA April 25, 1973 [K. S. HEGDE AND H. R. KHANNA, JJ.] 91 Income-tax A ct (1922), Sec. 24( l) Proi·iso, Explanation 2 Speculative rran- sactions-Goods sold by delivery of Pucca Delivery Orders and not by actuaf delivery to the im1nediate haver whether sveculative. The assessee. inter alia. deals in jute ,and jute goods. For the relevant assess· ment years, the assessee showed certain amounts as losses in its business in the sale and purchase of gunny bags. The Income-tax Officer treated those losses as speculative, holding that there was no actual delivery of the· gunny bags as the· transaction was settled only by the delivery of Pucca Delivery Orders (P.D.Os). The principal question for decision was, whether the transactions covered by P.D.O's \Vere speculative transactions or not. After the decisions of the various tax authorities, the question was ultimately referred to the High Court for its opinion. Relying on its earlier decision in Nana/al M. Varma and Co. (P) Ltd. v. Commissioner of lnCome-tax, West Ben~ gal. (73 l.T.R. 713). the High Court answered the question in favour of th<> Revenue. D On appeals by special leave, allowing the appeals, E F HELD : To effect a valid transfer of any commodity, it is not necessary that the transfer in question should be followed up by aetual delivery of the goods t0> the transferee. Even if the goods are delivered to the transferees' transferee, the first transfer also will be a valid transfer, on the principle of feeding back the title. [97B] Duni Chand Rataria v. Bliuwalka Brothers Ltd. (1955J 1 S.C.R. 1071; lJay- yanna Bhimayya v. Ga,·t. of Andhra Pradesh [1961] 3 S.C.R. 267, S."ate of Andhra Pradesh v. Kol/a Sreerama Murthy, [1963] 1 S.C.R. 184, relied on. Jute and Gunnv Brokers Ltd. v. Union of India [19611 3 S.C.R. 820, dis- tinguished. The appeal was allowed and the answer given by the High Court was vacated .. The case was remanded to the Tribunal to decide a fresh enquiry as to what ";as the trade practice in matlers of sales by delivery of P.D.Os at the relevant time-, and-whether the last buyer in the instant case. was given the actual possession· or 11ot. CIVIL APPELLATE JURISDICTION : Civil Appeal No.,1032 of 1970. Appeal by special leave from the order dated May 30, 1969 of the Calcutta High Court in Income-tax Ref. No. 111 of 1966 and Civif G Appeal No. 1033 of 1970. H . 5, Appeal by special leave from the Judgment al}d Order dated June 1969 of the Calcutta High Court in I.T.R. No. 174 of 1966 . CIVIL APPEAL No. 1034 of 1970. Appeal by special leave from the judgment and order dated J ~n~ 5, 1967 of the Calcutta High Court in I.T.R. 189 of 1967 and CIVll Appeal Nos. 1035 & 1036 of 1970. 92 SUPREME COURT REPORTS [ 1974] 1 S.C.R. Appea1 by special leave from the judgment and order dated June 12, 1969 of the Calcutta High Court in I.T.R. No. 162 of 1967 and A <:ivil Appeals Nos. 1037 to 1039 of 1970. Appeal by special leave from the judgment and order dated June 5, 1969 of the Calcutta High Court in l.T.R. No. 181 of 1966 and Civil Appeal No. 1040 of 1970. Appeal by special leave from the judgment and order dated June 5, 1969 of the Calcutta High Court in I.T.R. No, 141 of 1967. Leila Seth, U. K. Khaitan and B. P. Maheshwari, for the appellants. (in C.A. Nos. 1032-1035, 1036 & 1040). A. K. Sen, Leila Seth, U. K. Khaitan and B. P. Maheshwari, for the appellants. (in C.A. Nos. 1037-39). G. C. Sharma, S. P. Nayar and R. N. Sachthey, for the respon- dents, (in all the appeals except C.A. Nos. 1034 & I 040). G. C. Sharma, S. P. Nayar and B. D. Sharma, for the respondents, B c (in C.As. Nos. 1032, 1033, 1035-1039). D ·The Judgment of the Court was d~Iivered by HEGDE, J. These are appeals by special leave. They raise a <:ommon question of law viz. whether on the facts and in the circum- stances of these cases the amounts claimed by the appellants (asses- sees) GS their losses in transactions in gunny bags which were conclud- ed by the transfer or delivery of pucca delivery orders were speculative losseio i.;ndu- Explanation 2 to the proviso to section 24( 1) of the Indian Income-tax Act, 1922 (to be hereinafter referred to as the Act). For deciding the question of law formulated above, it will be sufficient if we set out the facts in Civil Appeal No. 1037 of 1970. At the hearing we were referred to the facts of
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