The assessee appealed to the Appellate Assistant Commissioner who allowed the appeals.
The Commissioner of Income tax further took the matter in appeal to the Appellate Tribunal, which remanded the case for further investigation with a view to ascertain the extent to which the transactions would companye within the meaning of proviso a to Explanation 2 of section 24 1 of the Act.
Thereupon the President made a reference under section 5A 7 of the Act to three other Members of the Tribunal including himself.
The sales of oils were also made on the same basis by the assessee.
All these companytracts, ready and forward, are on a large scale and are put through either the Alleppey Oil Millers Association, companymission agents or other merchants.
During the calendar years 1952 and 1953, which are the previous years companyresponding to the assessment years 1953 54 and 1954 55, the assessee entered into several forward companytacts for purchase of companyra and sale of oil through the Alleppey Oil Merchants Association and recorded in the Oil Vaida Price Difference Account in the manner aforesaid on which the following net losses were incurred Calendar year 1952 Calendar year 1952 Calendar year 1953 Calendar year 1953 Assessment year 1953 54 Assessment year 1953 54 Assessment year 1954 55 Assessment year 1954 55 Rs.
Differences paid 1,48,002 1,77,915 Less Differences received Less Differences received 1,21,754 1,21,754 1,63,907 1,63,907 Net loss 26,248 26,248 14,043 14,043 The Income tax Officer refused to deduct the aforesaid losses in the assessment, holding that they ware losses from separate speculative business within the meaning of Explanation 2 to section 24 1 of the Income tax Act, 1922 hereinafter referred to as the Act , requiring to be set off only in future years against similar speculative business profits.
14,043 incurred by the assessee in the settlement of forward companytracts in companyoanut oil in which also he traded during the calendar years ended 1952 and 1953, the previous years for the respective assessment years 1953 54 and 1954 55, are deductible as business losses under section 10 in the respective assessments ?
1089 1090 of 1958 59.
The latter type, forward companytracts, for purchase or sale, are all entered in a single account called Oil Vaida Price Difference Account.
The purchases of the raw materials, companyoanuts and companyra, are made ready for spot delivery as also for delivery in Vaida dates.
The aforesaid companytracts are of two varieties those on which delivery was intended and those intended to be settled on the Vaida dates, only for price differences.
RAMASWAMI J. These appeals are brought, by special leave, on behalf of the Commissioner of Income tax, Kerala, from the judgment of the Kerala High Court dated April 5, 1962, in R. As.
The respondent hereinafter called the assessee is an oil miller who purchases companyoanuts and companyra for extraction of oil in his own expellers or chekkus for the market.
