Judgment

HEGDE, J.:- These are appeals by special leave. They raise a common question of law viz., whether on the facts and in the circumstances of these cases the amounts claimed by the appellants (assessees) as their losses in transactions in gunny bags which were concluded by the transfer or delivery of pucca delivery orders were speculative losses under Explanation 2 to the proviso to Section 24 (1) of the Indian Income tax Act, 1922 (to be hereinafter referred to as the Act).

2. 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 that case only.

3. The assessee in Civil Appeal No. 1937 of 1970 is a company dealing inter alia, in jute and jute goods. In the assessment years 1957-58, 1958-59 and 1960-61 (corresponding accounting periods being calendar years 1956, 1957 and 1959), the assessee claimed Rs. 35,578/-, Rs. 20,665/- and Rupees 3849/- respectively as losses in its business in the sale and purchase of gunny bags. The Income-tax Officer treated those losses as speculative losses. He held that the contracts in respect of the gunny bags said to have be