Judgement

GUPTA, J.:- This appeal by special leave turns on the true meaning and scope of explanation 2 to Section 24 (1) of the Income-Tax Act 1922.

2. The appellant (hereinafter referred to as the assessee) is a private limited company carrying on business in tea garden tools and requisites and also acting as agents for selling tea; in fact the bulk of its income was from selling commission on tea. The assessment year in question is 1959-60.; in the relevant previous year which ended on June 30. 1958, the assessee for the first time in its history entered into certain transactions in jute. On April 17, 1958 the assessee had contracted to purchase 1100 bales of B-T will and 2500 bales of corn sacks; the contract for B-Twill was with two parties, M/s, Raghunath & Sons (P) Ltd. for 500 bales and M/s. Mahadeo Ramkumar for 600 bales. The corn sacks were all purchased from Tulsidar Jewaraj under three contracts for 800 bales. 1000 bales and 700 bales respectively. On June 18, 1958 the assessee entered into a contract with M/s, Lachhminarain Kanoria & Co. to sell the aforesaid quantities of B-Twill and corn sacks. The assessee had no godown for keeping the goods and had not handled them.