JUDGMENT

PATHAK, J.:—This appeal by certificate under Sec. 66A (2) of the Indian Income Tax Act, 1922 raises the question whether the transactions in which the assessee was engaged were "speculative transactions" as defined by Explanation 2 to Section 24 (1) of that Act.

2. The assessee carries on business in gunnies. The total purchase disclosed by the assessee for the year ended June 30, 1960 amounted to Rs. 1,01,51,225/- and the total sales during that year were shown at Rs. 1,03,27,208/-. The purchases and sales included certain transactions with Messrs. Kesardeo Shyamsunder. Under Contracts Nos. 96 dated November 11, 1959, 108 dated November 12, 1959, 643 dated April 27, 1960 and 836 dated May 25, 1960, the assessee claimed that 5,700 bales of gunny bags were purchased for Rs. 22,05,000/-. The assessee says that he sold them to the same party under contracts Nos. 520 dated March 30, 1960, 540 & 541 dated April 1, 1960 and 610 dated April 19, 1960 for Rs. 19,79,550/-. The result was a loss of Rs. 2,25,450/-. The contracts were transferable specific delivery contracts falling within the scope of the bye-laws of the East India Jute & Hessian Exchange Limited, the bye-laws having b