Judgment

PATHAK, J.:- In this tax reference made under Section 257 of the Income-tax Act, 1961, we are called upon to express our opinion on the following question of law :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in confirming the order of the Appellate Assistant Commissioner that the loss suffered by the assesses was not a loss incurred in a speculative transaction within the meaning of Section 43 (5) of the Income-tax Act, 1961?"

2. The assessee, M/s. Shantilal Pvt. Ltd., Bombay, is a private limited company. in the assessment proceedings for the assessment year 1971-72 it claimed a sum of Rs. 1,50,000/- paid by it as damages to M/s. Medical Service Centre as a business loss. During the previous year relevant to the said assessment year the assessee had contracted to sell 200 kg. of Folic acid USP at the rate of Rs. 440/- per Kilogram to M/s. Medical Service Centre and the delivery was to be effected on or before November 1, 1969, within about three months of the date of entering into the contract. The case of the assessee is that as the price of the commodity rose very sharply to as high as Rs. 2,000 per Kilogram during the period when th