SANKAR PRASAD MITRA, J.

( 1 ) THIS is a reference under Section 66 (1) of the Indian Income-tax Act, 1922. The assessment year is 1955-56, the relevant accounting year is the year ending on October 26, 1954 (Sambat year 2010 ). The assessee is a private limited company dealing, inter alia, in jute and hessian. For the assessment year under reference, the assessee claimed a loss of Rs. 1,50,217 in its jute and hessian account. The assessee conceded that in this account a profit of Rs. 6,29,396 arose in transactions concluded by payment of differences where no actual delivery of goods was either given or taken. There were, however, transactions in which delivery of the goods was effected by exchange of pucca delivery orders (hereinafter called P. D. Os.); in these transactions the assessee suffered a loss ; and after adjustment of the profit aforesaid there was a net loss of Rs. 1,50,217 in the jute and hessian account which the assessee claimed as its loss from the business in jute and hessian.

( 2 ) BEFORE the Income-tax Officer the assessee contended that the loss was a business loss as the actual delivery of goods was taken and given by the transfer of "p. D. Os. " The Income-tax Officer found that the assessee did not maintain any godown and there was no actual delivery of goods in any case. In the absence of physical delivery the Income-tax Officer held that the loss of Rs. 1,50,217 was a speculative loss and allowed it to be carried forward to be set off against future speculation profits under Section 24 (1) of the Income-tax Act, 1922.

( 3 ) BEFORE the Appellate Assistant Commissioner the assessee contended, inter alia, that the delivery of P. D. Os. amounted to actual delivery of the goods. In the alternative, the assessee dealt in P. D. Os. themselves as if these P. D. Os. were like share certificates or any ether commodity having an intrinsic value. In other words, the contention was that the assessee dealt in the purchases and sales of P. D. Os. It was stated that each P. D. O. was purchased after payment by cash or by cheque and each P. D. O. was sold and delivered after receipt in cash or by cheque. The Appellaie Assistant Commissioner in his order has considered whether the loss in question could be treated as loss in jute and hessian. He did not come to any definite conclusions. He proceeded to observe in paragraphs 3, 4 and 5 of his order as follows :" (3) However, it is not necessary to decide on this point for this appeal. Shri Ray's alternative contention was that the appellant dealt in the P. D. Os. themselves as if these P. D. Os. were like share certificates or any other commodity having an intrinsic value. . . In other words, the appellant was a dealer in the purchase and sale of P. D. Os, It is stated that each P. D. O. was purchased after payment by cash or by cheque and each P. D. O. was sold and delivered after actual receipt of cash or cheque. There seems to be no prohibition or restriction to such deals. The Income-tax Officer has not considered this aspect of the case in his order. He will now examine the evidence to be produced by the appellant and come to a finding whether the facts just stated are correct or not. If the facts stated are correct then the appellant can be held to be a dealer in the purchase and sale of P. D. Os. In such a case the loss suffered will be a trading loss and not a speculation loss. (4) For the reasons stated above, I set aside the assessment order with a direction that the Income-tax Officer should do the assessment, again after looking into the account with reference to the view of business dealings discussed above. . . (5) In the result, the assessment is set aside with a direction to the assessment again in the light indicated above. "

( 4 ) THE Income-tax Officer thereupon proceeded to make a fresh assessment. He found that the assessee did not have any godown for storing goods: there was no physical handling of jute and hessian : the assessee neither took phy

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