( 1 ) THE question in this reference is as follows: whether on the facts and in the circumstances of the case the transaction which resulted in the loss of Rs. 33,736 was a speculative transaction within the meaning of explanation 2 to Section 24 (1) of the Indian Income-tax Act, 1922, and therefore the said loss should not be allowed to be set off under Section 240) of the said Act

( 2 ) THE relevant assessment year is 1959-60 and the corresponding previous year is Dewali year 2015 ending on 9th November, 1958. The respondent assessee is a partnership firm having business in paper bags, gunny bags and other commodities. During the relevant previous year it had entered into transactions in gunny bags entailing purchase and sale of delivery orders. This was done according to the prevailing practice in the Calcutta Jute trade where formal transactions in gunny, hessian etc. are carried on by the transfer of the relative delivery orders only on full payment of the purchase or sale prices. There is no actual delivery of the commodities and this happens because of the fact that the manufacturers of the Jute Goods do not normally come into contact with the shippers, namely, the