Partial appeal success on forward exchange contract loss disallowance not speculative. Contracts post-maturity, except 3, yielded profits. Precedents considered.

The Tribunal partially allowed the appeal, determining that the loss claimed on cancellation of forward exchange contracts by the appellant was not speculative. The Assessing Officer's disallowance was overturned based on the contracts being cancelled after maturity, except for three specific ones resulting in profits. The Tribunal considered past cases and judicial precedents, concluding that the loss was incurred in the regular course of business. The order was pronounced on 30.10.2015.

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Issues:
1. Disallowance under section 14A of the Act.
2. Disallowance of loss claimed on cancellation of forward exchange contracts.

Issue 1: Disallowance under section 14A of the Act
The appellant did not press ground no.1 related to disallowance under section 14A. Hence, ground no.1 was dismissed as "not pressed."

Issue 2: Disallowance of loss claimed on cancellation of forward exchange contracts
The appellant, a company engaged in export manufacturing and trading of diamonds, filed its return of income for the assessment year 2008-09. The Assessing Officer disallowed a loss of Rs. 1,50,54,490 claimed on cancellation of forward exchange contracts, considering them speculative under section 43(5). The appellant contended that the loss was incurred in the regular course of business. The Assessing Officer found no merit in the appellant's submissions as the contracts were not linked to specific orders. The learned Commissioner (Appeals) upheld the disallowance, stating that no actual delivery was made against the forward contracts. The appellant argued that most contracts were cancelled after maturity, except for three, which resulted in profits. The Tribunal noted that the contracts were cancelled after maturity, except for three specific ones related to export and import, where profits were earned. Relying on judicial precedents and the appellant's past case, the Tribunal held that the loss claimed was not speculative and allowed the appeal partially.

In conclusion, the Tribunal found that the loss claimed on cancellation of forward exchange contracts was not speculative and should be allowed. The appeal was partly allowed, and the order was pronounced on 30.10.2015.

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