Cancellation charges paid on export supply contracts may...

Cancellation charges paid on export supply contracts may constitute deductible business expenditure rather than speculative loss where they arise from settlement of contracts for goods dealt with in the ordinary course of business. Export commission paid to non-resident agents for customer-solicitation services performed outside India is not subject to withholding where the recipients have no business connection in India and the payment is not otherwise chargeable to tax. Foreign-exchange forward-contract losses incurred to hedge export realisations are business losses, not speculative losses. Disallowance of expenditure relating to exempt income requires recorded satisfaction on the taxpayer's claim and material establishing a nexus between expenditure and exempt income before applying Rule 8D.