https://www.taxtmi.com/caselaws?id=234101 The dominant issue was whether loss on cancellation/settlement of foreign exchange forward contracts constituted a speculative loss under s.43(5) of the Income-tax Act or an allowable business loss. The HC held that s.43(5) targets contracts for purchase/sale of a commodity settled otherwise than by actual delivery, but the assessee was not a dealer in foreign exchange and had entered forward contracts only incidentally in the ordinary course of its export business to hedge currency risk. Since the underlying export contracts failed in certain cases, the resulting cancellation loss arose from hedging activity integral to business operations. The loss was therefore deductible as business loss, and the appeal was decided in favour of the assessee. en-us Thu, 28 Mar 2013 00:00:00 +0530 Mon, 20 Jul 2026 10:28:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=234101 The dominant issue was whether loss on cancellation/settlement of foreign exchange forward contracts constituted a speculative loss under s.43(5) of the Income-tax Act or an allowable business loss. The HC held that s.43(5) targets contracts for purchase/sale of a commodity settled otherwise than by actual delivery, but the assessee was not a dealer in foreign exchange and had entered forward contracts only incidentally in the ordinary course of its export business to hedge currency risk. Since the underlying export contracts failed in certain cases, the resulting cancellation loss arose from hedging activity integral to business operations. The loss was therefore deductible as business loss, and the appeal was decided in favour of the assessee. Case-Laws Income Tax Thu, 28 Mar 2013 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=234101