2014 (1) TMI 1736

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....able. 3. The assessee has moved an application for adjournment. However, when it was pointed out to the Ld. Departmental Representative that the case may be heard as the issue involved in the appeal appeared to be covered in favour of the assessee by various judicial decisions. The Ld. DR fairly conceded to this and submitted that he relies on the assessment order. 4. We have carefully perused the orders of the lower authorities. The only issue to be considered is whether the assessee is to be allowed Markto- Market loss arising out of the valuation of forward contract loss. The facts on record show that the assessee is a trader and exporter of diamonds. Substantial portion of its transactions are denominated in US$. Substantial porti....

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....ave carefully perused the order of the Ld. CIT(A). The Ld. CIT(A) after considering the facts of the case has discussed following decisions: "In the case of Woodward Governor Hon. Delhi High Court has Observed as under (294 ITR 451). "In the instant cases, on the other hand, the liability arises out of already concluded contracts. The liability already stands accrued the minute the contract was entered into. The mere postponement of the payment to different date cannot extinguish the liability and render it notional or contingent. The decision of Hon.Supreme Court in Bharat Earth Movers settles the position. That decision explains that what should be certain is the incurring of the liability and it being estimated with reasonable c....

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....ally accepted accounting standards; (vi) whether the system adopted by the assessee is fair and reasonable or is adopted only with a view to reducing the incidence of taxation. 5.9 ) In the case of DCIT v/s. Bank of Bahrain and Kuwait (ITA Nos. 4404 &1883/Mum./2004) the Special Bench of Jurisdictional Mumbal ITAT while holding that MTM losses in respect of forward foreign exchange contracts debited to profit and loss account is allowable, observed as under: (i) A binding obligation accrued against the Appellant the minutes it entered into forward foreign exchange contracts. (ii) A consistent method of accounting followed by the Appellant cannot be disregarded. The Appellant has consistently followed the same method of acco....