TaxTMI 
TaxTMI 
2017 (9) TMI 726
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..../- which was offered as income from other sources. It was further noted that in the original computation of income the disallowance under section 14A has been mentioned by the assessee as Rs. 73,81,010/- but in the revised computation this disallowance was withdrawn. The Auditors also in Annexure K corresponding to clause 17(1) in Form 3CD computed the disallowance under section 14A at Rs. 73,81,010/-. When asked for the assessee submitted that no disallowance is required to be made. The AO did not agree with the submission of the assessee but made disallowance as per para 7 of the order under section 14A r.w. Rule 8D amounting to Rs. 1,31,19,335/-. Assessee went in appeal before the CIT(A. The CIT(A) partly allowed the appeal of the assessee. 4. The learned A.R. before us referred to page 2 of the paper book which contains the computation of income and on that basis it was submitted that the assessee got the dividend from foreign subsidiary companies amounting to Rs. 15,47,12,858/- and the same has been shown as income from other sources. It is not the case that the dividend earned by the assessee has been claimed as exempt. It was also submitted that the assessee has not earne....
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....sing stock as on 31.03.2008 and thereby made an addition of Rs. 1,79,57,029/-. When the matter sent before the CIT(A), the CIT(A) upheld the action of the AO ion invoking section 145A of the Income Tax Act to compute closing stock but on the issue of correctness of the calculation of the AO he directed the AO to take into consideration the grievances of the assessee and verify the calculation as made at the time of assessment proceedings by strictly keeping in view the provisions of Section 145A alongwith the directions of the CIT(A) as given in A.Y. 2006-07. Thus allowed this ground statistically. 9. We heard the rival submissions and gone through the orders of the tax authorities below. We noted that provisions of Section 145A were effective from 01.04.1999 and applies from A.Y. 1999-200 onwards. The scope and effect of section 145A have been elaborated by the Departmental circular No. 772 dated 23rd December, 1998 as under: - "52.1 Method of accounting in certain cases:-52.1 The issue relating to whether the Value of the closing stock of the inputs, work-in-progress and finished goods must necessarily include the clement for which MODVAT credit is available, has been....
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.... Year Item Qty Rate Amount Opening Stock 20 Purchases 150 10 1500 ED on Purchases 150 2 300 Closing Stock 40 Sales 130 15 1950 ED on Sales 130 5 650 Under the Exclusive Method: P & L Account Dr Particulars Rs. Cr. Particulars Rs. Opening Stock 200 Sales 1950 Purchases 1500 Closing Stock 400 Excise Duty 0 Gross Profit 650 Total 2350 2350 Under the Inclusive Method: P & L Account Dr Particulars Rs. Cr. Particulars Rs. Opening Stock 240 Sales 2600 Purchases 1800 Closing Stock 480 Excise Duty 650 Credit obtained on consumption ....
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....ntracts on the basis of underlying purchases, sale contracts. The definition of speculative transactions under section 43(5) is an exhaustive one and the term does not include currency. The AO was not satisfied with the assessee's explanation. Therefore he treated the loss on cancellation of the forward contract as loss arising from speculation activities and disallowed the same. Assessee went in appeal before the CIT(A). The CIT(A) confirmed the order of the AO. 12. Aggrieved, assessee is in appeal before us. We have heard the rival submissions and carefully considered the same along with the orders of the tax authorities below. We have gone through the provisions of Section 43(5) which defines speculative transaction. We noted that as per the definition given in sub-section (5) the transaction entered into cannot be treated to a speculative transaction. The definition of speculative transactions under section 43(5) is an exhaustive one and the term 'commodity' including shares and stocks but does not include currency. (a) The term 'commodity' is defined neither in the Income-tax Act nor in the General Clauses Act. (b) Dictionary meaning of the....
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....change in forward market with the bank. The loss suffered by assessee on cancellation of such forward contracts is not speculative and loss is deductible as business loss. 13. We noted that similar issue has again came up before the Jurisdictional High Court in Tax Appeal No. 278 of 2014 in the case of M/s. D. Chetan & Co. In which the question before the Hon'ble High Court was: - "Whether on facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the addition of 'Mark to Market' Loss of Rs. 78,10,000/- made by the Assessing Officer on account of disallowance of loss on foreign exchange forward contract loss and not appreciating the fact that the said loss was a notional loss and hence cannot be allowed." The Hon'ble High Court after discussing the submissions of both parties held as under: - "7. The impugned order of the Tribunal has, while upholding the finding of the CIT (Appeals), independently come to the conclusion that the transaction entered into by the Respondent assessee is not in the nature of speculative activities. Further the hedging transactions were entered into so as to cover variation in foreign ex....
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....hange when incidental to carrying on business of cotton exporter and done to cover up losses on account of differences in foreign exchange valuations, would not be speculative activity but a business activity." 14. Similarly the Hon'ble Bombay High Court in the case CIT vs. M/s. London Star Diamond Co. (India) Pvt. Ltd. in appeal No. 712 of 2014 vide its order dated 19th October, 2016 on similar question decided the issue in favour of the assessee. Following the decision of the CIT vs. M/s. D. Chetan & Co. again when similar issue went before the Hon'ble Bombay High Court in ITA No. 1440 of 2014 in the case of CIT vs. M/s. Jaimin Jeweller Exports Pvt. Ltd. the Hon'ble High Court vide its order dated 17th February, 2017 decided the issue in favour of the assessee in view of the decision in the case CIT vs. M/s. D. Chetan & Co. and that ofCIT vs. M/s. Jaimin Jeweller Exports Pvt. Ltd. 15. The learned D.R. before us vehemently relied on the order of the CIT(A) but could not convince us that the facts involved in the case of the assessee are different to the decisions as has been given by the Hon'ble Bombay High Court in the above noted case law. 16. Respectful....