2018 (5) TMI 1240

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.... loss from speculation business as against claimed by the assessee as hedging loss? 2. Whether the Appellate Tribunal has erred on facts and in law in deleting the addition of Rs. 5,05,330/- made u/s. 40(a) (ia) of the Act without appreciating that the commission paid to a non resident agent was subject to TDS u/s. 195 of the Act?" 3. The first issue pertains to the decision of the Tribunal treating the loss suffered by the assessee in connection with the hedging contract as a business loss rejecting the Assessing Officer's contention that the same being speculative in nature was not allowable deduction. 4. From the documents on record we notice that the respondentassessee is engaged in the business of manufacturing and t....

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....der: "The assessee was not a dealer in foreign exchange. The assessee was a cotton exporter. The assessee was an export house. Therefore, foreign exchange contracts were booked only as incidental to the assessee's regular course of business. The Tribunal has recorded a categorical finding to this effect in its order. The Assessing Officer has not considered these facts. Under section 43(5) of the Income-tax Act, "speculative transaction" has been defined to mean a transaction in which a contract for the purchase or sale of commodity is settled otherwise than by the actual delivery or transfer of such commodity. However, as state above, the assessee was not a dealer in foreign exchange. The assessee was an exporter of cotton. In....

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....ed into forward contract with the banks. In some cases, the export could not be executed and the assessee had to pay certain charges to the Bank and thereby incurred certain expenses. These expenses the assessee claimed by way of expenditure towards business. We do not find that the transaction can be stated to be in speculation as to cover under sub-section (5) of section 43 of the Act. " 6. The second issue relates to the addition made by the Assessing Officer of a sum of Rs. 5.05 lacs under section 40(a)(ia) of the Income Tax Act, 1961 on the ground that the assessee had not deducted tax at source on foreign commission payments. The Tribunal however, recorded that the non-resident agent of the assessee was operating at his own level a....