TaxTMI 
TaxTMI 
2020 (1) TMI 1151
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....h June, 2016 passed by the Income Tax Appellate Tribunal, "F" Bench, Mumbai (briefly "the Tribunal" hereinafter) in Income Tax Appeal No.6271/Mum/2014 together with Cross-Objection No.34/Mum/2016 for the assessment year 2010-11. 3. The appeal has been preferred on the following question which is contended to be a substantial question of law:- "Whether, on the facts and circumstances of the case and in law, the Tribunal is correct in law in deleting the disallowance of loss of foreign exchange by holding that the same is not speculative loss but is allowable as business loss?" 4. In the assessment proceeding which culminated in the assessment order dated 25th March, 2013 passed by the Assessing Officer under Section 143(3) of ....
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....d in the manufacture and export of processed food products such as fruit pulp and other allied items, for which it was receiving export sales proceeds from abroad in foreign exchange currencies. We find from the record that the learned CIT (A), after examination of the matter, found that the assessee had entered into foreign exchange forward contracts with banks only to safeguard itself and hedge against the exposure risks in future fluctuation in the exchange rates of foreign currency to be received by it as export sale proceeds. It is seen that these foreign exchange forward contracts entered into with banks from time to time in the relevant periods under consideration, were made against confirmed export orders and export of goods by the ....
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....s on account of exports sale proceeds receivable, due to fluctuation in price of different commodities and which contracts were backed by confirmed export orders for dealing of goods manufactured or traded by it. These transactions were not speculative in nature and the resultant foreign exchange losses were consequently not speculative losses but allowable business losses. Such contracts are directly from the incidental to the assessee's business of manufacture and export of fruit pulp and allied products and therefore, in our view, do not represent speculative transactions.Therefore, the concept of delivery and non-delivery thereof is of no consequence and is irrelevant in the context of the facts of the case on hand. As long as ....
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.... a contract for the purchase or sale of a commodity is settled otherwise than by the actual delivery or transfer of such commodity. However, as stated above, the assessee was not a dealer in foreign exchange. The assessee was an exporter of cotton. In order to hedge against losses, the assessee had booked foreign exchange in the forward market with the bank. However, the export contracts entered into by the assessee for export of cotton in some cases failed. In the circumstances, the assessee was entitled to claim deduction in respect of Rs. 13.50 lakhs as a business loss. This matter is squarely covered by the judgment of the Calcutta High Court, with which we agree, in the case of CIT V. Soorajmull Nagarmull (19....
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....ture and export of fruit pulp and allied products and therefore, did not represent speculative transactions. 12. As referred to and relied upon by the Tribunal, this was also the view taken by this court in Badridas Gauridu (P.) Ltd.(supra). 13. This position has been again reiterated in Commissioner of Income-Tax Vs. D. Chetan and Company, (2017) 390 ITR 36 (Bom), wherein it has been held as under:- "The impugned order of the Tribunal has, while upholding the finding of the Commissioner of Income-tax (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 varia....
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....rendered in the context of the facts which arise before the authority for adjudication. Mere conclusion in favour of the Revenue in another case by itself would not entitle a party to have an identical relief in this case. In fact, if the Revenue was of the view that the facts in S. Vinodkumar (supra) are identical/similar to the present facts, then reliance would have been placed by the Revenue upon it at the hearing before the Tribunal. The impugned order does not indicate any such reliance. It appears that in S. Vinodkumar (supra), the Tribunal held t hat forward contract on facts before it to be speculative in nature in view of section 43(5) of the Act. However, it appears that the decision of this court in CIT v. Badridas Gauridu P. Lt....