2015 (10) TMI 2777

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ting to disallowance under section 14A of the Act. Accordingly, ground no.1, is dismissed as "not pressed". 3. The only other surviving issue, as raised in ground no.2, relates to disallowance of loss claimed on cancellation of forward exchange contracts amounting to Rs. 1,50,54,490. 4. Briefly the facts relating to the issue in dispute are the assessee a company is engaged in the business of export manufacturing and trading of diamond. For the assessment year under dispute, the assessee filed its return of income on 29th September 2009, declaring total income of Rs. 18,35,11,270. During the assessment proceedings, the Assessing Officer noticed that the assessee has debited an amount of Rs. 1,50,54,490, as exchange difference. On veri....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ed. They were neither settled by actual delivery nor by transfer of commodity. In this context, he also relied upon certain judicial precedents. 6. The learned Counsel for the assessee referring to the details of forward contract submitted that all the forward contracts were cancelled during the year. Referring to the details of forward contracts, again the learned counsel submitted that the export / import made by the assessee against forward contract is always more. He submitted that in assessee's own case, the Tribunal has allowed the loss on account of forward contract. In this context, he referred to the order dated 25th May 2009 in ITA no.4821/Mum./2007, for the assessment year 2004-05. He submitted that the Tribunal, following the....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ay be restored back to the file of the Assessing Officer. 8. In the rejoinder, the learned Counsel for the assessee submitted that except three contracts, all other contracts were cancelled after maturity. Even in respect of these three contracts, the assessee has earned profit. He further submitted that the assessee has received contract from foreign company for exporting diamond worth U.S. $ 90,00,000 and the forward contracts are linked to these transactions. Similarly, the assessee has placed orders for import of diamond worth U.S. $ 10,00,000 which are also linked to some forward contract. He, therefore, submitted that the allegation of the Department that there is neither any nexus between forward contracts and export / import nor ....