2020 (7) TMI 246

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....u/s 143(3) of the Income Tax Act, 1961 (in short the "Act") dated 27/12/2016. 2. The grounds of appeal raised by the assessee are as follows: 1. (a). That on the facts and in the circumstances of the case, Ld. CIT(A) is wrong and unjustified in conforming A.O's order where loss on forward booking of foreign exchange of Rs. 1,45,374/- was disallowed as regular business loss u/s 28. (b). That on the facts and in circumstances of the case, Ld. CIT(A) is wrong and unjustified in treating the loss of Rs. 1,45,374/- as speculative loss without considering that for payment of import purchases the assesse(importer) is required to make prior booking of foreign exchanges. 2. That on the facts and in the circumstances....

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....ed to our account which is being charged under the head loss on Forward Cancellation. This is not the speculative transaction as the same is being done with the underlying document for which foreign currency are being booked and is honored on the due date." However, the Assessing Officer rejected the contention of the assessee and held as follows: "A forward contract is an agreement between a buyer and a seller getting the seller to deliver a specified asset of specified quality and quantity to the buyer on a specified date at a specified place and the buyer in turn is obligated to pay the seller a pre-negotiated price in exchange of the delivery. The definition of 'speculative transaction' in section 43(5) gives a simple test f....

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....view of the facts as mentioned above, in the absence of any cogent material evidence, 1 do not find any infirmity in the order of the assessing officer and the same is hereby upheld. In view of above, this ground of appeal is dismissed." 6. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. 7. The ld. Counsel for the assessee has relied on the submissions made before the authorities below and on the other hand the ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity. 8. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee al....

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....ract is not a speculative transaction. The provision of section 43(5)(a) of the Act, is reproduced below: "a contract in respect of raw material or merchandise entered into by a person in the course of his manufacturing or merchanting business to guard against loss through future price fluctuations in respect of his contracts for delivery of goods manufactured by him or merchandise sold by him" shall not be deemed to be speculative transactions." A plain reading of section 43(5)(a) makes it clear that the impugned loss cannot be regarded as speculation. The Act clearly excludes hedging foreign currency transactions for the definition of speculative transaction. Hence the actions of Id AO in considering the loss on hedging for....

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....(A) who has confirmed the action of the Assessing Officer observing the followings: "I have considered the grounds of appeal, statement of facts and submission of the authorized representative of the appellate company as well as the order of the Assessing Officer framed in the light of the materials available on record before the Assessing Officer during the assessment proceedings. The Assessing Officer has mentioned that these expenses does not pertain to the year under consideration. I agree with the view as taken by the Assessing Officer. Keeping in view of the facts as mentioned above, in the absence of any cogent material evidence, I do not find any infirmity in the order of the Assessing Officer and the same is hereby upheld.....

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.... assessee made payments relating to AY 2013-14 during the relevant assessment year 2014- 15, applying the provisions of section 43B of the Act, the same is allowable expenditure. In view of the above facts we delete the disallowance of Rs. 1,12,214/-. 13. Ground No.3 raised by the assessee relates to ad hoc disallowance of travelling and conveyance expenses of Rs. 1,78,912/-. 14. At the outset itself, the ld. Counsel for the assessee submitted before the Bench that the order is passed by the Assessing Officer u/s 143(3) of the Act therefore no ad hoc disallowance should be made by assessing officer. However,ld. DR submits that the assessee failed to submit a few bills and vouchers relating to travelling expenses and conveyance expense....