2013 (1) TMI 997 - AT - Income Tax

Summary

Issues involved:
The judgment involves determining whether the loss on extension of Forward Foreign Exchange contracts should be considered as a capital loss or a business loss for assessment under the Income Tax Act.

Summary:

Issue 1: Classification of loss on extension of Forward Foreign Exchange contracts

The Revenue contended that the loss should be considered as a business loss, while the Assessing Officer treated it as income from other sources. The CIT(A) held that the loss on extension of forward foreign exchange contracts is a capital loss. The Revenue challenged this decision.

The Tribunal considered the previous findings in a similar case and concluded that the income arising from forward exchange contracts should be treated as capital gain. The Tribunal relied on consistent decisions and held that gains from early settlement of forward foreign exchange contracts are assessable as capital gain. Consequently, the appeal filed by the Revenue was dismissed.

Conclusion:
The Tribunal upheld the decision of the CIT(A) that the loss on extension of Forward Foreign Exchange contracts should be treated as a capital loss, in line with previous rulings and consistent interpretation of the law.