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TMI Blog2013 (5) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 in some cases failed. Thus the assessee was entitled to claim deduction as a business loss. In favour of assessee. - Tax Appeal No. 251 of 2010 - - - Dated:- 23-8-2011 - Akil Kureshi And Sonia Gokani,JJ. For the Appellant : Mrs. Mauna M Bhatt For the Respondent : Mr. Kirtikant Thaker, Mr. Pravin P Panchal ORDER (Per : Honourable Mr. Justice Akil Kureshi) Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of M.G.Brothers v. CIT, (1985) 154 ITR 695 and also in the case of Commissioner of Income Tax v. Joseph John, 67 ITR 74. On further appeal, the Tribunal deleted the disallowance relying on the decision of the Bombay High Court in the case of CIT v. Badridas Gauridu (P) Ltd., 261 ITR 256. We may notice that the Bombay High Court in the said decision had relied on a decision of the Calcutta High Court in the case of CIT v. Soorajmull Nagarmull, 129 ITR 169 (Cal.) Counsel for the Revenue vehemently contended that the Assessing Officer as well as the CIT (Appeals) had examined the issue threadbare. It was found that there was no direct connection between the export contract and the booking of dollars by the assessee. The entire transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) held that the expenditure would not be covered under section 43(5) of the Act as speculative transaction. It was observed as under: 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 com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the loss due to fluctuation in foreign exchange while implementing the export contracts, the assessee had entered 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. It is true that the CIT(Appeals) has made some observations which would prima facie suggest that there was no direct co-relation between the exchange document and the precise export contract. However, such observations cannot be seen in isol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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