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TMI Blog2015 (5) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... ant t the minutes it entered into forward foreign exchange contracts - A consistent method of accounting followed by the Appellant cannot be disregarded - Liability is said to have crystallized when a pending obligation on the balance sheet date is determinable with reasonable certainty - As per AS-11, when the transaction is not settled in the same accounting period as that in which it occurred, the exchange difference arises over more than one accounting period - In view of the decision of the Supreme Court in the case of Woodward Governor India (I) P. Ltd. [2009 (4) TMI 4 - SUPREME COURT ], the Appellant's claim is allowable - In the ultimate analysis, there is no revenue effect and it is only the timing of taxation of loss/profit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osses are on account of Mark to Market revaluation of the forward contracts as per the rupee value of US$ as on 31st March 2009. As at 31st March 2009, the assessee has outstanding receivable in foreign currency of US $ 4507723 which were restated at closing rate and gain of ₹ 1,78,11,968 has been recognized as income. Similarly, in order to hedge risk arising out of variation in exchange rate, assessee had entered in to forward contracts for sale of US $ 1029008 which was pending maturity as at year end i.e. 31st March 2009. In respect of these contracts, it has recognized loss of ₹ 13,85,718 by revaluing the same at the rate prevalent on year end date. The assessee has strongly relied upon the Special Bench decision of the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... realization were not received in time. These are not premature cancellations by the assessee and therefore, in our considered view, the said loss of ₹ 4,14,88,805/-, being related to the FCs which are integral or incidental to the exports of the diamonds, should be allowed as business loss in view of the binding High Court or Tribunal decisions/judgments in the case of D Kishare kumar and Co (supra), Badridas Gauridu Pvt Ltd (supra), Saaroj Muill Magarmull (supra), etc. Thus, loss arising from cancellation of the matured contracts is allowed in favour of the assessee. Thus, this part of the ground of the assessee is allowed. 5. Further, we find that this issue has also been decided by the Special Bench of the Tribunal, Mumbai Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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