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TMI Blog2014 (1) TMI 1680X X X X Extracts X X X X X X X X Extracts X X X X ..... O R D E R PER D. KARUNAKARA RAO, AM: This appeal filed by the Revenue on 31.10.2012 is against the order of the CIT (A)-27, Mumbai dated 24.8.2012 for the assessment year 2009-2010. 2. In this appeal, Revenue raised the following ground which reads as under: Whether on the facts and circumstances of the case and in law, the Ld CIT (A) has erred in holding that Mark to Market loss of ₹ 23,72,500/- arising on valuation of forward exchange contracts on the closing date of accounting year is not a notional loss and therefore, allowable. 3. Briefly stated relevant facts of the case are that the assessee is engaged in the business of import and export of diamonds. Assessee field the return declaring the total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing recognized as gain on loss in profit loss account. During the year under consideration assessee has recognized gain of ₹ 1,27,28,572/- by restating the receivables at closing rate. Assessee has followed the accounting standards for realizing the effect of the transactions undertaken during the year. During the proceedings before the Assessing Officer, assessee relied on the order of the ITAT in the case of DCIT vs. Bank of Bahrain and Kuwait (ITA Nos. 4404 1883/Mum./2004), wherein it was held that Mark to Market loss in respect of foreign exchange contracts debited to profit loss account is allowable. AO did not satisfy with the explanation given by the assessee and disallowed the said amount of ₹ 23,72,500/- by ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n earned on such revaluation was accepted and brought to tax in the respective years and there is no reason to arrive at a different conclusion at present merely because there is a loss during the year. Apparently, the AO was of the view that the appellant is not a dealer in foreign exchange unlike the Bank of Bahrain, and therefore, the said decision is not applicable to the facts of the case. It is not out of place to mention that the Hon ble Supreme Court, in the case of ONGC cited above, upheld the same principles that were laid down in the case of ONGC cited above upheld the same principles that were laid down in the case of Woodword Governor, and the loss was held allowable in similar circumstances, where the business of ONGC is not t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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