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TMI Blog2016 (4) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... ec.43(5) of the Act - Decided against assessee Additions made towards gratuity payment - Held that:- CIT(Appeals) observed that the assessee has applied to the Commissioner of Income-tax, Circle-I, seeking approval for group gratuity scheme on 19.3.2007 and the similar claim was allowed in the asst. year 2007-08, 2008-09 and 2009-10. On this basis, the CIT(Appeals) allowed the claim of the assessee in the asst. years under consideration. However, there is mandatory requirement of approval of gratuity scheme by the CIT, but no such approval was produced by the assessee, before us. In view of this, we remit this issue to the file of AO with a direction to decide the issue after examining whether there is mandatory requirement of approval of gratuity scheme by the competent authority. Allowability of deduction u/s.80IA - Held that:- Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. v. ACIT (2010 (3) TMI 860 - Madras High Court ), wherein it was held that losses and depreciation of the years earlier to the initial assessment year which have already been absorbed against the profits of other business cannot be notionally brought forward and set off against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions undertaken by the assessee with State Bank of India(SBI). The assessee entered into 13 numbers of SWAP options contract with SBI and the swaps were made against Swiss Franc(CHF). Under currency swap, he term loan was taken as a notional loan for foreign exchange of said transaction. Three contracts were signed between 22.2.2007 and 3.7.2007 and signed for one year. Since, loss incurred on maturity after one year, the same contracts were with fresh contract without debiting the loss for one more year. Subsequent year also incurred loss and the same was claimed as loss by the assessee. The assessee entered into a contract for purchase and sale of US Dollars/Swiss Franc which are commodities and the contract is finally settled not by the actual delivery of the dollar or the Swiss Franc but by paying the loss in Indian Rupee computed on the notional purchase and sale of the foreign currency. Therefore, the ingredients of provisions of sec.43(5)(d) of the Act were not satisfied. Further, it was observed that the transaction has not been done for the purchase of raw-materials or merchandize or purchase of any capital goods, but stated to be conversion of term loan into a fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss in his holdings of stocks and shares through price fluctuations; or (c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member; [or] (d) an eligible transaction in respect of trading in derivatives referred to in clause [(ac)] of section 2 of the Securities Contracts (Regulation Act, 1956 (42 of 1956) carried out in a recognized stock exchange;] Shall not be deemed to be a speculative transaction. The claim of the assessee could be allowed only when it satisfies the exceptions provided in sec.43(5)(d) of the Act. However, in the present case, it is admitted that the transaction carried out by the assessee does not fall in any exceptions provided above and it is not at all carried out through any recognized stock exchange. The claim of the assessee is rightly denied by the AO as well as by CIT (Appeals) as business loss, as there is no relationship with term loan availed by the assessee or interest payable on the said term loan with loss incurred by the assessee and in view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning Mills (P) Ltd. v. ACIT(supra), the same is confirmed. Accordingly, this ground of appeal of the Revenue is dismissed. 9. The next ground in Revenue's appeal in ITA No.1557/Mds/2014 is with regard to allowability of expenditure said to be incurred towards sales commission though there was no deduction of TDS by the assessee on that payment. 10. The assessee made the payment to non-resident foreigners said to be expenditure towards sales commission. The same was disallowed by the AO on the reason that there is no TDS on that payment. However, the Commissioner of Income-tax(Appeals) allowed the claim of the assessee, as there is no referring of any technical or managerial service outside India and it is the payments made to non-residents as commission on sales procured and income earned by such non-residents could not be deemed to accrue or arise in India and allowed the claim of the assessee. Against this, the Revenue is in appeal before us. 11. We have heard both the sides and perused the material on record. In our opinion, similar issue was considered by the Tribunal in the case of ACIT v. Euro Leder Fashions Ltd. (156 ITD 280), wherein it was held as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X
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