9911796707
TMI Blog2012 (12) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds:- "The Commissioner of Income-tax (Appeals)-XXXI, Mumbai [hereinafter referred to as the CIT(A)] erred in upholding the action of the Assistant Director of Income-tax (International Taxation) - 1(2), Mumbai (hereinafter referred to as the AO) in taxing the net profit of Rs. 2,93,47,992 made on actual purchase and sale of currency pursuant to underlying forex contracts and further erred in treating it as 'income from other sources'. 2. The CIT(A) ought to have held that as the purchase and sale of foreign currency has been done as part of hedge contracts entered into by them to protect its investments from foreign currency fluctuations, such income constitutes business income not chargeable to tax. 3. Without prejudice to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals), the main plank of the argument of the assessee was:- (i) The income represents business income of the appellant company and in the absence of a PE, the same is not chargeable to tax. (ii) Without prejudice, the differential can only be classified as a capital receipt not chargeable to tax as the underlying transaction is on investment account and not on trading account. It is further submitted that as there is no cost to the assessee in respect of the forward exchange contract, the differential receipt constitutes a capital receipt not exigible to capital gains. (iii) In any event and without prejudice, the differential cannot be classified under the head income from other sources and at best it would derive its charact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v/s ADIT, ITA no.6525/Mum./2009, which has followed the Special Bench decision of Apollo Tyers Ltd. (supra), Citicorp Investment Bank Singapore Ltd. v/s DDIT (IT), [2012] 24 Taxman.com 211, Credit Suisse Singapore Ltd. v/s ADIT, [2012] 24 Taxman.com 66 and DDIT v/s D.B. International Asia Ltd., ITA no.2954/Mum./2010. He submitted that in view of the above decisions, such an amount has to be treated as capital receipt liable to be taxed as capital gain. 7. On the other hand, the learned Departmental Representative relied upon the findings of the Commissioner (Appeals) as well as by the Assessing Officer. 8. We have carefully considered the rival contentions and the orders passed by the Commissioner (Appeals) as well as by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. The dispute is regarding nature of income arising from early settlement of forward foreign exchange contract. There is no dispute that the forward contract had been entered into by the assessee to safeguard the foreign exchange loan taken for purchase of debentures. There is also no dispute that debentures are capital assets and the income from sale of which has been treated as capital gain. The only dispute is regarding nature of income from the settlement of forward contract. We find that the same issue has already been considered by the Tribunal in the case of sister concern of the assessee i.e. Citicorp Banking Corporation Bahrain [ITA No. 6525/M/09j for the assessment year 2005-06. The Tribunal in the said case referred to the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee should be given benefit of DTAA only it was proved that money had been sent to Singapore. But we find that no dispute has been raised by authorities below regarding money being transferred to Singapore nor any such issue is in dispute before us. No doubt the respondent can raise an additional plea for the first time before the Tribunal in support of order of CIT(A) but same should be based on facts already on record. The plea raised on the presumption that money may not have been transferred to Singapore cannot be admitted at this stage. The dispute raised before us is only with regard to the nature of income from early settlement of forward foreign exchange contract taken to safeguard the foreign exchange loan which had been a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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