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2018 (12) TMI 1499 - ITAT INDOREDisallowance in respect of Hedging Loss - assessee has achieved the gross turnover at ₹ 112.75 crores approx - Held that:- For instance the assessee being in the business of trading of soya agrees to make supply to a customer for 12 months at an agreed price. To honour such contract regular purchase/supply of soya would be needed by the assessee. The prices of such commodities are bound to fluctuations. If the assessee in order to guard against the loss (if any) from price fluctuation against the specific contract for supply of goods, enters into another contract being speculative in nature then the case may fall under proviso (a) of the Section 43(5) of the Act. However in the instant case there is no such detail available to show that the alleged transactions entered on the portal of NCDEX were entered to counter or hedge the probable loss from the contract for actual delivery of goods. The loss from the alleged contracts giving rise to the liquidated damages of ₹ 37,88,391/- do not fall under proviso (a) of Section 43(5) and therefore no interference is called for in the finding of CIT(A) confirming the disallowance thereby treating the alleged loss of ₹ 37,88,391/- as speculation loss. However the assessee will be at liberty to set off the alleged speculation loss against the speculation profits if any during the year or in the subsequent years as allowable under provisions of Section 73 which provides for set off and carry forward or brought forward loses of speculation business. - Decided against assessee. Disallowance u/s 14A - Held that:- From perusal of the finding of CIT(A) while adjudicating the issue of disallowance of interest expenditure made by the A.O, we find that the alleged amount sustained by CIT(A) is not with regard to disallowance u/s 14A of the Act rather it is the addition sustained u/s 36(1)(iii) of the Act for the amount of interest paid in respect of amount invested in equity shares otherwise than for the purposes of business or profession. Our view get further fortified to the fact that the assessee has itself accepted that interest bearing funds were applied for making interest in the equity shares of ₹ 88,00,000/- of M/s. Girdharilal Sugar & Allied Industries Limited. Assessee has placed reliance on plethora of judgments but after examining the facts of the assessee’s case we find that none of the judgments and the decisions are applicable on the facts of the assessee. We in view of our above discussions find no reason to interfere in the findings of Ld.CIT(A) and therefore confirm the disallowance of ₹ 6,82,287/- and ₹ 1,73,382/- which the assessee has itself accepted while preparing the income tax return.- Decided against assessee.
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