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2013 (5) TMI 686 - HC - Income TaxForward contract cancellation loss - whether be treated as business loss - Held that:- As decided in CIT vs. Friends and Friends Shipping Pvt. Ltd [2013 (5) TMI 458 - GUJARAT HIGH COURT] as relying on Badridas Gauridu (P) Ltd. [2003 (1) TMI 61 - BOMBAY High Court] & Soorajmull Nagarmull case [1980 (9) TMI 69 - CALCUTTA High Court] the expenditure would not be covered under section 43(5) of the Act as speculative transaction. Assessee was not a dealer in foreign exchange therefore, foreign exchange contracts were booked only as incidental to the assessee's regular course of business. Under section 43(5) “speculative transaction” has been defined to mean a transaction in which a contract for the purchase or sale of commodity is settled otherwise than by the actual delivery or transfer of such commodity. However, as state above, the assessee was not a dealer in foreign exchange. In order to hedge against losses, the assessee had booked foreign exchange in the forward market with the bank. However, the export contracts entered into by the assessee for export in some cases failed. Thus the assessee was entitled to claim deduction as a business loss. In favour of assessee.
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