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2017 (1) TMI 673 - AT - Income TaxLoss arising out of fluctuation in forward foreign exchange contracts due to adverse movement of foreign currency exchange rate - Held that:- Hon’ble Supreme Court in the case of Woodward Governor India P. Ltd. (2009 (4) TMI 4 - SUPREME COURT) relied upon by the assessee will be applicable as the losses are towards hedging against export receivable in foreign currency outstanding as at year end towards export of polished diamonds undertaken by the assessee and cannot be categorized as notional loss or speculative loss as per provisions of Section 43(5) of the Act. CIT(A) has allowed the loss as deduction while computing income of the assessee being arising out of fluctuation in forward foreign exchange contracts due to adverse movement of foreign currency exchange rate at year end as the said forward foreign exchange contracts are backed by export receivables outstanding as on 31- 03-2009 and we donot find any perversity in the order of learned CIT(A) as learned DR could not point any defect/mistake in the finding of learned CIT(A) , which we confirm/sustain and the grounds raised in the Revenue appeal is dismissed. With Respect to the deduction disallowed by the learned CIT(A) arising out of fluctuation in foreign currency rates on forward foreign exchange contracts which are not backed by the export receivables but are stated to be backed with confirmed export orders against which the assessee had stated to have purchased stock and such stock being held by the assessee as on 31-03-2009 with respect to the confirmed export orders in hand , as against which the exports are stated to be made in subsequent financial year, needs verification by the AO of the contentions of the assessee , and hence interest of justice will be best served if the matter is set aside and restored to the file of AO for verification of contentions of the assessee and for fresh determination of the matter on merit in accordance with our directions as contained in this order .
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