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2018 (11) TMI 1104 - AT - Income TaxAssess the rental income under the head ‘Income from House Property’ and not 'income from other sources'. Allowability of busniss loss - decision to prematurely cancel the forward contracts - 'speculation loss’ OR ‘business loss’ - Held that:- The entire conspectus of facts and circumstances show that merely because assessee took a decision to prematurely cancel the forward contracts cannot be a ground to say that it is a ‘speculation loss’ and not a ‘business loss’, when otherwise entering of forward contracts in order to hedge against foreign exchange fluctuations with respect to import and export is accepted to be an activity carried out in the course of business. In fact, in the present case, assessee has sufficiently demonstrated that the action of premature cancellation of forward contracts was to contain avoidable future loss on account of adverse movement in the value of foreign exchange and the circumstances under which such a decision was taken, has also been sufficiently narrated. In the absence of any controversion of the same, we find that the assessee has discharged the onus cast on it to explain the incurrence of loss in question and, therefore, we deem it fit and proper to allow the stand of the assessee of treating the amount of ₹ 3,55,95,000/- as a ‘business loss’. Thus, on this aspect, assessee succeeds. Addition u/s 14A - disallowance of interest expenditure - Held that:- In any case, in the earlier assessment year of 2009-10, no interest disallowance was made by the Assessing Officer himself qua the said investment. The said assertion of the appellant is borne out of record inasmuch as in the earlier paras we have already dealt with the disallowance u/s 14A of the Act for Assessment Year 2009-10 wherein the only investment was in the shares of BSE and the Assessing Officer himself has not made any disallowance out of interest expenditure. In such a factual background, the disallowance computed by the Assessing Officer out of interest expenditure by applying Rule 8D(2)(ii) of the Rules is misplaced and is hereby directed to be deleted. So far as the disallowance out of Administrative expenses made by the Assessing Officer by applying Rule 8D(2)(iii) of the Rules is concerned, no specific arguments have been raised before us and the same is hereby affirmed. Thus, on this aspect, assessee partly succeeds.
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