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2020 (9) TMI 1022 - HC - Income TaxDisallowance u/s 14A r.w.r. 8D - Whether no exempt income received by assessee? - non recording of satisfaction - HELD THAT:- To apply the provisions of Section 14A AO should have recorded a finding as to how Sub-Section (1) of Section 14A would stand attracted. In the absence of any such finding, the disallowance made was not justifiable. AO straightaway proceeded to the second limb of Section 14(2) which is impermissible. The Tribunal rightly took note of the decision in the case of Redington India Ltd. [2017 (1) TMI 318 - MADRAS HIGH COURT] wherein it was held that the provisions of Section 14A r.w.r 8D cannot be made applicable in vacuum i.e in the absence of exempt income. Therefore, we find that the Tribunal was right in deciding the issue against the Revenue and in favour of the assessee. Disallowance of foreign exchange fluctuation loss - HELD THAT:- As considered the reasons assigned by the Tribunal in the assessee's own case for the earlier assessment year wherein the Tribunal rightly took note of the earliest decision on the said point in the case of Soorajmull Nagarmull [1980 (9) TMI 69 - CALCUTTA HIGH COURT] and pointed out that under Section 43(5) of the Act, '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. Assessee herein was not a dealer in foreign exchange, but was an exporter of cotton. Therefore, the Tribunal rightly took note of the transaction done by the assessee though, in order to hedge against the losses, the assessee booked foreign exchange in the forward market with the bank. Export contracts entered into by the assessee for the export of cotton in some cases failed and therefore, the assessee was held to be entitled to claim deduction in respect of the said amount as business loss. - Decided in favour of assessee.
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