Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (11) TMI 75 - AT - Income TaxMark to market loss - Unrealized foreign exchange forward contract losses treated as contingent in nature - AO noted that the aforesaid loss on account of exchange fluctuation on forward cover contracts not crystallised and is in the nature of notional loss - Assessee said such ‘mark to market’ (MTM) gains arising in the subsequent A.Y. 2013-14 has also been offered for taxation in tune with accounting policy and claimed that such fluctuation losses are a fait accomopli and not a notional loss of contingent nature - HELD THAT:- The issue is squarely covered in favour of the assessee by plethora of judgments which in unequivocal terms have held that ‘mark to market’ loss on such future and forward contracts are not a notional loss of contingent nature and the loss stands crystallized at the end of the year notwithstanding the continuance and spilling over of the contract to next year. We also simultaneously take note of the plea of the assessee that the claim has been made in consonance with Accounting Standards prescribed by ICAI. Besides, the gains arising in A.Y. 2013-14 due to devaluation of foreign exchange has also been similarly offered for taxation. Supreme Court in the case of CIT vs. Woodward Governor India Pvt. Ltd. [2009 (4) TMI 4 - SUPREME COURT] has considered such losses as allowable and not of contingent in nature. Similar view has been taken by the Co-ordinate Bench in the case of Investmentor Securities Limited [2018 (5) TMI 2161 - ITAT AHMEDABAD] and M/s. SAL Steel Ltd. [2017 (1) TMI 1822 - ITAT AHMEDABAD] We thus concur with the view taken by the CIT(A) that loss occurred due to such fluctuation in forward contract is a ordinary business loss and not merely a notional loss of provisional nature. We thus decline to interfere with the first appellate order.
|