Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (4) TMI 324 - AT - Income TaxRevision u/s 263 - currency Swap Loss on account of hedging of Rupee loan with Dollar loan through OTC contracts with Banks was speculative in nature [not excluded as per clause (d) to section 43(5) and was not allowable against income from non-speculative business - Held that:- Currency swap loss of ₹ 6.04 Crores was directly covered in favour of assessee by the decision of the jurisdictional High court in the case of CIT v. Friends and Friends Shipping Pvt. Ltd [ 2013 (5) TMI 458 - GUJARAT HIGH COURT], wherein assessee had entered into forward contracts with banks to hedge against any loss arising to fluctuation in foreign currency. In some cases, export could not be executed and assessee had to pay certain charges to banks. Assessee treated said charges as business loss and claimed deduction. However, Assessing Officer disallowed said loss holding it to be speculative in nature. Matter travelled up to Hon’ble High Court, wherein it was held that foreign exchange contracts as incidental to assessee’s export business and incurred loss in said contracts, said loss was not in nature of speculative loss but same was allowed as business loss. Thus, matter was decided in favour of assessee. In such situation, order passed by Assessing Officer cannot be said to be erroneous so as to be prejudicial to the interest of revenue. In response to query raised by Bench whether currency loss of ₹ 6.04 Crores consists of all the losses or any profit earned in this currency swap agreements. The Learned Authorized Representative drew our attention to pages 29 and 30 of the compilation where ledger account of currency swap was compiled. He also pointed out that in certain currency swap transactions, profit is also earned and hence, sum of ₹ 6.04 Crores is net figure of loss. Thus case on merit also tilt in favour of assessee. There is no dispute to the proposition that Assessing Officer’s order can be revised in case of assessee made no inquiry in the assessment order. But in case before us enquiry has been done. So it can not be said that Assessing Officer has passed order without any enquiry or application of mind. So, the cases relied by learned Departmental Representative does not help the Revenue. In view of above discussion, CIT was not justified in setting aside the order of Assessing Officer by invoking provision of 263 of Act because Assessing officer has decided the issue after making enquires as discussed above. Moreover, on merit also case tilt in favour of assessee. So order of CIT u/s. 263 is quashed. - Decided in favour of assessee.
|