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2020 (1) TMI 1151 - HC - Income TaxDisallowance of loss of foreign exchange - speculative loss OR business loss - HELD THAT:- Assessee had entered into foreign exchange export contracts with banks to the extent of its export orders. In other words, every foreign exchange forward contract was against a specific export order. Therefore, Tribunal held that assessee did not deal in foreign exchange but had entered into foreign exchange forward contract with banks to safeguard itself against possible foreign exchange losses on account of export sale proceeds to be received. Tribunal concurred with the view taken by the Commissioner of Income Tax (Appeals) that these transactions were not speculative in nature and the resultant foreign exchange losses were consequently not speculated loss but allowable business loss. Such contracts were incidental to the assessee’s business of manufacture and export of fruit pulp and allied products and therefore, did not represent speculative transactions. As referred to and relied upon by the Tribunal, this was also the view taken by this court in Badridas Gauridu case [ 2003 (1) TMI 61 - BOMBAY HIGH COURT ] This position has been again reiterated in Commissioner of Income-Tax Vs. D. Chetan and Company [2016 (10) TMI 629 - BOMBAY HIGH COURT] held that forward contract in foreign exchange when incidental to carrying on business of cotton exporter and done to cover up losses on account of differences in foreign exchange valuations, would not be speculative activity but a business activity. - Decided in favour of assessee.
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