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2016 (3) TMI 682 - RAJASTHAN HIGH COURT

2016 (3) TMI 682 - RAJASTHAN HIGH COURT - TMI - Forward booking of foreign exchange - whether was a speculative transaction which cannot be allowed for set off against normal business income? - CIT(A) has allowed set off by holding that a hedging loss is to be treated as business loss and is allowable to set off against business and profit also confirmed by ITAT - Held that:- CIT(A) has recorded a finding of fact that the assessee had made contract with the Bank to cover up the risk of fluctuati .....

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Tax Act, 1961 ('the Act') is directed against the order dated 26.11.2013 passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur ('the Tribunal'), whereby the appeal filed by the appellant against the order dated 19.3.2013 passed by the Commissioner of Income Tax (Appeals), Jodhpur ('the CIT(A)') has been dismissed. The Assessing Officer ('A.O.') by its assessment order dated 30.12.2011 for assessment year 2009-2010, inter-alia came to the conclusion t .....

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s including the judgment of Bombay High Court in CIT v. Badridas Gauridu (P) Ltd. : 261 ITR 256, held as under:- 4.7. It is clear that hedging transactions are not deemed to be speculative transaction. Such transaction are entered into by manufacturer and merchants in the course of the business to source against loss through future price fluctuation. In cases where there is actually delivery or transfer of the commodity or goods takes place, the transaction would not amount to speculative transa .....

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at the assessee was not engaged in the transaction of F & O and commodities and shares which is done electronically; assessee is not a dealer in foreign exchange; the foreign exchange contract booked by the assessee was incidental to the regular business and was done in normal course of business, which is a hedging contract. Feeling aggrieved, the Revenue filed appeal before the Tribunal. The Tribunal, after hearing the parties, came to the following conclusion and dismissed the appeal : 4. .....

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