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2016 (4) TMI 428 - ITAT CHENNAI

2016 (4) TMI 428 - ITAT CHENNAI - TMI - Business loss - treated as speculation loss in stead of loss in foreign currency transactions - Held that:- In the present case, it is admitted that the transaction carried out by the assessee does not fall in any exceptions provided above and it is not at all carried out through any recognized stock exchange. The claim of the assessee is rightly denied by the AO as well as by CIT (Appeals) as business loss, as there is no relationship with term loan avail .....

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see in earlier para were delivered on different set of facts and those transactions fall under the exceptions provided in sec.43(5) of the Act - Decided against assessee

Additions made towards gratuity payment - Held that:- CIT(Appeals) observed that the assessee has applied to the Commissioner of Income-tax, Circle-I, seeking approval for group gratuity scheme on 19.3.2007 and the similar claim was allowed in the asst. year 2007-08, 2008-09 and 2009-10. On this basis, the CIT(Appeals .....

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ourt in the case of Velayudhaswamy Spinning Mills (P) Ltd. v. ACIT (2010 (3) TMI 860 - Madras High Court ), wherein it was held that losses and depreciation of the years earlier to the initial assessment year which have already been absorbed against the profits of other business cannot be notionally brought forward and set off against the profits of the eligible business for computing the deduction u/s.80IA of the Act and there is no mandate in sec.80IA(5), claim of deduction u/s. 80IA of the Ac .....

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[2016 (1) TMI 75 - ITAT CHENNAI ] the assessee had not established that the non-resident had rendered services abroad and there was no business connection in India by producing relevant records, viz., either agreement entered into by the assessee with them or correspondence took between the parties. Without examining these details, one is not in a position to decide the nature of services rendered by the non-resident agent.Therefore, it is appropriate to remit the entire issue back to the file o .....

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sessment years 2010-11 and 2011-12. Since, the issues involved in these appeals are common, these are clubbed together, heard together and disposed off by this common order for the sake of convenience. 2. First, we take up the assessee's appeal in ITA Nos.775 & 2685/Mds/2014 : 2.1 The ground in these appeals is with regard to confirming the addition made by the Assessing Officer by treating the business loss as speculation loss in stead of loss in foreign currency transactions. 3. The fa .....

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nsaction. Three contracts were signed between 22.2.2007 and 3.7.2007 and signed for one year. Since, loss incurred on maturity after one year, the same contracts were with fresh contract without debiting the loss for one more year. Subsequent year also incurred loss and the same was claimed as loss by the assessee. The assessee entered into a contract for purchase and sale of US Dollars/Swiss Franc which are commodities and the contract is finally settled not by the actual delivery of the dollar .....

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rrency only and this loss bears no nexus to the term loan which indicates that it was not done to reduce the interest. The assessee is not a dealer in stocks and shares and is not a member of a forward market or stock exchange, nor was the transaction carried out through a recognized stock exchange. Therefore, the exceptions provided in sec.43(5) are not applicable to the assessee's case and accordingly, the Assessing Officer rejected the loss claimed by the assessee. On appeal, CIT(Appeals) .....

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015 2) M/s. S.P.Apparels Ltd. v. DCIT [ITA No.1327/Mds/2014 dt. 17.4.2015] 3) M/s. Cotton Blossom (India) P. Ltd. v. ACIT [ITA No.1642/Mds/13 dated 30.1.2015] 4) M/s. SCM Garments (P) Ltd. v. DCIT & Others [ITA No.1645 & 2275/Mds/2014 dated 27.2.2015] 5. The ld. DR relied on the judgment of the Bombay High Court in the case of CIT v. Shri Bharat R. Ruia(HUF) [337 ITR 452]. 6. We have heard both the parties and perused the material on record. It is appropriate to go through the provisions .....

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anting business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or merchandise sold by him; or (b) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations; or (c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing .....

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t. However, in the present case, it is admitted that the transaction carried out by the assessee does not fall in any exceptions provided above and it is not at all carried out through any recognized stock exchange. The claim of the assessee is rightly denied by the AO as well as by CIT (Appeals) as business loss, as there is no relationship with term loan availed by the assessee or interest payable on the said term loan with loss incurred by the assessee and in view of the judgment of the Bomba .....

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round of appeal of the assessee is rejected. 7. Coming to the Revenue's appeal in ITA Nos.1557 & 2942/Mds/14, the first common ground is with regard to deleting the additions made towards gratuity payment when there is no mandatory approval from the Commissioner of Income-tax. The CIT(Appeals) observed that the assessee has applied to the Commissioner of Income-tax, Circle-I, seeking approval for group gratuity scheme on 19.3.2007 and the similar claim was allowed in the asst. year 2007- .....

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ground of appeal is allowed for statistical purposes. 8. The next common ground is with regard to allowability of deduction u/s.80IA of the Act by following the judgment of the Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. v. ACIT (340 ITR 477), wherein it was held that losses and depreciation of the years earlier to the initial assessment year which have already been absorbed against the profits of other business cannot be notionally brought forward and set off against .....

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The next ground in Revenue's appeal in ITA No.1557/Mds/2014 is with regard to allowability of expenditure said to be incurred towards sales commission though there was no deduction of TDS by the assessee on that payment. 10. The assessee made the payment to non-resident foreigners said to be expenditure towards sales commission. The same was disallowed by the AO on the reason that there is no TDS on that payment. However, the Commissioner of Income-tax(Appeals) allowed the claim of the asses .....

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Fashions Ltd. (156 ITD 280), wherein it was held as under : "Section 40(a)(i) makes it clear that the disallowance shall be made in case of any payment made which is chargeable under this Act and is payable outside India or in India to a non-resident not being a company or to a foreign company on which tax is deductible at source. Therefore, the first condition required to be fulfilled is the payment must be chargeable under the Act, thereafter the question of deduction of tax will arise. .....

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