TMI Blog2014 (7) TMI 1212X X X X Extracts X X X X X X X X Extracts X X X X ..... osition that the payments for imports may not be due as on a particular date and vice versa. Having regard to the overall circumstances the learned CIT(A) applied the ratio of the Hon'ble jurisdictional High Court decision in the case of CIT vs. Badridas Gauridu Pvt. Ltd. [2003 (1) TMI 61 - BOMBAY High Court] to hold that the loss incurred by the assessee cannot be treated as a notional loss but an actual loss which is allowable as deduction. - ITA No. 2670/Mum/2013 - - - Dated:- 9-7-2014 - Shri D. Manmohan, Vice President and Shri N.K. Billaiya, Accountant Member Appellant by: Shri Vikash Agarwal O R D E R Per D. Manmohan, V.P. This appeal by the Revenue is directed against the order passed by the CIT(A)-27, Mumba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, it cannot be allowed in the year under consideration. On an appeal filed by the assessee the learned CIT(A) accepted the contention of the assessee that the loss suffered by him cannot be considered as speculation loss but it is a business loss. In this regard he observed as under: - 6. I have carefully considered the contents of the assessment order, appellant s submissions, Remand Report and the appellant s rejoinder thereof. At the outset, it is undisputed that except an amount of `50231/- being profit booked on MTM valuation, the entire loss claimed by the appellant was an actual loss incurred on cancellation of the forward contracts. Generally, foreign exchange forward contracts are entered as per the guidelines laid down by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the net exposure to foreign exchange. Further, legally speaking the forward contracts for purchase of dollars and sale of dollars are two different transactions that the appellant has to fulfill each contract separately as and when it matures. Thus, either on the practical front or on the legal front, the forward contract transactions cannot be considered in terms of netting off of foreign exchange realizable/payable. In view of the above discussion, I am unable to agree with the AC. that the net exposure to foreign exchange has to be compared with outstanding forward contracts in order to arrive at a conclusion whether such contracts were entered with an intent of speculation. That apart, without netting of the debtors and creditors, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... booked by MTM valuation, the entire loss claimed by the assessee was actual loss incurred on cancellation of the forward contracts. It is not the case of the Revenue that at a given point of time all the receivables and all the payables can be adjusted each other. There may be a position that the payments for imports may not be due as on a particular date and vice versa. Having regard to the overall circumstances the learned CIT(A) applied the ratio of the Hon'ble jurisdictional High Court decision in the case of CIT vs. Badridas Gauridu Pvt. Ltd. 261 ITR 256 to hold that the loss incurred by the assessee cannot be treated as a notional loss but an actual loss which is allowable as deduction. 6. The learned D.R. was unable to make ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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