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TMI Blog2018 (1) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(iii) on the plea that assessee was having sufficient own funds for investment in subsidiary company. 3. At the outset, learned AR placed on record the order of the Tribunal for A.Y.2008-09 dated 11/09/2017, wherein both the issues raised by assessee during the year under consideration were decided in favour of the assessee. We had carefully gone through the orders of the Tribunal wherein disallowance made u/s.14A was deleted by Tribunal after observing as under:- "6. We heard the rival submissions and gone through the orders of the tax authorities below. We have also gone through the case law relied upon before us. From the computation statement as well as the Balance Sheet as submitted by the assessee we noted that the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal. We have gone through the order of the Tribunal dated 11/09/2017, wherein the Tribunal concluded as under:- "We have heard the rival submissions and carefully considered the same along with the orders of the tax authorities below. We have gone through the provisions of Section 43(5) which defines speculative transaction. We noted that as per the definition given in sub-section (5) the transaction entered into cannot be treated to a speculative transaction. The definition of speculative transactions under section 43(5) is an exhaustive one and the term 'commodity' including shares and stocks but does not include currency. (a) The term 'commodity' is defined neither in the Income-tax Act nor in the General Clauses Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is, therefore, directly rebutted in view of the legal impossibility and in view of the fact that foreign currency was neither commodity nor shares." (f) The Special Bench of ITAT Kolkata in the case of Shree Capital Services Ltd. v. ACIT 121 ITD 498 has held that derivatives with underlying as shares and securities should be also considered as commodities as the underlying shares and securities as specifically included within the term commodities. Accordingly, transactions in security derivatives are subject to the provisions of S. 43(5). However, a currency cannot be termed as a commodity so as to attract the provisions of S. 43(5). Jurisdictional Bombay High Court in the case of Badridas Gauridu (P) Ltd. 261 ITR 256 has held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Assessing Officer also in the Assessment Order does not find that the transaction entered into by the Respondent assessee was speculative in nature. It further holds that at no point of time did Revenue challenge the assertion of the Respondent assessee that the activity of entering into forward contract was in the regular course of its business only to safeguard against the loss on account of foreign exchange variation. Even before the Tribunal, we find that there was no submission recorded on behalf of the Revenue that the Respondent assessee should be called upon to explain the nature of its transactions. Thus, the submission now being made is without any foundation as the stand of the assessee on facts was never disputed. So far a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cidental 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." 14. Similarly the Hon'ble Bombay High Court in the case CIT vs. M/s. London Star Diamond Co. (India) Pvt. Ltd. in appeal No. 712 of 2014 vide its order dated 19th October, 2016 on similar question decided the issue in favour of the assessee. Following the decision of the CIT vs. M/s. D. Chetan & Co. again when similar issue went before the Hon'ble Bombay High Court in ITA No. 1440 of 2014 in the case of CIT vs. M/s. Jaimin Jeweller Exports Pvt. Ltd. the Hon'ble High Court vide its order dated 17th February, 2017 decided the issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, Department did not file any appeal and accepted assessee's contention. 10. We have considered rival contentions and found from record that the assesses has incurred expenses on behalf of certain foreign subsidiaries and Indian subsidiary and shown them under the head Advances Recoverable. The assessee has not made any non business advance to the these companies, but these amount represents various debits in the nature of sale of spares, royalty receivable, service charges and the expenses incurred on their behalf such as traveling expenses, establishment expenses, financial guarantees, communications expenses, etc. The assessee does not have system of charging interest on such debits of expenses incurred on their behalf. Such adv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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