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TMI Blog2016 (5) TMI 1529X X X X Extracts X X X X X X X X Extracts X X X X ..... hange loss on forward contracts. 3. In Revenue's appeal, the main grievance of Revenue is with regard to findings of the Ld.CIT(A) that order passed u/s.144 is not tenable. 4. The brief facts of the case are that the assessee is a domestic company, engaged in the business of manufacturing and export of fruit pulps. The assessee filed its e-return on 30.09.2009 admitting 'Nil' income under the normal provisions of the Act. The liability to tax u/s.115JB as per this return was 93,47,952/-. Subseqently, the case was selected for scrutiny and the assessment u/s.143(30 r.w.s.144 of the Act was completed on 15.02.2011 after making certain disallowances. While passing the order, the AO mentioned that he has framed the assessment u/s.144 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g due opportunity to the assessee. 6. Hence, the appeal of Revenue is partly allowed for statistical purposes. 7. Coming to the assessee's appeal, the facts of the case are that the assessee claimed forex fluctuation loss. The AO observed that the assessee had hedged the export receivables by entering into forward contracts with SBI and ICCI Bank the loss on such account was Rs. 93,30,000/-, further three transactions noted on 28.02.2009 and 28.02.2009 by which contracts have been eventually settled with SBI and the loss was Rs. 1,94,07,300/-. Further, AO observed that apart from these, forward contracts entered into by the assessee in SBI and ICICI Banks have not been settled through actual delivery and he portion of turnover involved in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising out of speculative transaction. In the present case, the assessee, as already indicated, has been dealing in shares where delivery was in fact taken and also in shares where delivery was not ultimately taken. In other words, the assessee has been dealing in actual selling and buying of shares as also dealing in shares only for the purpose of settling the transaction otherwise than by actual delivery. The question arise whether the losses arising out of the dealings and transaction in which the assessee did not ultimately take delivery of the shares or give delivery of the shares could be set off against the income arising out of the dealings and transactions in actual buying and selling of shares. An answer to this question is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peculation business. The assessee, in the present case, principally is a share broker, as already indicated. The assessee is also in the business of buying and selling of shares for self where actual delivery is taken and given and also in buying and selling of shares where actual delivery was not intended to be taken or given. Therefore, the entire transaction carried out by the assessee, indicated above, was within the umbrella of speculative transaction. There was, as such, no bar in setting off the loss arising out of derivatives from the income arising out of buying and selling of shares. This is what the learned Tribunal has done. 9. From the above decision of the Calcutta High Court in the case of Baljit Securities Pvt. Ltd. cited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions entered into by it in Foreign Exchange cannot be held to be hedging transactions. As the assessee was dealing in diamonds and FC entered into only for diamonds would have been covered by the proviso (a) to the section 43(5)of the Act. As held by the Hon'ble High Court of Calcutta in the matter of Gourepore Co. Ltd ,onus was on the assessee to prove that the transactions in question were not of a speculative nature. ITAT was of the opinion that it had failed to discharge the onus cast upon him by the statute. It was also not able to contradict the finding of fact that booking and cancellation of FC of foreign exchange were not in respect of specified export or import. Besides, finding of fact given by the Revenue Authorities rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss derivative transaction has no proximity with export turnover and the Assessing Officer is directed to compute accordingly. Further, the Assessing Officer has to see whether there is any premature cancellation of forward contract of foreign exchange and that transaction should be taken out for the purpose of considering the business loss and only the transactions which are completed to be considered for the purpose of determining the business loss from these foreign exchange forward contract. With this observation, we remand this issue to the file of the Assessing Officer for fresh consideration. 7. Before us, the ld. Representative relied on the judgment of Gujarat High Court in CIT vs Friends and Friends Shipping P. Ltd, [2013] 217 Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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