TMI Blog2020 (10) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... or the foregoing reasons, we find no ground to interfere with the impugned order passed by the Tribunal. - Decided against revenue. - T.C.A.No.271 of 2020 - - - Dated:- 29-9-2020 - HONOURABLE MR.JUSTICE T.S. SIVAGNANAM and HONOURABLE MRS. JUSTICE V.BHAVANI SUBBAROYAN For Appellant : Mr. T.R. Senthilkumar, SSC assisted by Ms. K.G. Usharani, JSC For Respondent : Mr. A.S. Sriraman Judgment was delivered by T.S.SIVAGNANAM,J This appeal, filed by the Revenue under Section 260A of the Income Tax Act, 1961 ( the Act for brevity), is directed against the order dated 11.6.2019 passed by the Income Tax Appellate Tribunal, Bench B Chennai (for short, the Tribunal) in ITA.No.131/Chny/2016 for the assessment year 2009-10. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law raised for consideration are as follows : The assessee company is engaged in the business of manufacture and sale of cotton yarn, fabrics, garments and generation and sale of electricity. For the assessment year under consideration namely AY 2009-10, they filed the return of income on 21.9.2009 declaring a total loss of ₹ 24,29,95,888/- under normal provision and book profit of ₹ 6,99,37,975/- under Section 115JB of the Act. The assessee claimed business loss, which was adjusted against general reserve account and the current year loss was booked in the profit and loss account under the head 'administration expenses'. The Assessing Officer disallowed the business loss and treated it as a speculative loss. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aragraph 7 of the impugned order. 8. The Tribunal referred to (i) the decision of the High Court of Bombay in the case of CIT Vs. Badridas Gauridu P. Ltd. [reported in (2003) 261 ITR 256] and (ii) another decision of the Bombay High Court in the case of CIT Vs. D.Chetan Co. [reported in 390 ITR 36] and held that the loss incurred on foreign exchange derivative could not be disallowed holding to be a speculative loss; that it was important to note that foreign exchange derivative transaction partook the character underlying the transaction of foreign exchange; and that if the transaction, in respect of which derivative transaction was undertaken, was capital in nature, even the derivative transaction would also be capital in nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.9.2020] wherein one of the substantial questions of law, which fell for consideration, was as to whether the Tribunal was right in holding that the loss incurred on account of cancellation of forward contracts was not speculative losses falling within the provisions of Section 43(5) of the Act. The said question was answered in favour of the assessee on the following lines: 26. ........Be that as it may, we have considered the reasons assigned by the Tribunal in the assessee's own case for the earlier assessment year wherein the Tribunal rightly took note of the earliest decision of the Calcutta High Court on the said point in the case of Soorajmull Nagarmull and pointed out that under Section 43(5) of the Act, 'speculative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts were booked only as incidental to the assessee's regular course of business. The Tribunal has recorded a categorical finding to this effect in its order. The Assessing Officer has not considered these facts. Under section 43(5) of the Income-tax Act, speculative transaction has been defined to mean a transaction in which a contract for the purchase or sale of a commodity is settled otherwise than by the actual delivery or transfer of such commodity. However, as stated above, the assessee was not a dealer in foreign exchange. The assessee was an exporter of cotton. In order to hedge against losses, the assessee had booked foreign exchange in the forward market with the bank. However, the export contracts entered into by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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