ITO, Tiruppur V. M/s.P.V. Apparels, Tiruppur

ITA 2153/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7916 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 18-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Keywords: Business income; Speculation loss
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 43(5); 73

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , ! ' . #$ % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.2153/MDS./2016 / ASSESSMENT YEAR : 2012-13 THE ITO, WARD 1(1), TIRUPUR. VS. M/S.P.V. APPARELS, G1,NETHAJI APPAREL PARK, N.H.47,COIMBATORE ROAD, ETTIVEERAPALAYAM, NEW TIRUPUR, TIRUPUR 641 666. [PAN AALFP 8231 F ] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : SHRI SHIVA SRINIVAS, JCIT D.R /RESPONDENT BY : NONE / DATE OF HEARING : 29 - 12 - 2016 / DATE OF PRONOUNCEMENT : 08 - 02 - 2017 , / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-3, COIMBA TORE DATED 29.04.2016 PERTAINING TO ASSESSMENT YEAR 2012-13. ITA NO.2153/16 :- 2 -: 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS-3) ERRE D IN DELETING THE DISALLOWANCE OF SPECULATION LOSS OF RS.1,06,21, 303/- ON ACCOUNT OF CANCELLATION OF FOREIGN CURRENCY CONTRAC T BY TREATING IT AS TRADING LOSS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS-3) OUGH T TO HAVE CONSIDERED THAT FORWARD CONTRACTS ARE NOT RELATABLE TO ANY SPECIFIC EXPORT BILLS OF THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS-3) FAIL ED TO CONSIDER THAT THE ASSESSEE HAS NOT ACTUALLY DELIVER ED THE FOREIGN CURRENCY. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS-3)OUGHT TO HAVE CONSIDERED THAT THE ASSESSEE HAD FAILED TO SUBSTANT IATE THAT THE TRANSACTIONS ARE IN RESPECT OF UNDERLYINGS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE RATIO IN THE CASE OF CIT VS BADRIDAS GAURIDHU (P) LTD 261 ITR 25 6 BORN., WHEREIN THE TRIBUNAL HAD GIVEN A CATEGORICAL FINDIN G OF FACT THAT FORWARD CONTRACTS ARE RELATABLE TO THE EXPORT BUSIN ESS AND ONLY SOME OF THE FORWARD CONTRACTS WERE CANCELLED AND IS DISTINGUISHABLE FROM THE FACTS OF THE ASSESSEES CA SE. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HA VE HEARD THE LD.D.R AND PERUSED THE MATERIAL ON RECORD. THE SIMILIAR ISSUE CAME FOR CONSIDERATION BEFORE THIS TRIBUNAL IN THE CASE OF COTTON BLOSSOM INDIA PVT LTD. VS. ACIT IN ITA NO.2153/16 :- 3 -: ITA NO.583/MDS./2014 & 1531/MDS./2015 FOR ASSESSMEN T YEARS 2009- 10 TO 2008-09 DATED 31.12.2015 WHEREIN THE TRIBUNAL HELD AS FOLLOWS:- 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ACCORDING TO THE LD. AR, THE ISSUE IS COV ERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESS EES OWN CASE FOR THE ASSESSMENT YEAR 2006-07. IN OUR OPINION, THIS ISSUE WAS COVERED BY THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUN AL IN THE CASE OF DCIT V. ASVINI FISHERIES PVT LTD. IN ITA NO.2246/MD S/2014 AND THE TRIBUNAL VIDE ITS ORDER DATED 18.12.2015 HAS OBSERV ED AS UNDER: 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. SIMILAR ISSUE WAS CONSIDERED B Y THIS TRIBUNAL WHERE ONE OF THE MEMBERS IS A PARTY, IN TH E CASE OF M/S MAJESTIC EXPORTS VS THE JOINT CIT IN I.T.A.NOS. 1336 AND 3072/MDS/2014, DATED 24.7.2015, WHEREIN IT HAS BEEN HELD AS UNDER: 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE ASSESSEE WAS ENGAGED I N THE BUSINESS OF MANUFACTURING AND EXPORT OF HOSIERY GAR MENTS. DURING THE COURSE OF EXPORT, THE ASSESSEE ENTERED I NTO DERIVATIVE CONTRACT. THE ASSESSEE INCURRED LOSS IN THIS TRANSACTION. THE ASSESSEE CLAIMED IT AS BUSINESS L OSS. ACCORDING TO THE ASSESSING OFFICER THIS LOSS WAS NO T BUSINESS LOSS AND IT IS A SPECULATIVE LOSS AND THIS TRANSAC TION IS SPECULATIVE IN NATURE AS SUCH THE LOSS INCURRED ON THIS TRANSACTION CANNOT BE SET OFF AGAINST BUSINESS INCO ME OF THE ASSESSEE. ACCORDING TO THE LD. AUTHORISED REPRESEN TATIVE FOR ASSESSEE, THE DERIVATIVE TRANSACTION CANNOT FALL UNDER SEC.73. EXPLANATION TO SEC.73 CREATES A DEEMING FICTION BY WHICH AMONG THE ASSESSEE, WHO IS A COMPANY, AS INDICATED IN THE SAID EXPLANATION DEALING WITH THE TRANSACTION OF SHARE A ND SUFFER LOSS, SUCH LOSS SHOULD BE TREATED TO BE SPECULATIVE TRANSACTION WITHIN THE MEANING OF SEC.73 OF THE ACT, NOTWITHSTA NDING THE FACT THAT THE DEFINITION OF SPECULATIVE TRANSACTIO N MENTIONED IN SEC.43(5) OF THE ACT, THE TRANSACTION IS NOT OF THAT NATURE AS THERE HAS BEEN ACTUAL DELIVERY OF THE SCRIPS OF SHA RE. AS PER THE DEFINITION OF SEC.43(5), TRADING OF SHARES WHICH IS DONE ITA NO.2153/16 :- 4 -: BY TAKING DELIVERY DOES NOT COME UNDER THE PURVIEW OF THE SAID SECTION. SIMILARLY, AS PER CLAUSE (D) OF SEC.43(5) , DERIVATIVE TRANSACTION IN SHARES IS ALSO NOT SPECULATION TRANS ACTION AS DEFINED IN THE SAID SECTION. THEREFORE, BOTH PROFI T/LOSS FROM ALL THE SHARE DELIVERY TRANSACTIONS AND DERIVATIVE TRANSACTIONS ARE HAVING THE SAME MEANING, SO FAR AS SEC.43(5) OF THE ACT IS CONCERNED. AGAIN, IN VIEW OF THE FACT THAT BOTH DE LIVERY TRANSACTIONS AND DERIVATIVE TRANSACTIONS ARE NON-SP ECULATIVE AS FAR AS SEC.43(5) IS CONCERNED, IT FOLLOWS THAT BOTH WILL HAVE THE SAME TREATMENT AS FAR AS APPLICATION OF EXPLANATION TO SEC.73 IS CONCERNED. THEREFORE, AGGREGATION OF THE SHARE TRADING PROFIT AND LOSS FROM DERIVATIVE TRANSACTIONS SHOULD BE DONE BEFORE THE EXPLANATION TO SEC.73 IS APPLIED. THE A BOVE VIEW HAS BEEN TAKEN BY SPECIAL BENCH OF THIS TRIBUNAL, M UMBAI BENCH, IN THE CASE OF CIT V. CONCORD COMMERCIAL PVT . LTD. (2005) 95 ITD 117 (MUM)(SB). IN THIS CASE, THE SPE CIAL BENCH HELD THAT : BEFORE CONSIDERING WHETHER THE ASSESSEES CASE IS HIT BY THE DEEMING PROVISION OF EXPLANATION TO SEC. 73 OF THE ACT, THE AGGREGATE OF THE BUSINESS PROFIT / LOSS HA S TO BE WORKED OUT BASED ON THE NON-SPECULATIVE PROFITS; EI THER IT IS FROM SHARE DELIVERY OR FROM SHARE DERIVATIVE . 8. FROM THE ABOVE, IT IS CONCLUDED THAT BOTH TRADING O F SHARES AND DERIVATIVE TRANSACTIONS ARE NOT COMING UNDER TH E PURVIEW OF SECTION 43(5) OF THE ACT WHICH PROVIDES DEFINITI ON OF SPECULATIVE TRANSACTION EXCLUSIVELY FOR PURPOSES OF SECTION 28 TO 41 OF THE ACT. AGAIN, THE FACT THAT BOTH DELI VERY BASED TRANSACTION IN SHARES AND DERIVATIVE TRANSACTIONS A RE NON- SPECULATIVE AS FAR AS SECTION 43(5) IS CONCERNED GO ES TO CONFIRM THAT BOTH WILL HAVE SAME TREATMENT AS REGAR DS APPLICATION OF THE EXPLANATION TO SECTION 73 IS CON CERNED, WHICH CREATES A DEEMING FICTION. NOW, BEFORE APPLIC ATION OF THE SAID EXPLANATION, AGGREGATION OF THE BUSINESS P ROFIT/LOSS IS TO BE WORKED OUT IRRESPECTIVE OF THE FACT, WHETHER IT IS FROM SHARE DELIVERY TRANSACTION OR DERIVATIVE TRANSACTIO N. 8.1 NOW, THIS VIEW HAS BEEN TAKEN BY CO-ORDINATE, CHENNAI IN THE CASE M/S. AISHWARYA & CO P. LTD IN I TA NO.860/MDS/2014, DATED 29.05.2015, WHEREIN THEY FOL LOWED ITA NO.2153/16 :- 5 -: THE JUDGMENT OF THE CALCUTTA HIGH COURT IN THE CASE OF M/S. BALJIT SECURITIES PVT. LTD. (88 CCH 313) WHEREIN HE LD AS UNDER:- CLAUSE (D) OF SECTION 43(5) BECAME EFFECTIVE WITH EFFECT FROM 1ST APRIL, 2006. THEREFORE, PRIOR TO 1ST APRIL, 200 6 ANY TRANSACTION IN WHICH A CONTRACT FOR THE PURCHASE OR SALE OF ANY COMMODITY INCLUDING STOCKS AND SHARES WAS PERIODICA LLY OR ULTIMATELY SETTLED OTHERWISE THAN BY THE ACTUAL DEL IVERY OR TRANSFER OF THE COMMODITY OR SCRIP WAS A SPECULATIV E TRANSACTION. SUB-SECTION 1 OF SECTION 73 PROVIDES A S FOLLOWS: (1) ANY LOSS, COMPUTED IN RESPECT OF A SPECULATIO N BUSINESS CARRIED ON BY THE ASSESSEE, SHALL NOT BE SET OFF EX CEPT AGAINST PROFITS AND GAINS, IF ANY, OF ANOTHER SPECULATION B USINESS. THE RESULTANT EFFECT WAS THAT ANY LOSS ARISING OUT OF SPECULATIVE TRANSACTION COULD ONLY HAVE BEEN SET OFF AGAINST PR OFITS 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 SH ARES 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 DEALING S AND TRANSACTION IN WHICH THE ASSESSEE DID NOT ULTIMATEL Y TAKE DELIVERY OF THE SHARES OR GIVE DELIVERY OF THE SHAR ES COULD BE SET OFF AGAINST THE INCOME ARISING OUT OF THE DEALI NGS AND TRANSACTIONS IN ACTUAL BUYING AND SELLING OF SHARES . AN ANSWER TO THIS QUESTION IS TO BE FOUND IN THE EXPLANATION APPENDED TO SECTION 73 WHICH READS AS FOLLOWS: EXPLANATION: WHERE ANY PART OF THE BUSINESS OF A COMPANY OTHER THAN A COMPANY WHOSE GROSS TOTAL INCOME CONSI STS MAINLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEAD S INTEREST ON SECURITIES, OR A COMPANY THE PRINCIPA L BUSINESS OF WHICH IS THE BU9SINESS OF BANKING OR THE GRANTIN G OF LOANS AND ADVANCES) CONSISTS IN THE PURCHASE AND SALE OF SHARES OF OTHER COMPANIES, SUCH COMPANY SHALL, FOR THE PURPOS ES OF THIS SECTION, BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSISTS OF THE PU RCHASE. IN ORDER TO RESOLVE THE ISSUE BEFORE US, THE SECTION H AS TO BE READ IN THE MANNER AS FOLLOWS: EXPLANATION : WHERE ANY PART OF THE BUSINESS OF A COMPANY ( . . . .. .. .. .. .. .. .. . .. .. . ) CONSIS T IN ITA NO.2153/16 :- 6 -: THE PURCHASE AND SALE OF SHARES OF OTHER COMPANIES, SUCH COMPANY SHALL, FOR THE PURPOSES OF THIS SECTION, BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSISTS OF THE PURCHASE AND SALE OF S UCH SHARES. IT WOULD, THUS, APPEAR THAT WHERE AN ASSESSEE, BEIN G THE COMPANY, BESIDES DEALING IN OTHER THINGS ALSO DEALS IN PURCHASE AND SALE OF SHARES OF OTHER COMPANIES, THE ASSESSEE SHALL BE DEEMED TO BE CARRYING ON A SPECULATION BUS INESS. THE ASSESSEE, IN THE PRESENT CASE, PRINCIPALLY IS A SHA RE BROKER, AS ALREADY INDICATED. THE ASSESSEE IS ALSO IN THE BUSI NESS OF BUYING AND SELLING OF SHARES FOR SELF WHERE ACTUAL DELIVERY IS TAKEN AND GIVEN AND ALSO IN BUYING AND SELLING OF S HARES WHERE ACTUAL DELIVERY WAS NOT INTENDED TO BE TAKEN OR GIV EN. THEREFORE, THE ENTIRE TRANSACTION CARRIED OUT BY TH E ASSESSEE, INDICATED ABOVE, WAS WITHIN THE UMBRELLA OF SPECULA TIVE 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 TRI BUNAL HAS DONE. 9. FROM THE ABOVE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF BALJIT SECURITIES PVT. LTD. CITED SUPRA, TH E ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE. HOWEVER, WE MAKE IT CLEAR THAT TOTAL TRANSACTION CONSIDERED FOR DETERMINING T HIS BUSINESS LOSS FROM DERIVATIVE TRANSACTIONS CANNOT B E MORE THAN THE TOTAL EXPORT TURNOVER OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND IF THE DERI VATIVE TRANSACTION IS IN EXCESS OF EXPORT TURNOVER, THEN THAT LOSS SUFFERED IN RESPECT OF THAT PORTION OF EXCESS TRANS ACTIONS TO BE CONSIDERED AS SPECULATIVE LOSS ONLY AS THAT EXCE SS DERIVATIVE TRANSACTION HAS NO PROXIMITY WITH EXPORT TURNOVER AND THE ASSESSING OFFICER IS DIRECTED TO COMPUTE AC CORDINGLY. THIS GROUND IS ALLOWED AS INDICATED ABOVE . 5. FURTHER, THE MUMBAI BENCH OF ITAT IN THE CASE OF A RASKA DIAMOND P. LTD VS ACIT, 152 ITD 203, HAS HELD AS U NDER: TOTAL SALES DURING THE YEAR AMOUNTED TO ` 27.78 CRORES, THAT THE AO AND THE FAA HAD HELD SUCH TRANSACTION WERE SPECULATIVE IN NATURE AND HAD DISALLOWED THE CLAIM MADE BY THE ASSESSEE, THAT THE ASSESSEE WAS OF THE OPINION THA T TRANSACTIONS ENTERED INTO BY IT WERE NOT SPECULATIV E TRANSACTIONS. ITAT FOUND THAT THE AMOUNT INVOLVED IN THE FORWARD CONTRACT (FC) WAS MORE THAN 100% OF THE ITA NO.2153/16 :- 7 -: TURNOVER OF THE ASSESSEE, THAT FC WERE NOT RELATABL E TO SPECIFIC BILLS, THAT THE ASSESSEE HAD NOT RELATED A NY SINGLE BILL TO ANY OF THE CONTRACT AND HAD NOT PROV IDED ANY PURCHASE ORDER DURING THE ASSESSMENT OR APPELLA TE PROCEEDINGS. ITAT FOUND THAT IN THE CASE UNDER CONSIDERATION ASSESSEE WAS NOT DEALING IN FOREIGN EXCHANGE, THEREFORE TRANSACTIONS ENTERED INTO BY IT IN FOREIGN EXCHANGE CANNOT BE HELD TO BE HEDGING TRANSACTIONS. AS THE ASSESSEE WAS DEALING IN DIAMON DS AND FC ENTERED INTO ONLY FOR DIAMONDS WOULD HAVE BE EN COVERED BY THE PROVISO (A) TO THE SECTION 43(5)OF T HE 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 OPINIO N 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 REMAINED UN-CONTRAVENED THAT LO SS IN QUESTION, SHOWN BY IT PERTAINED TO THOSE FC TRANSACTIONS, AGAINST WHICH NO ACTUAL DELIVERY OF F OREIGN EXCHANGE WAS MADE. ON APPRECIATION OF THE FACTS SURROUNDING THE TRANSACTION ITAT HAD REACHED AT THE CONCLUSION THAT TRANSACTIONS ENTERED IN TO BY THE ASSESSEE WERE SPECULATIVE IN NATURE AND THE CASE OF THE ASSESSEE IS NOT COVERED BY PROVISO(A) OF THE SECTIO N 43(5) OF THE ACT. DISPUTED TRANSACTIONS WERE SPECULATIVE AND NOT HEDG ING TRANSACTION, THAT THE ASSESSEE COULD NOT RELATE ANY SINGLE BILL TO ANY OF THE CONTRACT AND IT HAD NOT P ROVIDED DETAIL OF ANY PURCHASE ORDER RELATABLE TO SPECIFIC TRANSACTION, DURING THE ASSESSMENT OR APPELLATE PROCEEDINGS. THUS, THE TRANSACTIONS UNDERTAKEN BY I T HAVE TO BE TAKEN AS TRANSACTIONS RELATABLE TO FOREI GN EXCHANGE. ITAT WAS OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY. THEREFORE, CONSIDERING THE PECULIAR FACT S AND CIRCUMSTANCES OF THE CASE, ITAT CONFIRMED HIS ORDER ITA NO.2153/16 :- 8 -: FAA AND DECIDE EFFECTIVE GROUND AGAINST THE ASSESSE E. 6. IN VIEW OF THE ABOVE ORDERS OF THE TRIBUNAL, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER HAS TO CONSIDER THE FOREIGN EXCHANGE DERIVATIVE IN PROPORTION TO EXPORT TURNOVE R AS REGULAR BUSINESS TRANSACTION OF THE ASSESSEE. IF THE DERIVATIVE TRANSACTION UNDERTAKEN BY THE ASSESSEE IS IN EXCESS OF EXPORT TURNOVER THEN THAT LOSS SUFFERED I N RESPECT OF THAT PORTION OF EXCESS TRANSACTION HAS TO BE CON SIDERED AS SPECULATIVE LOSS ONLY AND THAT EXCESS DERIVATIVE T RANSACTION HAS NO PROXIMITY WITH EXPORT TURNOVER AND THE ASSES SING OFFICER IS DIRECTED TO COMPUTE ACCORDINGLY. FURTHE R, THE ASSESSING OFFICER HAS TO SEE WHETHER THERE IS ANY P REMATURE CANCELLATION OF FORWARD CONTRACT OF FOREIGN EXCHANG E AND THAT TRANSACTION SHOULD BE TAKEN OUT FOR THE PURPOSE OF CONSIDERING THE BUSINESS LOSS AND ONLY THE TRANSACT IONS WHICH ARE COMPLETED TO BE CONSIDERED FOR THE PURPOS E OF DETERMINING THE BUSINESS LOSS FROM THESE FOREIGN E XCHANGE FORWARD CONTRACT. WITH THIS OBSERVATION, WE REMAND THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRES H 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 TAXMAN 267, FOR THE PROPOSITION THAT IF THE ASSESSEE FAILED TO TAKE DELIVERY WITHIN THE PERIOD INDICATED IN CONTRACT AND THE ASSESSEE HAD GIVEN I NSTRUCTIONS TO BANK FOR CANCELLATION OF CONTRACT ON PAYMENT OF AGREED CHARGES TO THE BANK THESE TRANSACTIONS CANNOT BE CO NSIDERED AS SPECULATIVE TRANSACTION. HOWEVER, THERE IS NO F INDING IN THIS JUDGMENT TOWARDS THIS EFFECT AND THE RELIANCE PLACED BY THE ASSESSEE IS MISPLACED. MORE SO, THIS ISSUE WA S CONSIDERED BY THE MUMBAI TRIBUNAL WHILE DELIVERING THE DECISION IN THE CASE OF ARASKA DIAMOND P. LTD, 152 ITD 203, AND AFTER FOLLOWING THE JUDGMENTS OF CALCUTTA HIGH COURT IN THE CASE OF BENGAL & ASSAM CO. LTD VS CIT 227 CTR 3 99, AND BOMBAY HIGH COURT JUDGMENT IN THE CASE OF CIT V S BADRIDAS GAURIDU P. LTD 261 ITR 256, THE TRIBUNAL C AME TO THE CONCLUSION THAT THE TRANSACTIONS, WHICH WERE PR EMATURELY CANCELLED, CANNOT BE CONSIDERED AS BUSINESS TRANSAC TION AND IT IS TO BE CONSIDERED AS SPECULATIVE TRANSACTION. IN VIEW OF THE ABOVE, WE ARE INCLINED TO REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. ITA NO.2153/16 :- 9 -: 12. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN I TA NOS. 583/MDS/2014 & 1531/MDS/2015 ARE ALLOWED AND THE AP PEAL OF THE REVENUE IN ITA NO. 1604/MDS/2015 IS ALLOWED FOR STA TISTICAL PURPOSES. IN VIEW OF THE ABOVE ORDER OF TRIBUNAL, WE SET ASID E THE ORDER OF THE LOWER AUTHORITIES AND REMIT THE ISSUE IN DISPUTE TO THE FILE OF AO ON SIMILAR DIRECTION SO AS TO PASS FRESH ORDER AFTER G IVING OPPORTUNITY TO THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE ALLOWED FOR S TATISTICAL PURPOSES ORDER PRONOUNCED ON 08 TH FEBRUARY, 2017, AT CHENNAI. SD/ - SD/ - ! ' # . $ %& ' ( DUVVURU RL REDDY ) ) % / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER () / CHENNAI *+ / DATED: 08 TH FEBRUARY, 2017. K S SUNDARAM +,-- ./-0/ / COPY TO: - 1 . / APPELLANT 3. - 1-!' / CIT(A) 5. /23- 4 / DR 2. / RESPONDENT 4. - 1 / CIT 6. 3&-5 / GF