DCIT, CHENNAI V. Aswini Fisheries P Ltd, CHENNAI

ITA 2246/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96549 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 10-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 08-09-2014
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Keywords: Business income; Speculation loss
• Section: 43(5); 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI , . ! ' , # '$ % [ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ] ./ I.T.A.NO.2246/MDS/2014 / ASSESSMENT YEAR : 2009-10 THE DY. CIT COMPANY CIRCLE I(1) CHENNAI VS. M/S ASVINI FISHERIES P. LTD 136 & 139, OLD MAHABALIPURAM ROAD, KARAPAKKAM CHENNAI 600 096 [PAN AAACA 2931 P] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI A V SREEKANTH, JCIT /RESPONDENT BY : SHRI VIKRAM VIJAYARAGHAVAN, ADVOCATE / DATE OF HEARING : 10 - 12 - 2015 / DATE OF PRONOUNCEMENT : 18 - 1 2 - 2015 * / 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)(CENTRAL)-I , DATED 20.5.2014 FOR ASSESSMENT YEAR 2009-10. 2. THE ONLY ISSUE IN THIS APPEAL IS WITH REGARD TO TR EATMENT OF LOSS ARISEN ON ACCOUNT OF FOREIGN EXCHANGE DERIVATI VE CONTRACTS. ITA NO.2246/14 :- 2 -: 3. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE-COMPA NY IS ENGAGED IN THE BUSINESS OF PROCESSING AND EXPORT OF MARINE PRODUCTS. THE ASSESSEE SUFFERED A LOSS OF ` 2,56,46,747/- ON ACCOUNT OF FOREIGN EXCHANGE FORWARD CONTRACT TRANSACTIONS AND TREATED THE SAME AS PART OF BUSINESS LOSS AND SET OFF SUCH LOSS AGAINST THE BUSINESS INCOME OF THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE OP INION THAT THIS IS A SPECULATIVE LOSS AND CANNOT BE SET OFF AGAINST BUSI NESS INCOME OF THE ASSESSEE IN VIEW OF THE PROVISIONS OF SEC. 73 OF TH E INCOME-TAX ACT. ACCORDINGLY, HE REJECTED THE CLAIM OF THE ASSESSEE . ON APPEAL, THE CIT(A), BY PLACING RELIANCE ON THE DECISIONS OF THE DELHI TRIBUNAL IN THE CASE OF MUNJAL SHOWA LTD VS DCIT, 94 TTJ 227, AHMED ABAD TRIBUNAL IN THE CASE OF ESSAR STEEL VS DCIT [2005] 97 ITD 125, CHENNAI TRIBUNAL IN THE CASE OF DCIT VS PATERSON SECURITIES PVT. LTD , 127 ITD 386, AND M/S COTTON BLOSSOM(INDIA) LTD VS ACIT IN I.T.A.NO. 2032/MDS/2012 DATED 21.12.2013, OBSERVED THAT THESE TRANSACTIONS DEALT WITH IN THE COURSE OF CARRYING IN THE REGULAR COURSE OF ITS BUS INESS ACTIVITIES AND NOT AS A SEPARATE BUSINESS ACTIVITY AND THEREFORE, THE FORWARD CONTRACTS ENTERED INTO WITH BANK IN FOREIGN EXCHANG E IS NOT A SPECULATIVE TRANSACTION AND THE SAME FALLS OUTSIDE THE PURVIEW OF SPECULATIVE TRANSACTION BY PROVISO (C) TO SEC. 43(5 ) OF THE ACT. THE CIT(A) ALSO RELIED ON THE DECISION OF THE CHENNAI T RIBUNAL IN THE CASE OF M/S CELEBRITY FASHIONS LTD IN I.T.A.NOS.1249 & 1 250/MDS/2013 FOR ITA NO.2246/14 :- 3 -: ASSESSMENT YEARS 2008-09 AND 2009-10 WHEREIN IT WAS HELD THAT THE LOSS INCURRED BY THE ASSESSEE AS A RESULT OF FOREI GN EXCHANGE FORWARD CONTRACTS RELATES TO ITS BUSINESS ONLY AND HENCE TH E SAME HAS TO BE TREATED AS BUSINESS LOSS. ACCORDINGLY, IN HIS OPIN ION, THE LOSS ARISING FROM THESE FORWARD CONTRACTS IS NOT A SPECULATIVE L OSS U/S 43(5) AND HE DIRECTED THE ASSESSING OFFICER TO TREAT THE ABOV E LOSS AS REGULAR BUSINESS LOSS AND ALLOWED THE APPEAL OF THE ASSESS EE AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. SIMILAR ISSUE WAS CONSIDERED BY THIS TRIBU NAL WHERE ONE OF THE MEMBERS IS A PARTY, IN THE CASE OF M/S MAJESTIC EXP ORTS 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 IN T HE BUSINESS OF MANUFACTURING AND EXPORT OF HOSIERY GARMENTS. DURIN G THE COURSE OF EXPORT, THE ASSESSEE ENTERED INTO DERIVATIVE CONT RACT. THE ASSESSEE INCURRED LOSS IN THIS TRANSACTION. THE AS SESSEE CLAIMED IT AS BUSINESS LOSS. ACCORDING TO THE ASSESSING OFFICE R THIS LOSS WAS NOT BUSINESS LOSS AND IT IS A SPECULATIVE LOSS AND THIS TRANSACTION IS SPECULATIVE IN NATURE AS SUCH THE LOSS INCURRED ON THIS TRANSACTION CANNOT BE SET OFF AGAINST BUSINESS INCOME OF THE AS SESSEE. ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE, THE DERIVATIVE TRANSACTION CANNOT FALL UNDER SEC.73. EXPLANATION TO SEC.73 CREATES A DEEMING FICTION BY WHICH AMONG THE A SSESSEE, WHO IS A COMPANY, AS INDICATED IN THE SAID EXPLANATI ON DEALING WITH THE TRANSACTION OF SHARE AND SUFFER LOSS, SUCH LOSS SHOULD BE TREATED TO BE SPECULATIVE TRANSACTION WITHIN THE ME ANING OF SEC.73 OF THE ACT, NOTWITHSTANDING THE FACT THAT THE DEFI NITION OF ITA NO.2246/14 :- 4 -: SPECULATIVE TRANSACTION 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 SHARE. AS PER THE DEFINITION OF S EC.43(5), TRADING OF SHARES WHICH IS DONE 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 NO T SPECULATION TRANSACTION AS DEFINED IN THE SAID SECTION. THEREF ORE, BOTH PROFIT/LOSS FROM ALL THE SHARE DELIVERY TRANSACTION S 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 T HAT BOTH DELIVERY TRANSACTIONS AND DERIVATIVE TRANSACTIONS ARE NON-SP ECULATIVE AS FAR AS SEC.43(5) IS CONCERNED, IT FOLLOWS THAT BOTH WILL H AVE THE SAME TREATMENT AS FAR AS APPLICATION OF EXPLANATION TO SE C.73 IS CONCERNED. THEREFORE, AGGREGATION OF THE SHARE TRA DING PROFIT AND LOSS FROM DERIVATIVE TRANSACTIONS SHOULD BE DON E BEFORE THE EXPLANATION TO SEC.73 IS APPLIED. THE ABOVE VIEW HAS BEEN TAKEN BY SPECIAL BENCH OF THIS TRIBUNAL, MUMBAI BENCH, IN THE CASE OF CIT V. CONCORD COMMERCIAL PVT. LTD. (2005) 95 ITD 117 (MUM)(SB) . IN THIS CASE, THE SPECIAL 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 HAS TO BE W ORKED OUT BASED ON THE NON-SPECULATIVE PROFITS; EITHER 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 DEFINITION OF SPECULATIVE TRANSACTION EXCLUSIVELY FOR PURPOSES OF SECTION 28 TO 41 OF THE ACT. AGAIN, THE FACT THAT BOTH DELIVERY BASED TRANS ACTION IN SHARES AND DERIVATIVE TRANSACTIONS ARE NON-SPECULAT IVE AS FAR AS SECTION 43(5) IS CONCERNED GOES TO CONFIRM THAT BOTH W ILL HAVE SAME TREATMENT AS REGARDS APPLICATION OF THE EXPLANA TION TO SECTION 73 IS CONCERNED, WHICH CREATES A DEEMING FICT ION. NOW, BEFORE APPLICATION OF THE SAID EXPLANATION, AGGREGAT ION OF THE BUSINESS PROFIT/LOSS IS TO BE WORKED OUT IRRESPECTI VE OF THE FACT, WHETHER IT IS FROM SHARE DELIVERY TRANSACTION OR DE RIVATIVE TRANSACTION. ITA NO.2246/14 :- 5 -: 8.1 NOW, THIS VIEW HAS BEEN TAKEN BY CO-ORDINATE, C HENNAI IN THE CASE M/S. AISHWARYA & CO P. LTD IN ITA NO.860/MDS/2014, DATED 29.05.2015 , WHEREIN THEY FOLLOWED THE JUDGMENT OF THE CALCUTTA HIGH COURT IN THE CASE OF M/S. BALJIT SECURITIES PVT. LTD. (88 CCH 313 ) WHEREIN HELD 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 C OMPANY 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: ITA NO.2246/14 :- 6 -: EXPLANATION : WHERE ANY PART OF THE BUSINESS OF A COMPANY ( . . . .. .. .. .. .. .. .. . .. .. . ) CONSIS T IN 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, THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE. HOWEVER, WE MAKE IT CLEAR THAT TOTAL TRANSACTION CONSIDERED FOR DETERMINING THIS BUSINESS LOSS FROM DERIVATIVE TRANSACTIONS CANNOT BE MORE THAN TH E TOTAL EXPORT TURNOVER OF THE ASSESSEE FOR THE ASSESSMENT Y EAR UNDER CONSIDERATION AND IF THE DERIVATIVE TRANSACTION IS IN EXCESS OF EXPORT TURNOVER, THEN THAT LOSS SUFFERED IN RESPECT OF THAT PORTION OF EXCESS TRANSACTIONS TO BE CONSIDERED AS S PECULATIVE LOSS ONLY AS THAT EXCESS DERIVATIVE TRANSACTION HAS NO PROXIMITY WITH EXPORT TURNOVER AND THE ASSESSING OFFICER IS DI RECTED TO COMPUTE ACCORDINGLY. THIS GROUND IS ALLOWED AS INDI CATED ABOVE . 5. FURTHER, THE MUMBAI BENCH OF ITAT IN THE CASE OF AR ASKA DIAMOND P. LTD VS ACIT, 152 ITD 203, HAS HELD AS U NDER: ITA NO.2246/14 :- 7 -: 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 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 ITA NO.2246/14 :- 8 -: 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 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 TURNOVER AS REGU LAR BUSINESS TRANSACTION OF THE ASSESSEE. IF THE DERIVATIVE TR ANSACTION UNDERTAKEN BY THE ASSESSEE IS IN EXCESS OF EXPORT TURNOVER TH EN THAT LOSS SUFFERED IN RESPECT OF THAT PORTION OF EXCESS TRANSACTION HA S TO BE CONSIDERED AS SPECULATIVE LOSS ONLY AND THAT EXCESS DERIVATIVE T RANSACTION HAS NO PROXIMITY WITH EXPORT TURNOVER AND THE ASSESSING OF FICER IS DIRECTED TO COMPUTE ACCORDINGLY. FURTHER, THE ASSESSING OFFICE R HAS TO SEE WHETHER THERE IS ANY PREMATURE CANCELLATION OF FORW ARD CONTRACT OF FOREIGN EXCHANGE AND THAT TRANSACTION SHOULD BE TAK EN OUT FOR THE PURPOSE OF CONSIDERING THE BUSINESS LOSS AND ONLY T HE TRANSCTIONS WHICH ARE COMPLETED TO BE CONSIDERED FOR THE PURPOS E OF DETERMINING THE BUSINESS LOSS FROM THESE FOREIGN EXCHANGE FORW ARD CONTRACT. WITH THIS OBSERVATION, WE REMAND THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. ITA NO.2246/14 :- 9 -: 7. BEFORE US, THE LD. REPRESENTATIVE RELIED ON THE JUD GMENT OF GUJARAT HIGH COURT IN CIT VS FRIENDS AND FRIENDS SH IPPING 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 INSTRUCTIONS TO BANK FOR CANCELL ATION OF CONTRACT ON PAYMENT OF AGREED CHARGES TO THE BANK THESE TRANSAC TIONS CANNOT BE CONSIDERED AS SPECULATIVE TRANSACTION. HOWEVER, TH ERE IS NO FINDING IN THIS JUDGMENT TOWARDS THIS EFFECT AND THE RELIANCE PLACED BY THE ASSESSEE IS MISPLACED. MORE SO, THIS ISSUE WAS CON SIDERED BY THE MUMBAI TRIBUNAL WHILE DELIVERING THE DECISION IN TH E CASE OF ARASKA DIAMOND P. LTD, 152 ITD 203, AND AFTER FOLLOWING TH E JUDGMENTS OF CALCUTTA HIGH COURT IN THE CASE OF BENGAL & ASSAM C O. LTD VS CIT 227 CTR 399, AND BOMBAY HIGH COURT JUDGMENT IN THE CASE OF CIT VS BADRIDAS GAURIDU P. LTD 261 ITR 256, THE TRIBUNAL C AME TO THE CONCLUSION THAT THE TRANSACTIONS, WHICH WERE PREMAT URELY CANCELLED, CANNOT BE CONSIDERED AS BUSINESS TRANSACTION AND IT IS TO BE CONSIDERED AS SPECULATIVE TRANSACTION. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOW ED FOR STATISTICAL PURPOSES. ITA NO.2246/14 :- 10 -: ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2015, AT CHENNAI. SD/- SD/- ( . ! ' ) (G. PAVAN KUMAR) # / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER !' / CHENNAI #$ / DATED: 18 TH DECEMBER, 2015 RD $%&& '(&)( / COPY TO: & 1 . / APPELLANT 4. & * / CIT 2. / RESPONDENT 5. (+,& - / DR 3. & *&./ / CIT(A) 6. ,0&1 / GF