S. JOGANI EXPORTS P.LTD, MUMBAI V. ACIT 5(3), MUMBAI

ITA 7012/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3944 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 03-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 23-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A DHYANI
• Assessee Lawyers: K A VAIDYALINGAN
• Keywords: Business income; Speculation loss; Commercial expediency
• Section: 142(1); 43(5); 63; 28; 10

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , , BEFORE SHRI C.N. PRASAD , JM AND SHRI RAJESH KUMAR , AM ./ I.T.A. NO 7012/MUM/2012 ( / ASSESSMENT YEAR: 200 9 - 10 ) M/S. S. JOGANI EXPORTS PVT.LTD 109/110, SHREEJI CHAMBERS, TATA ROAD NO.1 &2, OPERA HOUSE, MUMBAI - 400 004 / VS. ASST. COMMISSIONER OF INCOME TAX 5 (3), AAYKAR BHAVAN, MUMBAI - 400 020. ./ ./ PAN : AALCS 4862J ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : SHRI K A VAIDYALINGAN /RESPONDENT BY : SHRI R A DHYANI / DATE OF HEARING : 01.02.2016 / DATE OF PRONOUNCEMENT : 26. 02.2016 / O R D E R PER RAJESH KUMAR, A. M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 24.09.2012 OF COMMISSIONER OF INCOME TAX (APPEALS) - 9, MUMBAI (HEREINAFTER CALLE D AS THE CIT(A)) FOR ASSESSMENT YEAR 2009 - 10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CI.T.(A) ERRED IN UPHOLDING THE ADDITION MADE OF RS.2,13,43,725/ - BY THE LEARNED AO ON A MISTAKEN FACT THAT THIS AMOUNT REPRESENTS LOSS I N RESPECT OF CANCELLATION OF FORWARD CONTRACTS AND BEING SPECULATIVE IN NATURE IS NOT ALLOWABLE AS PER THE PROVISIONS OF SEC.43(5) WHEREAS IN REALITY, THIS LOSS IS ON RESTATEMENT OF OUTSTANDING FORWARD CONTRACTS (MARKED TO MARKET) AS AT YEAR END. 2 ITA NO. 7012 /MUM/201 2 HE HAS TO TALLY MISUNDERSTOOD THE FACTS AND PROCEEDED AND DECIDED THE ISSUE ON A WRONG PREMISE. 2. THE LEARNED CI.T.(A) ERRED ON FACTS IN HIS OBSERVATIONS IN PARA 5.2.1 AND 5.2.2 THAT A . LEARNED ASSESSING OFFICER HAS ARGUED THAT THE LOSS IN QUESTION IS A SPECULATIVE LOSS BECAUSE THESE TRANSACTIONS WERE SETTLED OTHERWISE THAN BY DELIVERY; B . THE APPELLANT HAD ENTERED INTO SEVERAL FORWARD CONTRACTS ALL OF WHICH WERE CANCELLED DURING THE YEAR, AND C . DURING THE COURSE OF ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS, IT WAS NOT DISPUTED BY THE APPELLANT THAT THE LOSS SHOWN WAS EXCLUSIVELY DUE TO FORWARD CONTRACT AGAINST WHICH NO DELIVERY WAS MADE. 3. THE LEARNED CI.T.(A), INSPITE OF DRIVING HOME SPECIFICALLY IN WRITING ON THE SUBJECT, ERRED IN NOT FOLLOWING VARIOUS JUDICIAL PRO NOUNCEMENTS SQUARELY ON THE ISSUE RELIED UPON BY THE APPELLANT INCLUDING THAT OF THE HON. SUPREME COURT IN THE CASE OF WOODWARD GOVERNOR(312 ITR 254) AND OF JURISDICTIONAL MUMBAI ITAT SPECIAL BENCH IN THE CASE OF BANK OF BAHARAIN & KUWAIT (2010) 5 ITR (TRI B) 301, SUBSEQUENTLY FOLLOWED ON IDENTICAL FACTS IN THE CASE OF M/S. BHAVANI GEMS, WHEREIN IT HAS BEEN HELD THAT LOSS INCURRED ON FOREIGN EXCHANGE FLUCTUATION ON REVENUE ACCOUNT ON MARKED TO MARKET BASIS IS NOT NOTIONAL LOSS AND THE SAME IS ALLOWABLE U/S 3 7(1) OF THE INCOME TAX ACT. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE QUASHED AND THE LEARNED AO BE DIRECTED TO ALLOW THE LOSS OF RS.2,13,43,725/ - AS BUSINESS LOSS AND ALLOW THE SAME TO BE SET OFF AGAINST BUSINESS INCOME. 2. AT THE OUTSET THE LD AR SUBMITTED THAT THE GROUND NO . 1 WAS ONLY EFFECTIVE GROUND AND PRESSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2009 DECLARING AN INCOME OF RS.2,37,29,127/ - . THE ASSESSEE WAS ENGAGED IN THE BU SINESS OF TRADING, MANUFACTURING AND EXPORT OF CUT AND POLISHED DIAMOND FOR WHICH THE ASSESSEE HAD TO IMPORT THE RAW DIAMOND. CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED U/S 143(2) AND 3 ITA NO. 7012 /MUM/201 2 142(1) OF THE ACT AND SERVED UPON THE ASSESSEE . FOR THE PURPOSE OF ITS BUSINESS , THE ASSESSEE WAS HAVING FORWARD FOREIGN EXCHANGE CONTRACT BOTH FOR IMPORT, EXPORT SUNDRY DEBTORS AND CREDITOR S . THE ASSESSEE HAD ENTERED INTO FOREIGN EXCHANGE FORWARD CONTRACT FOR SALE S WHICH WERE OUTSTANDIN G AT THE YEAR END AMOUNTING TO RS. 40,50,58,275/ - WHICH WERE RE - STATED AT THE EXCHANGE RATE AS ON THE DATE OF END OF THE YEAR REPORTING AND THUS BOOKED MARKED TO MARKET LOSS OF RS.2,13,43,275/ - . 3. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NO TICED THAT THE ASSESSEE HAD CHARGED TO THE PROFIT AND LOSS ACCOUNT , A LOSS OF RS.2,13,43,275/ - ON FORWARD CONTRACT FOR SALE RE - S T ATING THE SAME AT THE EXCHANGE RATE PREVALENT AT THE YEAREND WHICH WAS NOT ALLOWABLE UNDER THE INCOME TAX ACT AS BEING CONTING ENT AND NOTIONAL IN NATURE ON THE ANALOGY THAT THE ACTUAL LOSS OR PROFIT WOULD MATERIALIZE ONLY UPON WHEN THE CONTRACT WAS PERFORMED. THE LD AO RELIED UPON THE INSTRUCTION NO. 3 OF 2010 WHICH PROVIDED CLARIFICATION IN RESPECT SPECULATIVE TRANSACTIONS U/S 4 3(5) (D) OF THE INCOME TAX ACT 1961 ON FOREX DERIVATIVES. THE AO HELD THAT THE INSTRUCTION CLEARLY PROVIDED FOR DISALLOWANCE OF LOSSES ON FORWARD CONTRACT IN DERIVATIVE WHICH WERE PENDING FOR PERFORMANCE AT THE YEAR END AS BEING IN THE NATURE OF CONTINGENT AND NOTIONAL. 4. THE LD CIT(A) CONFIRMED THE ORDER OF AO BY CONSIDERING THE LOSS TO BE ON ACCOUNT OF CANCELLATION OF FORWARD CONTRACT AND SPECULATIVE IN NATURE BY HOLDING AS UNDER: 5.1.2 I HAVE CAREFULLY AND DISPASSIONATELY CONSIDERED THE FACTS A ND CIRCUMSTANCES OF THE CASE. IT IS NOT DISPUTED THAT THE APPELLANT HAD CLAIMED IN ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2008 - 09, A LOSS OF RS.2,13,43,725/ - ON ACCOUNT OF EXCHANGE RATE FLUCTUATION OF OUTSTANDING DEBTORS AND CREDITORS FOR SALE AND PURC HASE OF FOREIGN CURRENCY CONSIDERING THE EXCHANGE RATE AS ON 31.3.2009. IT IS ALSO NOT DISPUTED THAT THE APPELLANT HAS CANCELLED FORWARD CONTRACTS IN US DOLLAR WHICH WERE BOOKED DURING THE DURING ACCOUNTING YEAR RELEVANT TO ASSESSMENT YEAR 2009 - 10 WHICH R ESULTED 4 ITA NO. 7012 /MUM/201 2 INTO NET LOSS. THE LAO HAS ARGUED THAT THE AFORESAID LOSS IS A SPECULATIVE LOSS BECAUSE THESE ARE THE TRANSACTIONS WHICH WERE SETTLED BY THE APPELLANT OTHER THAN BY ACTUAL DELIVERY AND HENCE AS PER PROVISIONS OF SECTION 43(5) OF THE ACT THESE ARE S PECULATIVE LOSS. ON THE OTHER HAND THE LAR HAS VEHEMENTLY ARGUED THAT IN ORDER TO MINIMIZE RISK / LOSS IN THE FOREX MARKET, THE APPELLANT TOOK FORWARD EXCHANGE COVER FROM ITS BANKERS. HOWEVER DUE TO VARIOUS COMMERCIAL CONSIDERATION EXIGENCIES AND / OR CHAN GES IN THE FOREX MARKET THE APPELLANT COMPANY HAD TO CANCEL FORWARD CONTRACTS WHICH WERE BOOKED DURING THE ACCOUNTING YEAR RELEVANT TO ASSESSMENT YEAR 2009 - 10. 5.2.2 A PERUSAL OF THE RELEVANT DETAILS AVAILABLE BEFORE ME INDICATES THAT THE APPELLANT HAD INDEED ENTERED INTO SEVERAL FORWARD CONTRACTS ALL OF WHICH WERE CANCELLED DURING THE YEAR. A FORWARD CONTRACT IS A AN AGREEMENT BETWEEN A BUYER AND SELLER WHOLLY GETTING THE SELLER TO DELIVER A SPECIFIED ASSET OF SPECIFIED QUALITY AND QUANTITY TO THE BUYER ON A SPECIFIED DATE AT A SPECIFIED PLACE AND THE BUYER IN TURN IS OBLIGATED TO PAY THE SELLER A PRE - NEGOTIATED PRICE IN EXCHANGE OF THE DELIVERY. IN THE INSTANT CASE, THE APPELLANT IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND EXPORT OF DIAMONDS. ,IN RESP ECT OF EXPORT OF DIAMONDS, THE APPELLANT HAS ENTERED INTO FORWARD CONTRACT IN RESPECT OF FOREIGN EXCHANGE TO BE RECEIVED AS A RESULT OF EXPORT. THIS WAS DONE TO AVOID THE RISK OF LOSS DUE TO FOREIGN EXCHANGE FLUCTUATION. THE APPELLANT AT THE TIME OF AGREEI NG TO EXPORT TOOK INTO CONSIDERATION ITS COST IN RUPEES AND ALSO CONSIDERED THE SPOT PRICE OF RUPEE AGAINST FOREIGN EXCHANGE. WHEN THE ACTUAL EXPORT IS MADE, THIS SPOT PRICE MAY BE DIFFERENT AS AGAINST' THE SPOT PRICE ON THE DATE ON WHICH THE APPELLANT EXP ECTED AN EXPORT ORDER. ON THE DATE OR RECEIPT OF FOREIGN EXCHANGE, IF THE SPOT PRICE OF RUPEE AGAINST FOREIGN EXCHANGE INCREASES THEN THE APPELLANT WILL BE BENEFITED. FOR E.G. WHEN THE APPELLANT UNDERTAKES TO ACCEPT AN EXPORT ORDER, IF THE VALUE OF ONE USD IS INR 45 AND WHEN THE APPELLANT ACTUALLY EXPORTS, THE VALUE OF ONE USD MAY BE DIFFERENT. AN APPELLANT ENTERS INTO FORWARD CONTRACT FOR RECEIPT OF RUPEES AGAINST USD. IF ON THE DATE OF RECEIPT OF FOREIGN EXCHANGE, THE RATE OF ONE DOLLAR IS INR 50 RUPEES THE APPELLANT WILL BE BENEFITED BY THE INR 5 PER USD DUE TO FOREIGN CONTRACT. THE APPELLANT MAY CREDIT THE AMOUNT AS PER FORWARD CONTRACT A T THE SALE PRICE OF EXPORT. ALTERNATIVELY, HE CAN GET THE SPOT PRICE ON THE DATE OF ACCEPTING THE EXPORT ORDER AS THE SALE PRICE AND THE DIFFERENCE DUE TO SPOT PRICE ON THE DATE OF SETTLEMENT OF FORWARD CONTRACT MAY BE CREDITED AS PROFIT 5 ITA NO. 7012 /MUM/201 2 DUE TO FORWARD CONTRACT. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE AO AND DURING THE COURSE OF APPELLATE PROC EEDINGS BEFORE ME IT IS NOT DISPUTED THAT LOSS SHOWN IS EXCLUSIVELY DUE TO FORWARD CONTRACTS AGAINST WHICH NO ACTUAL DELIVERY OF FOREIGN EXCHANGE WAS MADE. THE FORWARD CONTRACT IS TO BE SETTLED EITHER BY DELIVERY OR THE DIFFERENCE IS EITHER CREDITED OR D EBITED BY THE BANKER. IN THE PRESENT CASE, ALL FORWARD CONTRACTS WERE CANCELLED. THEY WERE NEVER SETTLED BY ACTUAL DELIVERY NOR BY TRANSFER OF THE COMMODITY. 5.2.3. SUB - SECTION 5 TO SECTION 43 OF THE ACT, PRESCRIBES SPECULATIVE TRANSACTION AS A TRANSA CTION IN WHICH A CONTRACT FOR THE PURPOSE OF SALE OF ANY COMMODITY INCLUDING STOCK AND SHARES, IS PERIODICALLY OR ULTIMATELY SETTLED OTHERWISE THAN BY THE ACTUAL DELIVERY OR TRANSFER OF THE COMMODITY OR SCRIPS. IT IS CLEAR THAT A TRANSACTION IS SPECULATIVE IN CASE THE CONTRACT IS PERIODICAL OR ULTIMATELY SETTLED OTHERWISE THAN BY ACTUAL DELIVERY OR TRANSFER OF THE COMMODITY. IN THE INSTANT CASE, IT HAS BEEN ADMITTED THAT THE LOSS DEBITED ON ACCOUNT OF FORWARD CONTRACT IS IN RESPECT CONTRACTS IN WHICH THERE HAS BEEN NO ACTUAL DELIVERY. 5.2.4 THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF V. N. SARSETY V/S CIT( 1987) 163 FTR 727 (KAR) HAD AN OCCASION TO CONSIDER THE MEANING OF THE WORDS 'SPECULATIVE TRANSACTION'. IN THE CASE BEFORE THE HON'BLE JURISDICTIO NAL HIGH COURT, THE ISSUE WAS ALLOWABILITY OF DEDUCTION OF RS.35,150/ - WHICH WAS TO BE PAID BY THE ASSESSEE ON ACCOUNT OF NON~ DELIVERY OF CERTAIN QUANTITY OF COTTON UNDER THE AGREEMENT DATED 5 TH FEB. 1969. THE HON'BLE HIGH COURT HELD THAT IF THE CONTRACT IS SETTLED DURING THE SUBSISTENCE' OF THE CONTRACT WITHOUT DELIVERY THEN THE TRANSACTION IS SPECULATIVE. IN CASE A DISPUTE ARISES AND THE AMOUNT IS PAID AS A BREACH OF, THE CONTRACT THEN THE MATTER IS TO BE CONSIDERED DIFFERENTLY. 5.2.5 IN ORDER THAT A TRANSACTION MAY FALL WITHIN THE SCOPE OF THE EXPRESSION SPECULATIVE TRANSACTION' IT MUST BE A TRANSACTION IN WHICH A CONTRACT FOR PURCHASE OR SALE OF ANY COMMODITY, INCLUDING STOCKS AND SHARES, PERIODICALLY OR ULTIMATELY SETTLED OTHERWISE THAN BY THE ACT UAL DELIVERY OR TRANSFER OF THE COMMODITY OR SCRIPS. WHAT IS IMPORTANT TO BE NOTICED IS THAT THE CONTRACT FOR PURCHASE OR SALE OF ANY COMMODITY MUST BE SETTLED OTHERWISE' THAN BY THE ACTUAL DELIVERY OR TRANSFER OF THE COMMODITY OR HON'BLE SUPREME COURT IN THE CASE OF CIT VS SHANTILAL (P) LIMITED (1983) 35 CTR 395: (1983) 144 ITR 57 (SC) HAS OBSERVED THAT CONTRACT CAN BE SAID TO BE SETTLED FOR THE PURPOSE OF SPECULATIVE TRANSACTION UNDER S. 43(5) OF THE ACT IF, 6 ITA NO. 7012 /MUM/201 2 INSTEAD OF EFFECTING THE DELIVERY OR TRANSFER OF THE EFFECTING THE DELIVERY OR TRANSFER OF THE COMMODITY ENVISAGED BY THE CONTRACT, THE PROMISEE, IN TERMS OF S. 63 OF THE INDIAN CONTRACT ACT, 1872, ACCEPTS INSTEAD OF IT, ANY SATISFACTION WHICH HE THINKS FIT AND WHAT IS REALLY SETTLED BY DAMAGES IS T HE DISPUTE BETWEEN THE PARTIES' AND, THEREFORE, IT IS QUITE DIFFERENT FROM THE SETTLEMENT OF THE CONTRACT. A CONTRACT IS SETTLED WHEN IT IS EITHER PERFORMED OR THE PROMISE DISPENSES WITH OR REMIS, WHOLLY OR IN PART, THE PERFORMANCE OF THE PROMOSE MADE TO H IM OR ACCEPTS INSTEAD OF IT ANY SATISFACTION WHICH HE THINKS FIT. 5.2.7 IN THAT CASE THE BUYER, INSTEAD OF WAITING TO TAKE A CTUAL DELIVERY OF THE COTTON, HAD ACCEPTED A TOTAL AMOUNT OF RS.35,000 IN FULL SETTLEMENT OF THE CONTRACTUAL OBLIGATIONS. THAT CAS E, THEREFORE, CLEARLY FALLWITHIN S. 43(5) OF THE ACT, HELD THE APEX COURT. IN THE PRESENT CASE ALSO, NO ACTUAL DELIVERIES WERE MADE AND HENCE THE TRANSACTION CLEARLY FALL WITHIN SEC.43(5) OF THE ACT. 5.2.8 THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF HOOSEN KASQM DADA (INDIA) LIMITED V/S CIT (1964) 52 ITR 171 (CAL) HAD AN OCCASION TO C ONSIDER AS TO WHETHER THE INTENTION TO GIVE DELIVERY OR NOT IS MATERIAL TO ,DECIDE THE TRANSACTION AS SPECULATIVE WHEN THERE IS NO ACTUAL DELIVERY. THE HON'BLE HIGH COUR T HELD THAT THE DEFINITION OF SPECULATIVE TRANSACTION AS CONTAINED IN THE ACT HAS RESTRICTED THE MEANING OF THE EXPRESSION 'SPECULATIVE TRANSACTION' AND IN A SENSE SIMPLIFIED IT FOR THE PURPOSES OF COMPUTATION OF INCOME TAX. WHEN THERE IS NO DELIVERY UNDER A SETTLEMENT CONTRACT, IT IS A SPECULATIVE TRANSACTION. ON THE OTHER HAND, HOWEVER, SPECULATIVE THE TRANSACTION MIGHT BE, IF THERE IS DELIVERY, IT CANNOT BE CONSIDERED AS A SPECULATIVE TRANSACTION. HENCE, THE INTENTION OF THE ASSESSEE THAT FORWARD CONTRAC T WILL BE SETTLED THROUGH ACTUAL DELIVERY IS NOT MATERIAL AND THE ONLY MATERIAL THING IS TO SEE AS TO WHETHER THERE HAS BEEN ACTUAL DELIVERY OR NOT. 5.2.9 THE HON'BLE MADRAS HIGH COURT IN THE CASE OF SRI RANGA VILAS GINNING & OIL MILLS VS CIT (1982) 1 33 ITR 85 (MAD) HAD AN OCCASION TO CONSIDER THE MEANING OF 'SPECULATION BUSINESS'. IN THE CASE BEFORE THE HONBLE HIGH COURT, THE ASSESSEE WAS DEALING IN THE BUSINESS OF GROUNDNUT OIL.. THE ASSESSEE ENTERED INTO FORWARD CONTRACT FOR SUPPLY OF GROUNDNUT 0 IL. FORWARD CONTRACT WAS SETTLED NOT BY ACTUAL DELIVERY BUT BY PAYMENT OF DIFFERENCE. SUCH LOSS WAS HELD TO BE LOSS OF SPECULATION BUSINESS. 5.2.10 THE HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS PUTTAIAH SESHAIASH AND COMPANY (1984) 186 IT R 168 7 ITA NO. 7012 /MUM/201 2 (AP) ALSO HAD AN OCCASSION TO CONSIDER THE DEFINITION OF SPECULATION BUSINESS. THE HON'BLE HIGH COURT HELD THAT THE INTENTION OF THE PARTIES IS IMMATERIAL AND IRRELEVANT. IN THAT CASE, MAJORITY OF CONTRACTS WERE PERFORMED. HOWEVER, FOR SOME OF THE C ONTRACTS, THE ASSESSEE WAS NOT ABLE TO PERFORM ON ACCOUNT OF WANT OF WAGONS AND THE ASSESSEE PAID DIFFERENCE IN RESPECT OF UNFULFILLED CONTRACTS. THE LOSS IN RESPECT OF SUCH UNPERFORMED CONTRACTS WAS CNSIDERED AS SPECULATION LOSS. 5.2.11 PROVISO, TO S. 43(5) SPECIFIES CERTAIN CATEGORIES OF TRANSACTIONS WHICH CANNOT BE TREATED AS SPECULATIVE TRANSACTION. EXCLUSION IS OF TRANSACTION IN RESPECT OF CONTRACT FOR ACTUAL DELIVERY OF GOODS MANUFACTURED OR MERCHANDISE SOLD BY HIM. IN THIS CASE, CONTRACT IS IN R ESPECT OF FOREIGN EXCHANGE WHICH IS NOT GOODS MANUFACTURED BY ASSESSEE. HENCE, IT CANNOT BE SAID THAT TRANSACTION OF SETTLEMENT OF FOREIGN EXCHANGE CONTRACT SETTLED WITHOUT ACTUAL DELIVERY CAN BE COVERED UNDER PROVISO TO SECTION 43(5). 5.2.12 THE LAR HAS RELIED IN THE DECISION OF HON'BLE ITAT MUMBAI BENCH, HOWEVER, THE MUMBAI BENCH HAS NOT CONSIDERED EXPLN. 2 TO S. 28 OF THE IT ACT. EXPLANATION 2 TO S. 28 SAYS THAT WHERE SPECULATIVE TRANSACTIONS CARRIED ON BY AN ASSESSEE ARE OF SUCH A NATURE AS TO CON STITUTE A BUSINESS, THE BUSINESS (HEREINAFTER REFERRED TO AS 'SPECULATION BUSINESS') SHALL BE DEEMED TO BE DISTINCT AND SEPARATE FROM ANY OTHER BUSINESS. 5.2.13 THE HON'BLE MADRAS HIGH COURT IN THE CASE OF SRI RANGA VILAS GINNING AND OIL MILLS (SUP RA) HAD AN OCCASION TO CONSIDER AS TO WHETHER THE WARD CONTRACT FOR SUPPLY OF GROUNDNUT OIL WHICH WERE SETTLED NOT BY ACTUAL DELIVERY IS TO BE CONSIDERED AS A SPECULATION BUSINESS IN VIEW OF EXPLN. TO S. 28.' THE HON'BLE MADRAS HIGH COURT HELD THAT IF IN A BUS INESS, THE ASSESSEE IS DOING REGULAR BUSINESS IN SPOT DEALINGS IN COMMODITY AND ALSO INDULGES IN SPECULATIVE TRANSACTIONS IN THE SAME COMMODITY THEN SPECULATIVE TRANSACTIONS CRE TO BE HELD AS DISTINCT BUSINESS AS SPECULATION BUSINESS ON ACCOUNT OF EXPL. 2 TO SEC. 28. 5.2.14 THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V/S SHREE TEX TILES (1994) 206 ITR 345 (RAJ) AND HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS BHIKAMCHAND JANKILAL (1981) 131 ITR 554 (MP) HAS HELD THAT EVEN A SINGLE SP ECULATIVE TRANSACTIONS CAN CONSTITUTE SPECULATION BUSINESS. 5.2.15 HOWEVER, IN THE INSTANT CASE, THERE ARE A NUMBER OF TRANSACTIONS AND FORWARD CONTRACTS HAVE BEEN TAKEN BY THE APPELLANT AND CANCELLED. THUS, IT IS NOT AN ISOLATED TRANSACTION. 8 ITA NO. 7012 /MUM/201 2 HENCE, IN VIEW OF EXPL NO.2 TO S.28, THE PROFIT FROM THE FORWARD CONTRACT WILL HAVE TO BE ASSESSED AS PROFIT FROM SPECULATION BUSINESS. 5.2.16 THE LAO HAS RELIED ON THE PROVISION OF SUB - SECTION 5 OF SECTION OF 43 THE ACT AND THE PROVISION OF SECTION 73 R.W. INSTR UCTION NO.3 OF 2010 DATED 23.3.2010 ISSUED BY THE CBDT IN ORDER TO COME TO A CONSIDERED CONCLUSION THAT THE DISPUTED LOSS ON ACCOUNT OF CANCELLATION OF FORWARD EXCHANGE CONTRACT IS NOT ALLOWABLE BUSINESS. THE LAO HAS EXAMINED THE CLAIM OF THE APPELLANT T HAT THE DISPUTED BOOKING AND CANCELLATION OF FOREIGN EXCHANGE CONTRACTS WERE IN THE NATURE OF HEDGING AGAINST LOSS IN IMPORT AND EXPORT OF COTTON. THE AO VIDE PAGE NOS. 2 TO 8 OF THE RELEVANT ASSESSMENT ORDER HAVE NEGATED THE CLAIM OF THE APPELLANT. THE LAO HAS EXAMINED THE CLAIM OF HEDGING OF THE APPELLANT IN THE LIGHT OF CBDTS CIRCULAR NO.23 OF 1960 DATED 12.9.1960 ISSUED VIDE (F NO.4 (124)6060 - TPL) WHEREIN HEDGING TRANSACTION IS CONNECTED THOUGH NOT THE SAME, COMMODITIES NOT TO BE TREATED AS SPEC ULATIVE TRANSACTIONS PROVIDED OTHER CONDITIONS OF EXPLANATION 2 SECTION 24 ARE SATISFIED. AS PER THE ANSWER TO POINT NO.3 OF THE CBDTS CIRCULAR NO.23 OF 1960, IT WAS CLARIFIED BY THE BOARD THAT ONLY IN THE CASE OF BONAFIDE READY DELIVERY CONTRACT HAV ING BEEN SETTLED BY ACTUAL DELIVERY THE TRANSACTIONS NEED NOT BE TREATED AS SPECULATIVE TRANSACTIONS. HOWEVER IN THE PRESENT CASE ALL CONTRACTS HAVE BEEN SETTLED WITHOUT ACTUAL DELIVERY AS CBDT HAS ALSO CLARIFIED IN ANSWER TO POINT NO.4. IN THE SAID CBDT'S CIRCULAR NO.23 OF 1960 AS REGARDS THE SHARE INVESTORS CASE, TRANSACTION IN SCRIPS OUTSIDE THE HOLDING WERE NOT TO BE TREATED AS HEDGING TRANSACTION BUT IN THIS CASE ADMITTEDLY THE APPELLANT HAS NOT ENTERED INTO FORWARD CONTRACTS IN COTTON YARN BUT ONLY IN US DOLLARS. 5.2.17 SECONDLY, WITHOUT PREJUDICE, EVEN IN THE MERCANTILE SYSTEM OF ACCOUNTING THE QUESTION TO BE ASKED IS WHETHER THE LIABILITY IS CRYSTALLIZED DURING THE PREVIOUS YEAR. HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS KAMANI METAL PRODU CTS PVT LTD ( 1994) 208 ITR 107 BOM HAS HELD THAT WHERE T HE LIABILITY HAS NOT CRYSTALLIZED DURING THE PREVIOUS YEAR, THE LOSS WAS NOT ALLOWABLE. SIMILAR VIEWS HAVE BEEN HELD IN THE FOLLOWING DECISIONS: - (I) CIT VS INDIAN OVERSEAS BANK(1985) 151 ITR 446 ( MAD) (II) INDIAN MOLASSES CO.LTD VS CIT ( 1959) 37 ITR 66 (SC) 9 ITA NO. 7012 /MUM/201 2 (III) CIT VS NAINITAL BANK LTD (1966) 62 ITR 638(SC) (IV) CIT VS TATA IRON & STEEL CO.LTD (1998)231 ITR 285 (SC) HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LAO'S ACTION IN NOT ALLOWING MARK - TO - MARKET LOSS OF RS.2,13,43,725/ - IS CONFIRMED FOR THE SECOND REASON ALSO. 5.2.18 AS REGARDS, THE LARS RELIANCE ON THE DECISION OF WOODWARD GOVERNOR(P) LTD (SUPRA), THE LAO HAS ALREADY DISTINGUISHED THE FACTS OF THE PRESENT CASE WITH THOSE OF WOODWARD GOVERNOR (P) LTD (SUPRA)'S CASE. IN THAT CASE, WHEREVER DOLLAR RATES STOOD REDUCED, THE DEPARTMENT HAD TAXED THE GAINS AND IT WAS ONLY IN THE YEAR IN QUESTION WHEN THE LOSS WAS NOT ALLOWED. WHEREAS IN THE PRESENT CASE, THE APPELLANT ITSE LF HAS SUBMITTED THAT WHENEVER 'MARK TO MARKET' VALUATION RESULTS IN LOSS THE SAME IS DEBITED TO PROFIT AND LOSS ACCOUNT. HOWEVER, IF SUCH VALUATION RESULTS IN PROFIT THE SAME IS IGNORED AND NOT CREDITED TO THE PROFIT AND LOSS ACCOUNT. 5.2.19 I HAVE ALS O PERUSED THE DECISION RELIED UPON BY THE LAR. THESE CASE LAWS HAVE BEEN DISTINGUISHED BY THE LAO DURING THE ASSESSMENT PROCEEDINGS AND HAVE BEEN DISCUSSED IN THE RELEVANT ASSESSMENT ORDER. IN THE CASE OF CIT VS BADRIDAS GAURIDU PVT LTD 261 I TR 256 (BOM), T HE CONTRACT WAS LINKED WITH THE APPELLANT'S BUSINESS AND ON ACCOUNT OF FORWARD FORWARDING BOOKING CONTRACTS WITH THE BANKS WITH RESPECT OF APPELLANTS EXPORT ORDERS. IN THE INSTANT CASE IT IS THE FINDING GIVEN BY THE LAO THAT BOOKING AND CANCELLATION OF FORWARD CONTRACTS OF EXCHANGE WERE NOT IN RESPECT OF SPECIFIED EXPORT OR IMPORT ORDERS. IN THE PRESENT CASE ALL CONTRACTS HAVE BEEN CANCELLED. THEREFORE THE FACTS OF THE PRESENT CASE ARE CLEARLY DISTINGUISHABLE FROM THE FACTS MENTIONED IN THE CASE OF CIT V S BADRIDAS GAURIDU PVT LTD(SUPRA). THE LAO HAS FURTHER DISTINGUISHED THE CASE OF B VIJAYKUMAR & CO. (ITN NO.2510/MUM/2002) AND FACTS OF KISHOREKUMAR & CO. VS DCIT IN ITA NO. 3883/MUML .9 7 WITH THE FACTS OF THE PRESENT CASE. AS FAR AS THE LAR'S RELIANCE IN T HE CASE OF CIT VS HOTZ HOTEL LTD (2003) 260 ITR 132 (DEL) IS CONCERNED, IN THAT CASE BOTH APPELLATE AUTHORITIES RECORDED CONCURRENT FINDINGS OF FACT ABOUT THE EXISTENCE OF THE CONTRACT BETWEEN PARTIES AND INTENTION OF THE PARTIES TO ENTER INTO THE TRANSACT IONS. THE SAID FINDINGS WERE NOT CHALLENGED BY THE REVENUE BY MEANS OF SPECIFIC QUESTION. HON'BLE DELHI HIGH COURT HELD THAT THE QUESTION WHETHER THE TRANSACTION IS HEDGING TRANSACTION OR NOT IS PRIMARILY ONE OF THE 10 ITA NO. 7012 /MUM/201 2 FACT NECESSARILY TO BE DETERMINED ON APP RECIATION OF FACTS SURROUNDING THE TRANSACTION AND BY NOT MERE APPLICA TION OF A PRINCIPLE OF LAW. THEREFORE THE DECISION OF HON'BLE DELHI HIGH COURT DOES NOT COME TO THE RESCUE OF THE APPELLANT. ON THE OTHER HAND THERE ARE VARIOUS DECISIONS AS CITED BELOW WHICH SUPPORT THE CASE OF THE REVENUE IN THIS CASE. A) SHREE CAPITAL SERVICES LTD VS ACTI (2009) 121 ITD 498; B) ACIT VS K MOHANAN EXPORT PVT LTD (2011) 7 ITR 507; C) BENGAL & ASSAM CO.LTD VS CIT (2009)227 CTR 399 (CAL); AND D) ACT VS AJWA FUND WORLD & RESO RTS LTD. (2006) 9 SOT 354 (AHD) 5.2.20 AS FAR AS THE LARS RELIANCE ON EARLIER ASSESSMENT ORDER FOR ASSESSMENT YEAR 2008 - 09 IS CONCERNED, IT IS NOTED THAT FOR INCOME - TAX PURPOSE, EACH YEAR IS A SELF CONTAINED UNIT AND THE DECISION OF THE LAO G IVEN IN A PARTICULAR ASSESSMENT YEAR DO NOT OPERATE AS RES - JUDICATA IN THE MATTER OF INCOME - TAX ASSESSMENT OF THE EARLIER ASSESSMENT YEAR OR THE SUBSEQUENT ASSESSMENT YEAR. 5.2.21 THE DOCTRINE OF RES - JUDICATA OR ESTOPPELS BY RECORD DOES NOT APPLY TO INC OME - TAX PROCEEDINGS. THE FACT THAT IN SUBSEQUENT OR EARLIER ASSESSMENT YEAR, THE LAO HAS TREATED THE SPECULATION LOSS AS BUSINESS LOSS WILL NOT ESTOPPEL THE LAO FROM GIVING A FINDING AS TO WHETHER THE LOSS ARISING ON ACCOUNT OF CANCELLATION OF FORWARD EXCH ANGE CONTRACTS WITHOUT ACTUAL DELIVERY WAS' SPECULATION LOSS EVEN IF IT IS HELD OTHERWISE IN THE SUBSEQUENT ASSESSMENT YEAR. STRONG RELIANCE IS PLACED ON THE FOLLOWING DECISIONS: - A ) SIR KIKABAI PREMCHAND VS CIT (1953) 24 ITR 506 (SC) B ) ITO VS MURLIDHAR BHAG WANDAS (1964) 52 I TR 335,342(SC) C) NEW JAHANGIR VAKIL MILLS VS CIT (1963) 49 ITR 137, 142 (SC) D) M M IPACH VS CIT (1962) 67 ITR 106, 118 (SC) E) KAMANI PROPERTIES LTD VS CIT(1971) 82 ITR 547,554 (SC) 5.2.22 UNDER THE CIRCUMSTAN CES, AS STATED ABOVE, MARKED TO MARKET LOSS OF RS.2,13,43,725/ - DISALLOWED BY THE LAO IS CONFIRMED . THEREFORE, GROUND OF APPEAL NO.1 AND 2 ARE DISMISSED. 11 ITA NO. 7012 /MUM/201 2 5. THE AR VEHEMENTLY SUBMITTED BEFORE US THAT THE CASE OF THE ASSESSEE WAS COVERED IN ITS FAVOR BY DECISIONS OF THE HONBLE SUPREME COURT, HIGH COURT AND TRIBUNALS WHICH THE AO AND CIT(A) FAILED TO APPRECIATE. THE EFFECTIVE SOLE GROUND AS ARGUED BY THE LD AR WAS AGAINST THE DISALLOWANCE OF MARKED TO MARKET LOSS OF RS. 2,13,43,725/ - WHICH HAS ACCRUED FR OM THE REVALUATION AND RE - STATEMENT OF OUTSTANDING FORWARD CONTRACT AT THE END OF THE YEAR AS PER ACCOUNTING STANDARD - 11 BASED FOREIGN EXCHANGE ON THE CLOSING DATE OR REPORTING DATE. THE LD COUNSEL SUBMITTED THAT THE OUTSTANDING EXPORT RECEIVABLE AT THE CLOSE OF THE YEAR WERE RS. $ 1,01,18,500/ - WHICH WERE ALSO RE - STATED AT THE CLOSE OF THE YEAR AND A GAIN OF RS. 4,48,05,788/ - AS RECOGNIZED AS INCOME IN THE BOOKS OF ACCOUNTS. LIKEWISE IN ORDER TO COVER THE RISK OF THE FLUCTUATION IN FOREIGN CURRENCY RA TE, THE ASSESSEE HAD ENTERED INTO FORWARD CONTRACT FOR SALE AT $83,45,000/ - PENDING MATURITY AT THE YEAR END ON WHICH THE ASSESSEE REVALUED AND RE - STATED AT THE CURRENT EXCHANGE RATE PREVAILING AT THE END OF THE YEAR. THE LD COUNSEL STRONGLY PLACED RELIA NCE ON THE FOLLOWING DECISIONS OF TRIBUNAL IN WHICH THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF WOOLWARD GOVERNOR INDIA PVT. LTD(2009) 312 ITR 254 AND SPECIAL B ENCH DECISION IN THE CASE OF BANK OF BAHRAIN AND KUWAIT (41SOT29) WERE FOLLOWED: - A) V ENUS JEWEL ITA NO.7328 AND 7329/MUM/2013 DATED 31.7.2015; B) RIKIN EXPORTS - ITA NO.3757/MUM/2013 DATED 24.6.2015; C) RAJ GEMS - ITA NO.4486/MUM/2012 DATED19.5.2015; D) INTER JEWL PRIVATE LIMITED ITA NO.7013/MUM/2012 DATED 13.2.2015; E) MUNJANI BROS - ITA NO.7628/MUM/2011 DATED 2.12.2014; F) SUGTARIYA GEMS PRIVATE LIMITED - - ITA NO.3361/MUM/2013 DATED 6.8.2014; G) H SHERUL AND CO ITA NO.4481/MUM/2012 DATED 25.6.2014; H) S RAJIV AND CO - ITA NO.7095/MUM/2012 DATED 12.2.2014; I) D CHETAN AND C O. - ITA NO.4456/MUM/2012 DATED 14.8.2013; J) MUNJANI BROS ITA NO.6065/MUM/2012 DATED 19.9.2013; 12 ITA NO. 7012 /MUM/201 2 K) GANDHI ENTERPRISES - ITA NO.4485/M/2012 DATED 28.10.2013 ; L) SOCIETE GENERALE ITA NO.3597,3595,8198/MUM/2005 DATED 30.1.2013; M) BH AVANI GEMS ITA NO.2855/MUM/2010 DATED 30.3.2011; N) H DIPAK AND CO - ITA NO.7629/M/2011 DATED 30.4. 20; O) KUMBH GEMS - ITA NO.6600/M/2012 DATED 2.1.2014; AND P) RAJ GEMS - ITA NO.4486/M/2012 DATED 28.10.2013. 6 . THE LD DR ON THE OTHER HAND RELIED HEAVILY O N THE ORDERS OF AUTHORITY BELOW. 7 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORDS AND ALSO AFTER GOING THROUGH THE DECISIONS RELIED UPON BY THE LD.AR FIND THAT ASSESSEE HAD RECOGNIZED A LOSS OF RS. 2,13,43,725/ - ON FORWARD FOREIGN EXCHANGE CONTRACT OF $83,45,000/ - WHICH WERE MADE IN ORDER TO COVER THE LOSS DUE TO FLUCTUATION IN EXCHANGE RATE AND WERE PENDING FOR MATURITY AT THE CLOSE OF THE YEAR . AT THE SAME TIME THE ASSESSEE ALSO BOOKED A GAIN OF RS.4,48,05,788/ - ON THE OUTSTANDING EXPORT RECEIVABLE OF $1,01,18,500/ - FOLLOWING THE SAME ACCOUNTING SYSTEM AND ACCOUNTING STANDARD 11 WHICH DEALS WITH THE TREATMENT OF FOREX LOSSES OR GAINS WHICH WERE NOT ACTUALLY REALIZED BUT A LIKELY GAIN IF THE VALUE OF RECEIVABLES ARE REA LIZED AT THE YEAREND .THE SAME PRACTICE WAS BEING FOLLOWED IN THE EARLIER YEAR AND WAS ALSO ACCEPTED BY THE REVENUE. THE NEED TO HEDGE IS A COMMERCIAL EXPEDIENCY AND NECESSITY WHICH IS PRACTICALLY FOLLOWED IN ALL THE BUSINESS HOUSES ENGAGED IN IMPORT/EXPO RT AND THESE DAY S SPECIALLY THE EXCHANGE RATE IS HIGHLY VOLATILE. THE SPECIAL BENCH DECISION IN CASE OF DCIT VS BANK OF BAHRAIN AND KUWAIT (2010)132 TTJ MUMBAI (SB) 505 THE SPECIAL BENCH HELD THAT MTM LOSSES IN RESPECT OF FORWARD FOREIGN EXCHANGE CONTRAC T DEBITED TO THE PROFIT AND LOSS ACCOUNT ARE ALLOWABLE AND FURTHER HELD (I) A BINDING OBLIGATION IS ACCRUED AGAINST THE ASSESSEE THE MOMENT IT ENTERED INTO FORWARD FOREIGN EXCHANGE CONTRACT(II) CONSISTENT ACCOUNTING METHOD FOLLOWED BY THE ASSESSEE TO 13 ITA NO. 7012 /MUM/201 2 ACCO UNT FOR THE FOREX GAIN AND LOSS AT THE YEAREND BASED UPON THE CURRENT EXCHANGE RATE CANNOT BE DISREGARDED(III) THE LIABILITY IS SAID TO HAVE CRYSTALLIZED WHEN A PENDING OBLIGATION ON THE DATE OF BALANCE SHEET IS DETERMINABLE WITH REASONABLE CERTAINTY(IV) AS PER AS - 11 WHEN THE TRANSACTION IS NOT SETTLED IN THE SAME ACCOUNTING YEAR AS THAT IN WHICH IT OCCURRED , THE EXCHANGE DIFFERENCE ARISES OVER MORE THAN ONE ACCOUNTING PERIOD (V)IN THE ULTIMATE ANALYSIS , THERE IS NO REVENUE EFFECT AND IT IS ONLY TIMING OF TAXATION OF LOSS/PROFIT. THE TRIBUNAL IN THE CASE OF VENUS JEWEL (SUPRA) HAS VIDE PARA 10 OBSERVED AND HELD AS UNDER : 10. THE ISSUE ARISING IN THE PRESENT APPEAL BEFORE US IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL AND ALSO IN VIEW OF THE RATIO L AID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA PVT. LTD. (SUPRA) WHICH SQUARELY COVERS THE ISSUE IN FAVOUR OF THE ASSESSEE, WE UPHOLD THE ORDER OF THE CIT(A) IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF THE LOSS INCURRED ON FORWARD CONTRACT IN FOREIGN EXCHANGE. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE THUS DISMISSED. THE TRIBUNAL IN THE CASE OF RIKIN EXPORTS (SUPRA) HAS VIDE PARA 6 HELD AS UNDER : 6. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE AND IN THE LIGHT OF THE DECISION CITED (SUPRA), WE UPHOLD THE ORDER PASSED BY CIT(A) AND DISMISS THE APPEAL FILED BY REVENUE THE TRIBUNAL IN THE CASE OF INTER JEWL PRIVATE LIMITED (SUPRA) VIDE PARA 10 HAS OBSERVED AND HELD AS UNDER : 10. WE HAVE C AREFULLY PERUSED THE ORDER OF LD. CIT(A) AND THE DECISIONS BROUGHT TO OUR NOTICE. IN OUR CONSIDERED OPINION AND THE UNDERSTANDING OF THE FACTS WE FIND THAT THE REVENUE AUTHORITIES HAVE PROCEEDED ON A WRONG ASSUMPTION OF FACTS. WE FIND THAT THE DECISION OF THE TRIBUNALS SPECIAL BENCH IN THE CASE OF BANK OF BAHRAIN & KUWAIT (SUPRA) SQUARELY APPLY ON THE FACTS OF THE CASE AND ALSO BY THE VARIOUS JUDICIAL PRONOUNCEMENTS LIKE KUMBH GEMS IN ITA NO. 6600/MUM/2012, H. DIPAK & CO. IN ITA NO. 7629/MUM/2011, BHAVANI GEMS IN ITA NO.2855/MUM/2010 AND M/S. SUTARIYA GEMS PVT. LTD. IN 3361/MUM/2013. THEREFORE, WE HAVE NO HESITATION IN 14 ITA NO. 7012 /MUM/201 2 SETTING ASIDE THE ORDER OF LD. CIT(A) AND IN DIRECTING THE AO TO DELETE THE ADDITION OF RS.2,59,623/ - . GROUND NO.2 IS ALLOWED. IN THE CASE OF MUNJANI BROS, THE TRIBUNAL OBSERVED AND HELD AS UNDER : 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES. WE HAVE ALSO GONE THROUGH VARIOUS DECISIONS RELIED UPON BY THE CIT(A) AND DECISION OF THE TRI BUNAL RELIED BY THE COUNSEL BEFORE US, WE FIND THAT ON IDENTICAL FACTS, THE TRIBUNAL HAS FOLLOWED THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL AND ALSO THE DECISIONS OF THE HONBLE SUPREME COURT AT PARA 7 ON PAGE 3 AND 4 OF ITS ORDER . AS NO DISTINGUI SHING DECISION HAS BEEN BROUGHT BEFORE US BY THE DR , RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT AND OUR COORDINATE BENCHES NO INTERFERENCE IS CALLED FOR IN THE FINDINGS OF THE CIT(A). APPEAL FILED BY THE REVENUE IS DISMISSED. 8 . I N VIEW OF THE FACTS OF THE ASSESSEE AND VARIOUS JUDICIAL DECISIONS OF THE COORDINATE BENCHES FOLLOWING THE DECISION OF APEX COURT IN THE CASE OF WOOLWARD GOVERNOR INDIA PVT. LTD(SUPRA) AND SPECIAL BENCH DECISION IN THE CASE OF BANK OF BAHRAIN AND KUWAIT(SU PRA) , WE ARE OF THE CONSIDERED VIEW THAT CASE OF THE ASSESSEE IS FULLY COVERED BY THE DECISIONS OF THE COORDINATE NOTE BENCHES AND WE THEREFORE RESPECTFULLY FOLLOWING THE SAME ALLOW THE APPEAL OF THE ASSESSEE ON THE ISSUE OF MTM LOSSES BY DELETING THE DI SALLOWANCE OF RS. 2,13,43,725/ - . THE AO IS DIRECTED ACCORDINGLY. 9 . IN RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 26TH FEBRUARY , 201 6 SD SD ( C.N. PRASAD ) ( RAJESH KUMAR) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 26. 02 .201 6 SRL,SR.PS 15 ITA NO. 7012 /MUM/201 2 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI