ACIT CIR 15(1), MUMBAI V. SRUSTI DIAM, MUMBAI

ITA 9125/MUM/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71357 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 25-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 29-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K K VED
• Keywords: Business expenditure; Speculation loss; Revenue expenditure
• Section: 143(3); 43(5)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , , BEFORE SHRI SANJAY ARORA , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMB ER . / ITA NO. 9125 /MUM./ 2010 ( / ASSESSMENT YEAR : 20 0 7 08 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 15(1), MATRU MANDIR TARDEO ROAD, MUMBAI 400 007 .. / APP ELLANT V/S M/S. SRUSTI DIAM 107, THE JEWEL MAMAPARMANAND MARG OPERA HOUSE, MUMBAI 400 004 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAWFS3133N / REVENUE BY : MR. P.K. SINGH / ASSESSE E BY : MR. K.K. VED / DATE OF HEARING 25 .0 9 .2013 / DATE OF ORDE R 30.09.2013 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL IS PREFERRED BY THE REVENUE , CHALLENGING THE IMPUGNED ORDER DATED 19 TH OCTOBER 2010 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) X X VI , MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE M/S. SRUSTI DIAM 2 ACT') FOR THE ASSESSMENT YEAR 200 7 08 , VIDE WHICH, THE SOLE GROUND RAISED BY THE REVENUE, READS AS UNDER: 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 24,15,6281 - MADE BY THE AO BY TREATING THE LOSS FROM CANCELLATION OF FORWARD EXCHANGE CONTRACT A S SPECULATIVE LOSS, THEREFORE NOT ALLOWABLE AGAINST ANY OTHER TAXABLE INCOME EXCEPT THE SPECULATIVE PROFIT BY IGNORING THE FACT SUCH CONTRACTS ARE FUTURE DATES AND REMAINED UNSETTLED AS ON LAST DATE OF FINANCIAL YEAR. THE LEARNED CIT(A) ALSO FAILED TO APPR ECIATE THAT AS ON THE YEAR END SUCH LOSSES ARE ENTRIES ONLY WHICH ARE TO BE CARRIED FORWARD TO THE SUBSEQUENT YEAR, HENCE THE NATURE OF LIABILITIES IS CONTINGENT IN NATURE WHICH CAN NOT BE SET OFF AGAINST ANY OTHER INCOME.' 2. FACTS IN BRIEF : THE ASSESSEE , IN THE PRESENT CASE, IS A PARTNERSHIP FIRM ENGAGED PURCHASE, SALE AND MANUFACTURING OF CUT AND POLISHED DIAMONDS. IT HAS SUFFERED A LOSS OF ` 24,15,628, DURING THE YEAR ON ACCOUNT OF CANCELLATION OF FORWARD EXCHANGE CONTRACT DURING THE COURSE OF ITS BUSI NESS OF DIAMONDS, AS PER THE FOLLOWING DETAILS: DATE FORWARD EXCHANGE CONTRACT NO. FOREIGN EXCHANGE BOOKED US $ RATE ( ` ) FOREIGN EXCHANGE CANCELLED US$ RATE ( ` ) LOSS INCLUDING BANK CHARGES ( ` ) 12.10.06 MS 1517 5,00,000 46.88 5,00,000 45.57 6,55,113 12. 10.06 MS 1538 5,00,000 46.61 5,00,000 45.57 5,20,113 16.11.06 MS 1584 10,00,000 46.285 2,34,000 45.09 2,79,743 27.02.07 MS 1605 20,00,000 45.64 6,36,122.91 44.13 9,06,659 24,15,628 THE, ASSESSING OFFICER, HOWEVER, DISALLOWED THE SAME BY TREAT ING IT AS SPECULATIVE LOSS. 3. BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE MADE A VERY ELABORATE SUBMISSIONS AND RELIED UPON VARIOUS CASE LAWS INCLUDING THAT OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S BADRIDAS GAURIDU PVT . LTD., 261 ITR 256 (BOM.). THE MAIN PLANK OF THE ASSESSEES SUBMISSION WAS THAT, IT WAS NOT A DEALER IN FOREX. IT IMPORTS ROUGH DIAMONDS FOR WHICH PAYMENT IS REQUIRED TO BE MADE IN FOREX. TO HEDGE ITS RISK AGAINST FLUCTUATION M/S. SRUSTI DIAM 3 IN FOREX, IT ENTERS INTO FORW ARD CONTRACTS FOR BOOKING OF FOREX WITH BANK FOR A SPECIFIED PERIOD. SUCH A CANCELLATION OF FORWARD CONTRACT DUE TO CERTAIN FACTORS, RESULTS INTO LOSS OR GAIN DEPENDING UPON THE THEN PREVAILING EXCHANGE RATE. THE LEARNED COMMISSIONER (APPEALS), AFTER DULY APPRECIATING THE ASSESSEES SUBMISSIONS AND ALSO VARIOUS DECISIONS RELIED UPON BEFORE HIM, DELETED THE ADDITION AFTER HOLDING AND OBSERVING AS UNDER: I HAVE PERUSED THE ASSESSMENT O RD ER, WRITTEN SUBMISSION AND OTHER DETAILS FILED BY THE APPELLANT'S COUN SEL AND ORAL SUBMISSION MADE IN THE COURSE OF HEARING. FROM THE FACTS PLACED ON RECORD, IT EMERGES THAT THE ASSESSEE IMPORTS ROUGH DIAMONDS AND AFTER ASSORTMENT, MANUFACTURE CUT AND POLISHED DIAMONDS. TO HEDGE AGAINST THE RISK ARISING FROM FLUCTUATION IN F OREIGN EXCHANGE RATES, IT ENTERS INTO FORWARD CONTRACTS WITH BANKS FOR BOOKING OF FOREIGN EXCHANGE DEPENDING UPON ITS ANTICIPATED SCHEDULE OF REMITTANCES AGAINST IMPORTS. GENERALLY, THE REMITTANCES ARE MADE ON THE BASIS OF THESE FORWARD FOREIGN EXCHANGE CO NTRACTS. HOWEVER, SOMETIMES DUE TO FACTORS BEYOND THE ASSESSEE'S CONTROL, LIKE NON - AVAILABILITY OF FUNDS, INSUFFICIENT OUTSTANDING IMPORTS, ETC., THE ASSESSEE IS COMPELLED TO CANCEL THESE CONTRACTS, WHICH MAY RESULT IN GAIN OR LOSS DEPENDING UPON PREVAILIN G EXCHANGE RATE. FROM THE DETAILS GIVEN DURING APPELLATE PROCEEDINGS, IT IS FOUND THAT ASSESSEE IMPORTED ROUGH DIAMONDS WORTH US$ 1,68,34,942.27. AGAINST THESE IMPORTS, THE FOREIGN EXCHANGE BOOKED BY THE ASSESSEE THROUGH FORWARD FOREIGN EXCHANGE CONTRACTS, WORKED OUT TO US$ 68,41,407.03. OUT OF IT, FORWARD EXCHANGE CONTRACTS TO THE EXTENT OF US$ 18,70,122.91 WERE CANCELLED BECAUSE OF FACTOR BEYOND THE ASSESSEE'S CONTRO L THESE FACTS CLEARLY SHOWED THAT THE ASSESSEE WAS NOT A DEALER IN FOREIGN EXCHANGE AND BO OKING OF FOREIGN CURRENCIES THROUGH FORWARD CONTRACTS WAS ESSENTIALLY A PART AND PARCEL OF ITS DIAMOND MANUFACTURING BUSINESS. THE FACTS OF THE ASSESSEE'S CASE ARE SQUARELY COVERED BY THE JUDGMEN T OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF C.LT. VS. BADR IDAS GAURIDU PVT. LTD. (261 ITR 256), HON'BLE CALCUTTA HIGH COURT IN THE CASE OF C.LT. VS. SOORAJMULL NAGARMULL (129 ITR 169) AND HON'BLE BOMBAY BENCH OF INCOME - TAX APPELLATE TRIBUNAL IN THE CASE OF VOLTAS INTERNATIONAL LTD. VS. A.C.LT. (126 TTJ 720). FUR THER, THE DELHI BENCH OF INCOME - TAX APPELLATE TRIBUNAL HELD IN THE CASE OF MUNJAL SHOWA LTD. VS. D.C.LT. (94 TTJ 227) THAT 'FOREIGN CURRENCY OR ANY CURRENCY IS NEITHER COMMODITY NOR SHARES. THE SALE OF GOODS ACT SPECIFICALLY EXCLUDES CASH FROM THE DEFINITI ON OF GOODS. BESIDES, NO PERSON OTHER THAN AUTHORIZED DEALERS AND MONEY CHANGERS ARE ALLOWED IN INDIA TO TRADE IN FOREIGN CURRENCY, MUCH LESS SPECULATE. S.8 OF THE FOREIGN EXCHANGE REGULATIONS ACT, 1973, PROVIDES THAT EXCEPT WITH PRIOR G ENERAL OR SPECIAL P ERMISSION OF THE RBI, NO PERSON OTHER THAN AN AUTHORIZED DEALER SHALL PURCHASE, ACQUIRE, BORROW OR SELL FOREIGN CURRENCY. IN FACT, PRIOR TO THE LERMS, RESIDENTS IN INDIA WERE NOT EVEN PERMITTED TO CANCEL FORWARD CONTRACTS. THE PRESUMPTION OF ANY SPECULATIV E TRANSACTION IS, THEREFORE, DIRECTLY REBUTTED IN VIEW OF THE LEGAL IMPOSSIBILITY AND IN VIEW OF THE FACT THAT FOREIGN CURRENCY WAS NEITHER COMMODITY NOR SHARES.' CONSIDERING THE LEGAL POSITION AND FACTS IN THE ASSESSEE'S CASE, THE PAYMENT MADE TO BANK FOR CANCELLATION OF FOREIGN EXCHANGE FORWARD CONTRACTS IS NOT SPECULATIVE LOSS WITHIN THE AMBIT OF SEC.43(5) OF THE INCOME - TAX ACT, 1961 AND THE SAME IS ALLOWABLE AS A BUSINESS EXPENDITURE. AS LD. AO IS DIRECTED TO DELETE THE ADDITION OF RS.24,15,628/ - FROM THE ASSESSMENT . M/S. SRUSTI DIAM 4 4. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED UPON THE FINDINGS OF THE ASSESSING OFFICER AND SUBMITTED THAT THE LEARNED COMMISSIONER (APPEALS) HAS FAILED TO APPRECIATE THAT AS ON THE YEAR END, SUCH LOSSES ARE THE EN TRIES ONLY WHICH ARE TO BE CARRIED FORWARDED TO THE SUBSEQUENT YEAR, HENCE, THE NATURE OF LIABILITY IS CONTINGENT IN NATURE WHICH CANNOT BE SET OFF AGAINST ANY OTHER INCOME. 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE POINT IN ISSUE IS SQUARELY COVERED BY NOT ONLY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN BADRIDAS GAURIDU PVT. LTD. (SUPRA) BUT ALSO BY THE LATEST DECISION OF THE HON'BLE GUJARAT HIGH COURT IN CIT V/S FRIENDS AND FRIENDS SHIPPING PVT. LTD. [2013], 35 TAXMAN. COM 553 (GUJ.). HE ALSO CLARIFIED THAT THE ARGUMENTS RAISED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IS WHOLLY DIVORCED FROM THE FACTS AND MATERIAL ON RECORD AS IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE NATURE OF LIABILITIES IS CONTINGENT IN N ATURE. 6. AFTER CONSIDERING THE RIVAL CONTENTIONS AND ALSO GOING THROUGH THE RELEVANT FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) AND ALSO THE CASE LAWS RELIED UPON BY THE LEARNED COUNSEL, WE FIND THAT INSOFAR AS THE FACTS NARRAT ED BY THE LEARNED COMMISSIONER (APPEALS) IN HIS FINDING SEEMS TO BE UNDISPUTED. THE ASSESSEE HAS IMPORTED ROUGH DIAMOND WORTH US$ 16834942. AGAINST THESE IMPORTS, FOREIGN EXCHANGE BOOKED BY THE ASSESSEE THROUGH FORWARD FOREIGN EXCHANGE CONTRACTS WORKS OUT TO US$ 6841407. OUT OF IT, THE FORWARD EXCHANGE CONTRACTS TO THE EXTENT OF US$ 1870123, WERE CANCELLED BECAUSE OF THE FACTORS BEYOND THE ASSESSEES CONTROL. THE ASSESSEE WAS NOT A DEALER IN FOREIGN EXCHANGE AND BOOKING OF FOREIGN CURRENCIES THROUGH THE FOR WARD CONTRACT , AS THE ASSESSEE WAS IN DIAMOND MANUFACTURING BUSINESS AND SUCH A LOSS WAS ESSENTIALLY DUE TO EXCHANGE RATE FLUCTUATION IN THE COURSE OF ITS BUSINESS TRANSACTIONS. ON THESE FACTS, THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN BADRI DAS GAURIDU PVT. LTD. (SUPRA) IS SQUARELY APPLICABLE. NOT ONLY THIS, THE DECISION OF HON'BLE GUJARAT HIGH COURT IN FRIENDS AND FRIENDS SHIPPING PVT. LTD. (SUPRA) M/S. SRUSTI DIAM 5 FOLLOWING THE BOMBAY HIGH COURT DECISION HAS DECIDED THIS ISSUE BY HOLDING IT TO BE NOT IN THE NATURE OF SPECULATIVE LOSS IN SUCH A NATURE OF TRANSACTION. THE RELEVANT FACTS AND OBSERVATIONS MADE BY THE HON'BLE GUJARAT HIGH COURT ARE AS UNDER: 2. FROM THE RECORD, IT EMERGES THAT THE ASSESSEE WHO IS AN EXPORTER HAD ENTERED INTO FORWARD CONTRACTS WITH THE BANKERS TO HEDGE AGAINST ANY LOSS ARISING OUT OF FLUCTUATION IN FOREIGN CURRENCY. FROM THE ORDER PASSED BY THE CIT(A), WE GATHER THAT THE CONTRACT BETWEEN THE ASSESSEE AND THE BANK PROVIDED THAT THE ASSESSEE WOULD BUY SOME QUANTITY OF DOLLARS AT A PARTICULAR RATE TO COVER EXPORT BILL PAYMENT. THE CONTRACT GAVE DELIVERY OPTION DATES. THE ASSESSEE HAD TO TAKE THE DELIVERY WITHIN THE PERIOD INDICATED IN THE CONTRACT AND IF FOR SOME REASON IT WAS NOT POSSIBLE TO DO SO, THE ASSESSEE HAD TO GIVE INST RUCTIONS TO THE BANK FOR CANCELLATION OF THE CONTRACT. SINCE ON SOME OCCASIONS, THE ASSESSEE WAS REQUIRED TO GIVE INSTRUCTIONS FOR CANCELLATION OF FORWARD CONTRACT, THE ASSESSEE HAD TO PAY AGREED CHARGES TO THE BANK. IN THE PROCESS THE ASSESSEE SUFFERED LO SS OF RS.15 LACS. THE ASSESSING OFFICER DISALLOWED THE LOSS HOLDING IT AS SPECULATIVE IN NATURE AND THEREFORE COVERED UNDER SUB - SECTION (5) OF SECTION 43 OF THE ACT. IN FURTHER APPEAL, CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER RELYING ON THE DECI SION OF THE ANDHRA PRADESH HIGH COURT IN THE CASE OF M G. BROS. V. CIT 11985] 154 ITR 695/20 TAXMAN 90 AND ALSO IN THE CASE OF CIT V. JOSEPH JOHN {L968] 67 ITR 74 (SC). 'ON FURTHER APPEAL, THE TRIBUNAL DELETED THE DISALLOWANCE RELYING ON THE DECISION OF TH E BOMBAY HIGH COURT IN THE CASE OF CIT V. BADRIDAS GAURIDU (P.) LTD. 12003] 261 ITR 256/[2004] TAXMAN 376. WE MAY NOTICE THAT THE BOMBAY HIGH COURT IN THE SAID DECISION HAD RELIED ON A DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF CIT V. SOORAJMULL NA GARMULL F1981] 129 ITR 169/5 TAXMAN 289. 3. COUNSEL FOR THE REVENUE VEHEMENTLY CONTENDED THAT THE ASSESSING OFFICER AS WELL AS THE CIT (APPEALS) HAD EXAMINED THE ISSUE THREADBARE. IT WAS FOUND THAT THERE WAS NO DIRECT CONNECTION BETWEEN THE EXPORT CONT RACT AND THE BOOKING OF DOLLARS BY THE ASSESSEE. THE ENTIRE TRANSACTION WAS THUS IN THE NATURE OF SPECULATION. 4. ON THE OTHER HAND, LEARNED COUNSEL SHRI THAKER APPEARING ON BEHALF OF, THE ASSESSEE CONTENDED THAT THE ISSUE IS SQUARELY COVERED BY THE DE CISION OF THE BOMBAY HIGH COURT IN THE CASE OF BADRIDAS GAURIDU (P.) LTD. (SUPRA). THE ASSESSEE IS ADMITTEDLY NOT A DEALER IN FOREIGN EXCHANGE. THE CHARGES THAT THE ASSESSEE HAD TO PAY TO THE BANK WERE IN THE NATURE OF REVENUE EXPENDITURE IN THE COURSE OF BUSINESS. COUNSEL FURTHER SUBMITTED THAT THE RESERVE BANK OF INDIA'S GUIDELINES WOULD NOT PERMIT THE BANK TO ENTER INTO A FORWARD CONTRACT WITH RESPECT TO FOREIGN CURRENCY UNLESS THE ASSESSEE HAD EXPORT CONTRACT ON HAND. 6. IN THE DECISION OF THE BO MBAY HIGH COURT, THE ASSESSEE WAS IN THE BUSINESS OF EXPORT OF COTTON. THE ASSESSEE HAD ENTERED INTO FORWARD CONTRACT WITH BANKS IN RESPECT OF FOREIGN EXCHANGE. SOME OF THESE CONTRACTS COULD NOT BE HONOURED FOR WHICH THE ASSESSEE HAD TO PAY RS. 13.50 LA CS WHICH WAS DEBITED TO THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE CLAIMED THE SUM AS BUSINESS LOSS. REVENUE WAS OF THE OPINION THAT THE LOSS WAS SPECULATIVE IN NATURE. BOMBAY HIGH COURT FOLLOWING THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF S OORAJMULL NAGARMULL (SUPRA) HELD THAT THE EXPENDITURE WOULD NOT BE COVERED UNDER SECTION 43(5) OF THE ACT AS SPECULATIVE TRANSACTION. IT WAS OBSERVED AS UNDER: M/S. SRUSTI DIAM 6 'THE ASSESSEE WAS NOT A DEALER IN FOREIGN EXCHANGE. THE ASSESSEE WAS A COTTON EXPORTER. THE ASSESSEE WAS AN EXPORT HOUSE. THEREFORE, FOREIGN EXCHANGE CONTRACTS 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 CON SIDERED 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 COMMODITY IS SETTLED ITEM WISE THAN BY THE ACTUAL DELIVERY OR TRANSFER OF SUCH COMMODITY. HOWEVER, AS STATE 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 EXP ORT CONTRACTS ENTERED INTO BY THE ASSESSEE FOR EXPORT OF COTTON IN SOME CASE FAILED. IN THE CIRCUMSTANCES, THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION IN RESPECT OF RS. 13.50 LAKHS AS A BUSINESS LOSS. THIS MATTER IS SQUARELY COVERED BY THE JUDGMENT OF TH E CALCUTTA HIGH COURT, WITH WHICH WE AGREE, IN THE CASE OF CL'T V. SOORAJMULL NAGURMULL [1 981] 129 ITR 169.' BEFORE THE CALCUTTA HIGH COURT, THE ASSESSEE WAS A FIRM ENGAGED IN THE BUSINESS OF IMPORT AND EXPORT OF JUTE. IN COURSE OF BUSINESS, THE ASSESSEE WOULD ENTER INTO FORWARD CONTRACT IN FOREIGN EXCHANGE IN ORDER TO COVER THE LOSS WHICH MAY ARISE DUE TO DIFFERENCE IN FOREIGN EXCHANGE VALUATION. IN ONE SUCH CONTRACT, THE ASSESSEE HAD TO PAY TO THE BANK DIFFERENCE OF RS. 80,491/ - WHICH WAS CLAIMED BY THE ASSESSEE AS REVENUE EXPENDITURE. THE ASSESSING OFFICER DISALLOWED THE CLAIM. THE HIGH COURT HELD THAT THE ASSESSEE WAS NOT A DEALER IN FOREIGN EXCHANGE AND THE FOREIGN EXCHANGES WERE ONLY INCIDENTAL TO THE ASSESSEE'S REGULAR COURSE OF BUSINESS AND T HE LOSS WAS THUS NOT A SPECULATIVE LOSS BUT INCIDENTAL TO THE ASSESSEE'S BUSINESS AND ALLOWABLE AS SUCH. FACTS IN THE PRESENT CASE ARE VERY SIMILAR. ADMITTEDLY, THE ASSESSEE IS NOT A DEALER IN FOREIGN EXCHANGE. FOR THE PURPOSE OF HEDGING THE LOSS DUE TO FLUCTUATION IN FOREIGN EXCHANGE WHILE IMPLEMENTING THE EXPORT CONTRACTS, THE ASSESSEE HAD ENTERED INTO FORWARD CONTRACT WITH THE BANKS. IN SOME CASES, THE EXPORT COULD NOT BE EXECUTED AND THE ASSESSEE HAD TO PAY CERTAIN CHARGES TO THE BANK AND THEREBY I NCURRED CERTAIN EXPENSES. THESE EXPENSES THE ASSESSEE CLAIMED BY WAY OF EXPENDITURE TOWARDS BUSINESS. WE DO NOT FIND THAT THE TRANSACTION CAN BE STATED TO BE SPECULATION AS TO COVER UNDER SUB - SECTION (5) OF SECTION 43 OF THE ACT . 7. IN VIEW OF THE AFORESAI D DECISION , WHICH IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE ALSO THAT T HE ASSESSEE IS AN EXPORTER WHO HAD ENTERED INTO FORWARD CONTRACT AND DURING THE COURSE OF IMPORT BUSINESS AND HAS INCURRED A LOSS ARISING DUE TO FLUCTUATION IN FOREIGN EXC HANGE , THEREFORE, SUCH A LOSS IS TO BE ALLOWED AS BUSINESS LOSS . CONSEQUENTLY, WE DO NOT FIND ANY REASON TO DISTURB THE FINDINGS GIVEN BY THE LEARNED COMMISSIONER (APPEALS) ON THIS ISSUE AND DECLINE TO INTERFERE IN THE MATTER AS SUCH. M/S. SRUSTI DIAM 7 8. 8 . IN THE RESULT, REVENUES APPEAL IS TREATED AS DISMISSED. 30 TH SEPTEMBER 2013 ORDER PRONOUNCED IN THE OPEN COURT O N 30 TH SEPTEMBER 2013 SD/ - SANJAY ARORA ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 30 TH SEPTEMBER 2013 / COPY OF THE ORDER FORWARDED TO : (1) / THE ASSESSEE ; (2) / THE REVENUE; (3) ( ) / THE CIT(A ) ; (4) / THE CIT, MUMBAI CITY CONCERNED ; (5) , , / THE DR, ITAT, MUMBAI ; (6) / GUARD FILE . / TRUE COPY / BY O RDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI M/S. SRUSTI DIAM 8 DATE INITIAL DICTATION GIVEN ON COMPUTER 1. DRAFT DICTATED ON 26.9.2013 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 26.9.2013 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 26.9.2013 JM/AM 4. DR AFT DISCUSSED/APPROVED BY SECOND MEMBER 26.9.2013 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 26.9.2013 SR.PS 6. DATE OF PRONOUNCEMENT 30.9.2013 SR.PS 7. FILE SENT TO THE BENCH CLERK 30.9.2013 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER