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The Tax Publishers Dy. CIT v. Jay Chemical Inds Ltd. [ITA No. 1684/Ahd/2013, dt. 4-5-2016] : 2016 TaxPub(DT) 2282 (Ahd-Trib) Allowability of forex hedging losses *Facts:* Assessee in the manufacturing and exporting of dyes, chemicals had reported mark to market losses on hedge/forward contracts entered to protect export receivables to the tune of Rs. 2.03 crores. This was disallowed by the assessing officer holding that section 43(5) on speculative transaction does not permit the claim erroneously disregarding assessees plea of AS-11 application and Apex court decision of CIT v. Wood Ward Governor India P. Ltd. No. 2214 of 2009 has held it to be an allowable item on mercantile basis. Aggrieved department went in appeal: Held Hedge loss is an allowable expenditure - in favour of the assessee. AS-11 and Woodward Governors decision upheld.

The Tax Publishers

Dy. CIT v. Jay Chemical Inds Ltd. [ITA No. 1684/Ahd/2013, dt. 4-5-2016] : 2016 TaxPub(DT) 2282 (Ahd-Trib)

Allowability of forex hedging losses

Facts:

Assessee in the manufacturing and exporting of dyes, chemicals had reported mark to market losses on hedge/forward contracts entered to protect export receivables to the tune of Rs. 2.03 crores. This was disallowed by the assessing officer holding that section 43(5) on speculative transaction does not permit the claim erroneously disregarding assessees plea of AS-11 application and Apex court decision of CIT v. Wood Ward Governor India P. Ltd. No. 2214 of 2009 has held it to be an allowable item on mercantile basis. Aggrieved department went in appeal:

Held Hedge loss is an allowable expenditure - in favour of the assessee. AS-11 and Woodward Governors decision upheld.