The Tax Publishers2019 TaxPub(DT) 3366 (Bom-HC)

INCOME TAX ACT, 1961

Section 28(i) Section 73

Loss on forward contract in foreign currency by an assessee engaged in import-export business would be business loss and not speculative loss.

Business loss - Forward contract in foreign currency - Export and import business - Allowability of Mark to Market loss

Revenue challenged the order of Tribunal holding that “Mark-to-Market” loss arising on revaluation of forward exchange contract on the closing date of the previous year was not a notional loss and was allowable to assessee. Held: Forward contract in foreign exchange when incidental to carrying on of export and import business of assessee and was entered into to cover up losses, if any, on account of differences in foreign currency valuations, would not be a speculative activity and it would be a business activity.

Followed:Pr. CIT v. Polar Star [Income Tax Appeal No.843 of 2016, dt. 11-12-2018] CIT v. D. Chetan & Co. (2017) 390 ITR 36 (Bom) : 2016 TaxPub(DT) 4887 (Bom-HC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :



IN THE BOMBAY HIGH COURT

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