Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: articles on VAT and GST in India :: ACCOUNTING STANDARDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: form 3cd :: ACCOUNTING STANDARD :: cpt :: empanelment :: VAT RATES :: due date for vat payment :: VAT Audit :: TDS :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TAX RATES - GOODS TAXABLE @ 4%
 
 
ITAT-Constitution of Benches »
 Income Tax Appellate Tribunal, Mumbai Benches Mumbai Consolidated Cause List of SA/MA/Pronouncement for Friday 13.01.2017
 Income Tax Appellate Tribunal, Mumbai Benches Mumbai Consolidated Cause List of SA/MA/Pronouncement for Friday 13.01.2017
  Income Tax Appellate Tribunal, Kolkata Benches Kolkata Constitution of kolkata Benches for One Week From 16.01.2017 To 19/01/2017
 Income Tax Appellate Tribunal Kolkata Benches, Kolkata Consolidated list of Orders for Pronouncement on06/01/2017
 Income Tax Appellate Tribunal Chenni Benches, Chenni Constitution for The week 09/01/2017 To 12/01/2017
 Income Tax Appellate Tribunal Kolkata Benches, Kolkata Sub : Cause list for the Period from 09/01/2017 To 12/01/2017 (13-01-2017 is M.A.Day)
 Income Tax Appellate Tribunal Kolkata Benches, Kolkata Sub : Cause list for the Period from 09/01/2017 To 12/01/2017 (13-01-2017 is M.A.Day)
 Icome Tax Appellate Tribunal : Mumbai Benches : Mumbai of Constitution of Benches for the Period form 19/12/2016 To 12/01/2017
 Icome Tax Appellate Tribunal : Kolkata Benches : Kolkata Consolidated list of Orders ready for Pronouncement on 06/01/2017
 Income Tax Appellate Tribunal Pune Benches, Pune Causelist for The Week Ending 13/o1/2017
 Income Tax Appellate Tribunal Jaipur Benches Jaipur

S. Vinodkumar Diamonds Pvt. Ltd vs. ACIT (ITAT Mumbai)
May, 08th 2013

S. 43(5): Loss on foreign currency forward contracts by a manufacturer/ exporter is a “speculation loss” and not a “hedging loss”

The assessee, a dealer in diamonds, entered into forward contracts in US dollars. Some of the contracts were cancelled during the year and some were outstanding at the end of the year. The assessee suffered a loss of Rs. 4.02 crores on account of the cancellation and “marked to market” of the said forward contracts and claimed that sum as a deduction. The AO & CIT(A), relied on Instruction No. 03/2010 dated 23-3-2010 and held that the said loss arose on account of a “speculative transaction” while the assessee claimed that it arose out of a “hedging transaction”. HELD by the Tribunal:

There is a difference between a “speculative transaction” and a “hedging transaction”. S. 43(5) defines a “speculative transaction” to mean a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips. Proviso (a) to s. 43(5) refers to a “hedging transaction” as a contract in respect of raw materials or merchandise entered into by a person in the course of his manufacturing or merchandising business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or merchandise sold by him. In order for a transaction to be a “hedging transaction”, the commodity dealt in should be the same. If the subject matter of the transaction is different, it cannot be termed a hedging transaction. Also, the merchandise in respect of which the forward transactions have been entered into by the assessee must have a direct connection with the goods sold by him. On facts, as the assessee was not dealing in Foreign Exchange, the forward transactions entered into by it cannot be held to be hedging transactions. As the assessee is dealing in diamonds, only the forward contracts entered into for diamonds would be covered by Proviso (a) to s. 43(5). Consequently, the loss suffered by the assessee is a speculative loss.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Quality Assurance Services Testing and Re-testing

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions