Losses arising to Foreign Institutional Investors due to cancellation of foreign exchange forward contract are capital in nature

The Mumbai bench of the Income-tax Appellate Tribunal, (“Tribunal”) in a ruling’ in the case of Citicorp Banking Corporation, Baharain Vs. Addl. Director of Income Tax (I.T.)-Range 1-[2011-T11-40-1TAT-MUM-INTL], held that losses arising on cancellation of foreign exchange forward contracts entered into by the assessee for protecting it against the risk of currency fluctuation would be characterized as capital loss and the said loss can be set-off against other capital gains under the provisions of the Income-tax Act, 1961 (the “Act”). Further, the Tribunal also he...