Case Law Details
DCIT Vs Delight Suppliers Pvt. Ltd. (ITAT Kolkata)
Currency derivative loss cannot be treated as Bogus on the basis of retracted statement with no corroborative evidence and ITAT allows benefit of safe harbour rule of 5% under 3rd proviso to Section 50C.
The case of DCIT Vs Delight Suppliers Pvt. Ltd. before the Income Tax Appellate Tribunal (ITAT) Kolkata for the Assessment Year 2012-13 involves intricate issues concerning currency derivative losses and the application of statutory provisions related to capital gains.
Analysis:
Bogus Loss on Currency Derivatives: The Revenue contended that the currency derivative loss incurred by the assessee should be treated as bogus. This assertion was primarily based on the statement of Sachet Saraf, Director of M/s. Man Gold Vanijya Pvt. Ltd., supported by purported corroborative evidence. However, upon scrutiny, it was found that the transactions were conducted legitimately on the MCX Stock Exchange platform. Additionally, the retraction of Saraf’s statement weakened the Revenue’s case significantly. The absence of further investigation by the Assessing Officer (AO) and the lack of corroborative evidence led the ITAT to uphold the deletion of the addition of Rs. 1,54,38,794/-.
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