DCIT Vs J. K. Techno soft Ltd (ITAT Delhi)
Conclusion: Forward mark contracts on foreign currency was incurred during the normal course of business and the losses incurred were the part and parcel of the business activity of assessee, which were allowable as business expenditure and not speculative in nature, thus any expenditure incurred for such premium account computed as difference between the forward rate and the spot rate in such contract was also to be treated as business expenditure incurred in the course of business by the assessee.
Held: During the previous year, assessee claimed deduction of Rs. 18,44,736/- under the forward premium account which represented the amortized loss, computed as the difference between the forward rate and the spot rate at the date of the inspection of the forward exchange contract. AO disallowed the same holding that expenditure claimed by the assessee was speculative in nature and hence not allowable as business expenditure which had been deleted by CIT(A). It was held that CIT(A) had committed no error in deleting the addition observing that the forward mark contracts on foreign currency was incurred during the normal course of business and the losses incurred were the part and parcel of the business activity of assessee, which were allowable as business expenditure and not speculative in nature, thus any expenditure incurred for such premium account computed as difference between the forward rate and the spot rate in such contract was also to be treated as business expenditure incurred in the course of business by the assessee. There was no error in the order of CIT(A) in deleting the addition of Rs. 18,44,736/-,
