Foreign exchange loss due to currency fluctuation was not a speculation but a business loss

DCIT Vs Acalmar Oils & Fats Ltd. (ITAT Ahmedabad) Conclusion: Forward contracts in the nature of hedging transactions in course of normal import export activities to cover up losses on account of foreign exchange valuation difference results in business losses and not speculative one. Held: Assessee in order to hedge against the foreign currency liability had entered a foreign option contract with ICIC Bank in July, 2007. Due to sudden and unexpected fall in the value of USD Vs. Swiss currency in the math of March 2008, assessee had incurred foreign exchange loss. AO disallowed the claim o...