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Case Law Details

Case Name : ACIT Vs Gimpex Pvt Ltd (ITAT Chennai)
Appeal Number : ITA No. 176/Chny/2022
Date of Judgement/Order : 09/08/2023
Related Assessment Year : 2012-13
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ACIT Vs Gimpex Pvt Ltd (ITAT Chennai)

ITAT Chennai held that actual loss arisen on account of cancellation of the forward contracts entered into with the banks to safeguard realization of export proceeds is allowable as business loss.

Facts- The assessee being resident corporate assessee is stated to be engaged in manufacturing / export of mineral ores. During assessment proceedings, it transpired that the assessee suffered loss on forward exchange contracts. The Ld. AO held that such transactions are covered under the scope of Sec. 43(5)(a) since the transactions have ultimately been settled otherwise than by actual delivery and therefore, loss would be speculative in nature. The assessee incurred loss of Rs.1083.04 Lacs on such contracts which was disallowed by AO.

CIT(A) allowed the appeal. Being aggrieved, revenue has preferred the present appeal.

Conclusion- Madras High Court in the case of CIT vs. Celebrity Fashions Ltd. has allowed the loss on forward contracts as business loss.

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