IN INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA No.1465/Mds/2016 Assessment Year :2010-11 Deputy Commissioner of M/s S P Apparels Limited, Income Tax, v. No.39-A, VOC Extension Street, Circle 1, Kaikattipudur, Tirupur. Avinashi 641 654. PAN : AAJCS 4031 P (Appellant) (Respondent) Appellant by : Shri V. Nanda Kumar, JCIT Respondent by : Sh. T. Banusekar, CA Date of Hearing : 17.08.2016 Date of Pronouncement : 30.09.2016 ORDER PER N.R.S. GANESAN, JUDICIAL MEMBER: This appeal of Revenue is directed against order of Commissioner of Income Tax (Appeals) 3, Coimbatore, dated 30.12.2015 and pertains to assessment year 2010-11. 2. There was delay of 59 days in filing this appeal by Revenue. Revenue has filed petition for condonation of 2 I.T.A. No.1465/Mds/16 delay. We have heard Ld. Departmental Representative and Ld. representative for assessee. We find that there was sufficient cause for not filing appeal before stipulated time. Therefore, we condone delay and admit appeal. 3. Shri V. Nanda Kumar, Ld. Departmental Representative, submitted that assessee suffered loss in foreign exchange derivative to extent of `1,51,45,677/-. loss claimed by assessee was disallowed by Assessing Officer on ground that it is speculative transaction. On appeal by assessee, CIT(Appeals) found that derivative contracts were not entered into with intention to manage exposure of export proceeds received by assessee. CIT(Appeals) has also found that transaction did not attract conditions provided in second limb of Section 43(5) of Income-tax Act, 1961 (in short 'the Act'). Ultimately, by placing reliance on order of this Tribunal in assessee's own case for assessment year 2008-09 in I.T.A. No.1327/Mds/2014 dated 17.04.2015, CIT(Appeals) allowed claim of assessee. According to Ld. D.R., foreign exchange derivative transactions are covered by proviso to Section 43(5)(a) of Act. Since transaction was not done on actual delivery, according to Ld. D.R., it is speculative transaction as provided 3 I.T.A. No.1465/Mds/16 in Section 43(5) of Act, therefore, CIT(Appeals) is not justified in allowing claim of assessee. 4. On contrary, Sh. T. Banusekar, Ld. representative for assessee, submitted that assessee entered into cross currency option contracts on basis of expert advice and scientific analysis of currency movements across various currencies. According to Ld. representative, contracts were entered into by assessee with view to effectively manage underlying exposure on account of export proceeds receivable by assessee. Therefore, according to Ld. representative, proviso to Section 43(5) is not applicable at all. loss on account of foreign currency derivative is purely business loss, therefore, loss suffered by assessee in course of business is allowable under Section 28 of Act. In fact, identical issue was considered by this Tribunal in assessee's own case for assessment year 2008-09 in I.T.A. No. 1327/Mds/2014 dated 17.04.2015. This Tribunal allowed similar claim of assessee as business loss. CIT(Appeals) by placing reliance on order of this Tribunal in assessee's own case, for assessment year 2008-09, allowed claim of assessee. Therefore, 4 I.T.A. No.1465/Mds/16 according to Ld. representative, Revenue cannot have any grievance at all. 5. We have considered rival submissions on either side and perused relevant material available on record. During course of business transaction, assessee entered into cross currency option contracts in order to protect loss suffered on account of export proceeds receivable by assessee. Assessing Officer found that foreign currency derivative transaction was in nature of speculative transaction within meaning of Section 43(5) of Act, therefore, loss suffered by assessee cannot be allowed against income from business. identical set of facts was examined by this Tribunal in assessee's own case for assessment year 2008-09 and loss suffered by assessee in such transaction was held to be business loss by this Tribunal. Thus, this Tribunal for assessment year 2008-09 in assessee's own case allowed similar loss suffered by assessee. Since facts are identical for year under consideration, this Tribunal is of considered opinion that CIT(Appeals) has rightly followed order of this Tribunal for assessment year 2008-09 and allowed claim of assessee. 5 I.T.A. No.1465/Mds/16 This Tribunal do not find any reason to interfere with order of lower authority and accordingly same is confirmed. 6. In result, appeal filed by Revenue is dismissed. Order pronounced on 30th September, 2016 at Chennai. sd/- sd/- (A. Mohan Alankamony) (N.R.S. Ganesan) Accountant Member Judicial Member Chennai, th Dated, 30 September, 2016. Kri. Copy to: 1. Appellant 2. Respondent 3. CIT(A)-3, Coimbatore 4. CIT, Coimbatore 5. DR 6. GF. Deputy Commissioner of Income-tax, Circle–1, Tirupur v. M/s S P Apparels Limited