The Commissioner of Income-tax-3, Mumbai v. The Paper Products Ltd
[Citation -2017-LL-0724-4]
Citation | 2017-LL-0724-4 |
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Appellant Name | The Commissioner of Income-tax-3, Mumbai |
Respondent Name | The Paper Products Ltd. |
Court | HIGH COURT OF BOMBAY |
Relevant Act | Income-tax |
Date of Order | 24/07/2017 |
Assessment Year | 2009-10 |
Judgment | View Judgment |
Keyword Tags | transactions in derivatives • rate of foreign exchange • exchange fluctuation • foreign currency • forward contract • notional loss • actual cost |
Bot Summary: | Mr.Kotangale, the learned counsel submits that the Tribunal was not justified in allowing the claim of the Assessee on unexplained foreign exchange forward contract as such loss was only notional loss. According to the learned counsel, the Tribunal was not justified in holding that the notional loss on unexplained foreign exchange forward contract was in the nature of stock in trade capable of being valued at cost or market price. It ought to have been considered that the trading in foreign currency was not a main business of the Assessee. According to the learned counsel, notional loss arising in foreign exchange forward contract at the end of financial year was not allowable under the Income Tax Act. 302015 2 The learned counsel for the Respondent supports the Order. 4 The Apex Court has observed that the loss claimed by the Assessee on account of fluctuation in the rate of foreign exchange as on the date of the balance sheet was allowable and the Assessee was entitled for the adjustment of actual cost of imported assets. The loss due to foreign exchange fluctuation in foreign currency transactions in derivatives has to be considered on the last date of accounting year and it is deductible under Section 37(1) of the Act. |