RAMPURIA INDUSTRIES & INVESTMENTS LTD., ,KOLKATA vs. PRINCIPAL CIT, CENTRAL - 1, KOLKATA , KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA (Before Sri J. Sudhakar Reddy, Accountant Member & Sri S.S. Godara, Judicial Member) ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd………….……..................................……………..….......Appellant C/o. Subash Agarwal & Associates Siddha Gibson 1, Gibson Lane 2nd Floor Suite-213 Kolkata – 700 069 [PAN : AABCR 6319 P] Vs. Pr. Commissioner of Income Tax, Central (1), Kolkata….............................….…….....…..Respondent Appearances by: Shri Subash Agarwal, Advocate, appeared on behalf of the assessee. Shri Supriyo Pal, JCIT Sr. D/R, appearing on behalf of the Revenue. Date of concluding the hearing : January 15th, 2020 Date of pronouncing the order : February 26th, 2020 ORDER Per J. Sudhakar Reddy, AM :- This appeal filed by the assessee is directed against the order of the Learned Pr. Commissioner of Income Tax (Appeals) – 1, Kolkata, (hereinafter the “ld. Pr. CIT”), passed u/s. 263 of the Income Tax Act, 1961 (the ‘Act’), dt. 28/03/2018, for the Assessment Year 2013-14. 2. The assessee is a company and derives income from share trading, services and also rental income. The Assessing Officer passed an order u/s 143(3) of the Act on 19/03/2016. The ld. CIT(A) issued a showcause notice to the assessee proposing to revise the order passed by the Assessing Officer u/s 143(3) of the Act on 19/03/2016, on the ground that:- a) Currency is not covered under the definition of securities u/s 2(ac) of Securities Contracts (Regulation) Act, 1956 (‘SCRA') and hence the net loss on foreign currency transaction debited to the profit and loss account under the head “other expenses”, is a speculative loss and as the transaction of foreign currency do not qualify to be derivative transactions under the provision of Section 43(5)(d) of the Act, they cannot be treated as business transactions. Thus, he concludes that

2 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd loss on such foreign currency transaction is loss on such foreign currency transaction is speculative loss and not allowable speculative loss and not allowable as business expenditure. business expenditure. b) That the Assessing Officer has not conducted any verification o That the Assessing Officer has not conducted any verification o That the Assessing Officer has not conducted any verification of this issue during the course of assessment proceedings the course of assessment proceedings and hence there non application of mind and hence there non application of mind by the Assessing Officer. by the Assessing Officer. Thus the order is erroneous. After considering the reply of the assessee, the ld. Pr. CIT passed an order After considering the reply of the assessee, the ld. Pr. CIT passed an order After considering the reply of the assessee, the ld. Pr. CIT passed an order u/s 263 of the Act dt. 28/03/2018, wherein he has set aside the u/s 263 of the Act dt. 28/03/2018, wherein he has set aside the u/s 263 of the Act dt. 28/03/2018, wherein he has set aside the assessment order passed by the Assessing Officer u/s 143(3) of the Act on 19/03/2016 and ssed by the Assessing Officer u/s 143(3) of the Act on 19/03/2016 and ssed by the Assessing Officer u/s 143(3) of the Act on 19/03/2016 and restored to the file of the Assessing Officer to the extent of examining the restored to the file of the Assessing Officer to the extent of examining the restored to the file of the Assessing Officer to the extent of examining the transactions of foreign currency and passing a fresh order as per the directions transactions of foreign currency and passing a fresh order as per the directions transactions of foreign currency and passing a fresh order as per the directions given in his order. 3. Aggrieved the assessee is in appeal before us. eved the assessee is in appeal before us. 4. The ld. Counsel for the assessee, Shri Subash Agarwal, submitted that the The ld. Counsel for the assessee, Shri Subash Agarwal, submitted that the The ld. Counsel for the assessee, Shri Subash Agarwal, submitted that the assessee, in its reply to the showcause notice reply to the showcause notice, has brought to the notice of the Assessing has brought to the notice of the Assessing Officer that the definition of the term deriva Officer that the definition of the term derivative in Section 2(ac) of the SCRA is an tive in Section 2(ac) of the SCRA is an inclusive definition and that any other item confirming to the given characteristics inclusive definition and that any other item confirming to the given characteristics inclusive definition and that any other item confirming to the given characteristics, will also qualify to be a derivative transaction. He relied on press release No. 297/2007 dt. also qualify to be a derivative transaction. He relied on press release No. 297/2007 dt. also qualify to be a derivative transaction. He relied on press release No. 297/2007 dt. 14/11/2007 of SEBI and also the Cent 14/11/2007 of SEBI and also the Central Government Notification, S.O. 1327 (E) dated ral Government Notification, S.O. 1327 (E) dated 22/05/09, oN MCX Stock Exchange Ltd. MCX Stock Exchange Ltd., for the proposition that it was the intention of , for the proposition that it was the intention of the Government of India to consider currency as part of S o consider currency as part of Securities for all practical and ecurities for all practical and legal purposes. He relied on on the judgment of the Hon’ble Madras High the judgment of the Hon’ble Madras High Court in the case of Rajshree Sugars & Chemicals Ltd. v. AXIS Bank 8 MLJ 261 (Mad.) Rajshree Sugars & Chemicals Ltd. v. AXIS Bank 8 MLJ 261 (Mad.), wherein the term , wherein the term derivative has been defined to include foreign currency as underlying derivative for derivative has been defined to include foreign currency as underlying derivative for derivative has been defined to include foreign currency as underlying derivative for securities. He further relied on the judgment of the Agra Bench of the ITAT in the case of on the judgment of the Agra Bench of the ITAT in the case of Nand Nandan Agarwal vs. DCIT reported in Nand Nandan Agarwal vs. DCIT reported in [2018] 90 taxmann.com 3 (Agra [2018] 90 taxmann.com 3 (Agra - Trib.) and the judgment in the case of the judgment in the case of M/s. IVF Advisors vs. ACIT (2015) 39 ITR (T) 541 (Mumbai (2015) 39 ITR (T) 541 (Mumbai Trib.), in support of his contentions. He also referred to CBDT Instruction No. 3/2010 dt. contentions. He also referred to CBDT Instruction No. 3/2010 dt. contentions. He also referred to CBDT Instruction No. 3/2010 dt. 23/03/2010, wherein it was decided that the wherein it was decided that the loss on forex derivative transactions loss on forex derivative transactions arising from actual settlement/conclusions of contract should not be considered as arising from actual settlement/conclusions of contract should not be considered as arising from actual settlement/conclusions of contract should not be considered as speculative transactions.

3 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd 4.1. On the issue of whether the Assessing Officer has conducted proper enquiry, the On the issue of whether the Assessing Officer has conducted proper enquiry, the On the issue of whether the Assessing Officer has conducted proper enquiry, the ld. Counsel for the assessee filed a certified copy of the order sheet entry ld. Counsel for the assessee filed a certified copy of the order sheet entry ld. Counsel for the assessee filed a certified copy of the order sheet entry from the assessment record at pages 48 to 53 and pointed out that the Assessing Officer has at pages 48 to 53 and pointed out that the Assessing Officer has at pages 48 to 53 and pointed out that the Assessing Officer has repeatedly asked for explanations on the net loss epeatedly asked for explanations on the net loss on foreign currency transactions foreign currency transactions, on various occasions i.e.,  As Point No. 16 16 during the hearing on 13/07/2015  As Point No. 2 Point No. 2 during the hearing on 09/10/2015  As Point No. 2 Point No. 2 during the hearing on 02/11/2015  During the hearing During the hearing 14/12/2015  During the hearing During the hearing 07/03/2016 4.2. He also pointed out that the Assessing Officer on the last date of hearing He also pointed out that the Assessing Officer on the last date of hearing He also pointed out that the Assessing Officer on the last date of hearing, has clearly recorded that the papers submitted by the assessee have been perused clearly recorded that the papers submitted by the assessee have been perused clearly recorded that the papers submitted by the assessee have been perused and thereafter consciously chose thereafter consciously chose not to disallow the loss in question not to disallow the loss in question and hence the conclusion that the Assessing Officer has not called for the details and verified the same conclusion that the Assessing Officer has not called for the details and verified the same conclusion that the Assessing Officer has not called for the details and verified the same after application of mind, is a factually incorrect observation. after application of mind, is a factually incorrect observation. He relied on the following case He relied on the following case-law in support of his contentions of his contentions that the order passed u/s 263 of the Act is bad in law passed u/s 263 of the Act is bad in law:-  Narayan Tatu Rane vs. ITO (2016) 70 taxmann.com 227 (Mum) Narayan Tatu Rane vs. ITO (2016) 70 taxmann.com 227 (Mum)  Gabriel India Ltd. (Bom) 203 ITR 108 Gabriel India Ltd. (Bom) 203 ITR 108  Malabar Co. Ltd. vs. CIT (SC) (2000) 243 ITR 83 Malabar Co. Ltd. vs. CIT (SC) (2000) 243 ITR 83  CIT vs. G.M. Mittal Stainless Steel P. LTd. (SC) (2003) 263 ITR 255 Stainless Steel P. LTd. (SC) (2003) 263 ITR 255 Stainless Steel P. LTd. (SC) (2003) 263 ITR 255  CIT vs. Greenworld Corporation (SC) (2009) 314 IR 81 CIT vs. Greenworld Corporation (SC) (2009) 314 IR 81  CIT vs. Max India Ltd. (SC) (2007) 295 ITR 282 CIT vs. Max India Ltd. (SC) (2007) 295 ITR 282  Medicare TPA Service (I) Pvt. Ltd. vs. Pr. CIT Medicare TPA Service (I) Pvt. Ltd. vs. Pr. CIT 5. The ld. D/R, Shri Supriyo Pal, JCIT, submitted that the A The ld. D/R, Shri Supriyo Pal, JCIT, submitted that the Assessing Officer has not ssessing Officer has not called for any records and examined the issue called for any records and examined the issue as to whether the assessee is eligible to e assessee is eligible to claim, speculative loss on trading and derivatives claim, speculative loss on trading and derivatives as deduction. He took this Bench . He took this Bench through the assessment order and submitted that a perusal of the same demonstrates through the assessment order and submitted that a perusal of the same demonstrates through the assessment order and submitted that a perusal of the same demonstrates total non-application of mind by the Assessing Officer and this resulted the order being application of mind by the Assessing Officer and this resulted the order being application of mind by the Assessing Officer and this resulted the order being

4 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd erroneous and prejudicial to the interest of the revenue. He re erroneous and prejudicial to the interest of the revenue. He relied on the order of the ld. lied on the order of the ld. Pr. CIT passed u/s 263 of the Act and submitted that the issue has been restored to the Pr. CIT passed u/s 263 of the Act and submitted that the issue has been restored to the Pr. CIT passed u/s 263 of the Act and submitted that the issue has been restored to the file of the Assessing Officer for fresh examination in accordance with law and hence the file of the Assessing Officer for fresh examination in accordance with law and hence the file of the Assessing Officer for fresh examination in accordance with law and hence the assessee should not have any grievance and that al e should not have any grievance and that all these arguments can be raised l these arguments can be raised before the Assessing Officer. He rebutted the contentions of the assessee. before the Assessing Officer. He rebutted the contentions of the assessee. before the Assessing Officer. He rebutted the contentions of the assessee. 6. We have heard rival contentions. On careful consideration of the facts and We have heard rival contentions. On careful consideration of the facts and We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of t circumstances of the case, perusal of the papers on record, orders of t circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows: below as well as case law cited, we hold as follows:- 7. The first issue that arises for our consideration is whether currency transactions The first issue that arises for our consideration is whether currency transactions The first issue that arises for our consideration is whether currency transactions are included within the definition of derivatives under clause 2(ac) of the SCRA. are included within the definition of derivatives under clause 2(ac) of the SCRA. are included within the definition of derivatives under clause 2(ac) of the SCRA. The Mumbai ‘I’ Bench of the Tribunal in the case of nch of the Tribunal in the case of M/s. IVF Advisors (supra) M/s. IVF Advisors (supra) has held as follows:- “7. We have carefully perused the orders of the Revenue Authorities and the “7. We have carefully perused the orders of the Revenue Authorities and the “7. We have carefully perused the orders of the Revenue Authorities and the submissions made by the assessee in the light of the relevant provisions of the IT Act submissions made by the assessee in the light of the relevant provisions of the IT Act submissions made by the assessee in the light of the relevant provisions of the IT Act and also Securities Contract Regulation Act, 1956. Section 43(5) of the I.T. Act read ecurities Contract Regulation Act, 1956. Section 43(5) of the I.T. Act read ecurities Contract Regulation Act, 1956. Section 43(5) of the I.T. Act read as under: (5) 32"speculative transaction" means a transaction in which a (5) 32"speculative transaction" means a transaction in which a (5) 32"speculative transaction" means a transaction in which a contract for the purchase or sale of any commodity33, including contract for the purchase or sale of any commodity33, including contract for the purchase or sale of any commodity33, including stocks and shares, is periodically or ultim stocks and shares, is periodically or ultimately settled33 otherwise ately settled33 otherwise than by the actual delivery33 or transfer of the commodity or scrips: than by the actual delivery33 or transfer of the commodity or scrips: than by the actual delivery33 or transfer of the commodity or scrips: Provided that for the purposes of this clause Provided that for the purposes of this clause— (a) a contract in (a) a contract in respect of raw materials or merchandise entered into by a person in respect of raw materials or merchandise entered into by a person in respect of raw materials or merchandise entered into by a person in the course of his manufactu the course of his manufacturing or merchanting business to guard ring or merchanting business to guard against loss through future price fluctuations in respect of his against loss through future price fluctuations in respect of his against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or contracts for actual delivery of goods manufactured by him or contracts for actual delivery of goods manufactured by him or merchandise sold by him; or (b) a contract in respect of stocks and merchandise sold by him; or (b) a contract in respect of stocks and merchandise sold by him; or (b) a contract in respect of stocks and shares entered into by shares entered into by a dealer or investor therein to guard against a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations; or loss in his holdings of stocks and shares through price fluctuations; or loss in his holdings of stocks and shares through price fluctuations; or (c) a contract entered into by a member of a forward market or a (c) a contract entered into by a member of a forward market or a (c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of stock exchange in the course of any transaction in the nature of stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the or arbitrage to guard against loss which may arise in the ordinary course of his business as such member; [or] (d) an eligible ordinary course of his business as such member; [or] (d) an eligible ordinary course of his business as such member; [or] (d) an eligible transaction in respect of trading in derivatives referred to in clause transaction in respect of trading in derivatives referred to in clause transaction in respect of trading in derivatives referred to in clause [(ac)] of section 236 of the Securities Contracts (Regula [(ac)] of section 236 of the Securities Contracts (Regula [(ac)] of section 236 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) carried out in a recognised stock exchange;[or] (e) 1956 (42 of 1956) carried out in a recognised stock exchange;[or] (e) 1956 (42 of 1956) carried out in a recognised stock exchange;[or] (e) an eligible transaction in respect of trading in commodity derivatives an eligible transaction in respect of trading in commodity derivatives an eligible transaction in respect of trading in commodity derivatives carried out in a recognized association[ which is chargeable to carried out in a recognized association[ which is chargeable to carried out in a recognized association[ which is chargeable to commodities transaction tax under Chapte commodities transaction tax under Chapter VII of the Finance Act, r VII of the Finance Act, 2013 (17 of 2013)] shall not be deemed to be a speculative 2013 (17 of 2013)] shall not be deemed to be a speculative 2013 (17 of 2013)] shall not be deemed to be a speculative

5 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd transaction. [Explanation. transaction. [Explanation.—For the purposes of this clause, the For the purposes of this clause, the expressions expressions— (i) "eligible transaction" means any transaction, (i) "eligible transaction" means any transaction,—(A) carried out electronically on screen carried out electronically on screen-based systems through a stock ed systems through a stock broker or sub broker or sub-broker or such other intermediary registered under broker or such other intermediary registered under section 12 of the Securities and Exchange Board of India Act, 1992 section 12 of the Securities and Exchange Board of India Act, 1992 section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) in accordance with the provisions of the Securities (15 of 1992) in accordance with the provisions of the Securities (15 of 1992) in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956 Contracts (Regulation) Act, 1956 (42 of 1956) or the Securities and (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) and the rules, regulations or bye Act, 1996 (22 of 1996) and the rules, regulations or bye Act, 1996 (22 of 1996) and the rules, regulations or bye-laws made or directions issued under those Acts or by banks or mutual funds on a directions issued under those Acts or by banks or mutual funds on a directions issued under those Acts or by banks or mutual funds on a recognised stoc recognised stock exchange; and(B) which is supported by a time k exchange; and(B) which is supported by a time stamped contract note issued by such stock broker or sub stamped contract note issued by such stock broker or sub stamped contract note issued by such stock broker or sub-broker or such other intermediary to every client indicating in the contract such other intermediary to every client indicating in the contract such other intermediary to every client indicating in the contract note the unique client identity number allotted under any Act note the unique client identity number allotted under any Act note the unique client identity number allotted under any Act referred to referred to in sub-clause (A) and permanent account number allotted clause (A) and permanent account number allotted under this Act; (ii) "recognised stock exchange" means a recognised under this Act; (ii) "recognised stock exchange" means a recognised under this Act; (ii) "recognised stock exchange" means a recognised stock exchange as referred to in clause (f) of section 238 of the stock exchange as referred to in clause (f) of section 238 of the stock exchange as referred to in clause (f) of section 238 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which fulfils such conditions as may be prescribed and notified39 by the fulfils such conditions as may be prescribed and notified39 by the fulfils such conditions as may be prescribed and notified39 by the Central Government for this purpose;] [Explanation 2 Central Government for this purpose;] [Explanation 2 Central Government for this purpose;] [Explanation 2 – For the purposes of clause (e), the expressions purposes of clause (e), the expressions – (i) ‘commodity derivative” (i) ‘commodity derivative” shall have the meaning as assigned to it in Chapter VII shall have the meaning as assigned to it in Chapter VII shall have the meaning as assigned to it in Chapter VII of the Finance Act, 2013; (ii) “eligible transaction” means any transaction, Act, 2013; (ii) “eligible transaction” means any transaction, Act, 2013; (ii) “eligible transaction” means any transaction,- (A)carried out electronically on screen (A)carried out electronically on screen-based systems through based systems through member or an intermediary, registered under the bye member or an intermediary, registered under the bye-laws, rules and laws, rules and regulations of the recognized association for tra regulations of the recognized association for trading in commodity ding in commodity derivative in accordance with the provisions of the Forward derivative in accordance with the provisions of the Forward derivative in accordance with the provisions of the Forward Contracts (Regulation) Act, 1952 (74 of 1952) and the rules, Contracts (Regulation) Act, 1952 (74 of 1952) and the rules, Contracts (Regulation) Act, 1952 (74 of 1952) and the rules, regulations or bye regulations or bye-laws made or directions issued under that Act on a laws made or directions issued under that Act on a recognized association; and (B) which is suppor recognized association; and (B) which is supported by a time ted by a time stamped contract note issued by such member or intermediary to stamped contract note issued by such member or intermediary to stamped contract note issued by such member or intermediary to very client indicating in the contract note, the unique client identity very client indicating in the contract note, the unique client identity very client indicating in the contract note, the unique client identity number allotted under the Act, rules, regulations or bye number allotted under the Act, rules, regulations or bye number allotted under the Act, rules, regulations or bye-laws referred to in sub to in sub-clause (A), unique trade number and permanent account umber and permanent account number allotted under this Act. (iii) “recognized association” means a number allotted under this Act. (iii) “recognized association” means a number allotted under this Act. (iii) “recognized association” means a recognized association as referred to in clause (j) of section 2 of the recognized association as referred to in clause (j) of section 2 of the recognized association as referred to in clause (j) of section 2 of the Forward Contracts (Regulation) Act, 1952 (74 of 1952) and which Forward Contracts (Regulation) Act, 1952 (74 of 1952) and which Forward Contracts (Regulation) Act, 1952 (74 of 1952) and which fulfils such conditio fulfils such conditions as may be prescribed and is notified by the ns as may be prescribed and is notified by the Central Government for this purpose” Central Government for this purpose” Proviso (d) excludes the transaction from the definition of speculative Proviso (d) excludes the transaction from the definition of speculative Proviso (d) excludes the transaction from the definition of speculative transaction in respect of trading of derivatives referred to in section 2(ac) of the transaction in respect of trading of derivatives referred to in section 2(ac) of the transaction in respect of trading of derivatives referred to in section 2(ac) of the Securities Contract (Regulation) Act, 1956 carried in recognized stock exchange. ract (Regulation) Act, 1956 carried in recognized stock exchange. ract (Regulation) Act, 1956 carried in recognized stock exchange. Section 2(ac) of the Securities Contract (Regulation) Act, 1956 read as under: Section 2(ac) of the Securities Contract (Regulation) Act, 1956 read as under: Section 2(ac) of the Securities Contract (Regulation) Act, 1956 read as under: “ 2.[ac] “derivative” includes “ 2.[ac] “derivative” includes— (A)a security derived from a debt (A)a security derived from a debt instrument, share, loan, whether secured or instrument, share, loan, whether secured or unsecured, risk unsecured, risk instrument or contract for differences or any other form of security; instrument or contract for differences or any other form of security; instrument or contract for differences or any other form of security; (B)a contract which derives its value from the prices, or index of (B)a contract which derives its value from the prices, or index of (B)a contract which derives its value from the prices, or index of prices, of underlying securities;]” prices, of underlying securities;]”

6 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd 7.1 Thus, it can be seen that the derivatives also includes securi 7.1 Thus, it can be seen that the derivatives also includes securities. The definition of ties. The definition of eligible transaction mentioned herein above clearly show that the transaction must eligible transaction mentioned herein above clearly show that the transaction must eligible transaction mentioned herein above clearly show that the transaction must have been carried out electronically in accordance with the provisions of Securities have been carried out electronically in accordance with the provisions of Securities have been carried out electronically in accordance with the provisions of Securities Contracts (Regulation) Act and the Rules and Regulations or bye Contracts (Regulation) Act and the Rules and Regulations or bye Contracts (Regulation) Act and the Rules and Regulations or bye laws made or directions issued under this Act or by banks or mutual funds on a recognized stock directions issued under this Act or by banks or mutual funds on a recognized stock directions issued under this Act or by banks or mutual funds on a recognized stock exchange and which is supported by time stamped contract note issued by such stock exchange and which is supported by time stamped contract note issued by such stock exchange and which is supported by time stamped contract note issued by such stock broker or sub-broker or intermediary to every client indicating in the contra broker or intermediary to every client indicating in the contra broker or intermediary to every client indicating in the contract note the unique client identity number and permanent account number. the unique client identity number and permanent account number. 7.2 It would be pertinent to consider the decision of Hon’ble Madras High Court in the 7.2 It would be pertinent to consider the decision of Hon’ble Madras High Court in the 7.2 It would be pertinent to consider the decision of Hon’ble Madras High Court in the case of Rajshree Sugar & Chemicals Ltd. vs. Axis Bank Ltd., AIR 2011 (Mad) 144, case of Rajshree Sugar & Chemicals Ltd. vs. Axis Bank Ltd., AIR 2011 (Mad) 144, case of Rajshree Sugar & Chemicals Ltd. vs. Axis Bank Ltd., AIR 2011 (Mad) 144, wherein the term derivative has been defined to include foreign currency as an derivative has been defined to include foreign currency as an derivative has been defined to include foreign currency as an underlying security of the derivative. The relevant extract of the case is quoted below: underlying security of the derivative. The relevant extract of the case is quoted below: underlying security of the derivative. The relevant extract of the case is quoted below: “What are these derivatives which have gained such a great deal of “What are these derivatives which have gained such a great deal of “What are these derivatives which have gained such a great deal of notoriety? In simple terms, notoriety? In simple terms, derivatives are financial instruments derivatives are financial instruments whose values depend on the value of other underlying financial whose values depend on the value of other underlying financial whose values depend on the value of other underlying financial instruments. The International Accounting Standard (IAS) 39, defines instruments. The International Accounting Standard (IAS) 39, defines instruments. The International Accounting Standard (IAS) 39, defines “derivatives” as follows: “derivatives” as follows: - “A derivative is a financial instrument: (a) “A derivative is a financial instrument: (a) whose value c whose value changes in response to the change in a specified interest hanges in response to the change in a specified interest rate, security price, commodity price, foreign exchange rate, index of rate, security price, commodity price, foreign exchange rate, index of rate, security price, commodity price, foreign exchange rate, index of prices or rates, a credit rating or credit index, or similar variable prices or rates, a credit rating or credit index, or similar variable prices or rates, a credit rating or credit index, or similar variable (sometimes called the ‘underlying’); (b) that requires no (sometimes called the ‘underlying’); (b) that requires no (sometimes called the ‘underlying’); (b) that requires no initial net investment or little initial net investment relative to other types of investment or little initial net investment relative to other types of investment or little initial net investment relative to other types of contracts that have a similar response to changes in market contracts that have a similar response to changes in market contracts that have a similar response to changes in market conditions; and (c) that is settled at a future date.” Actually, conditions; and (c) that is settled at a future date.” Actually, conditions; and (c) that is settled at a future date.” Actually, derivatives are assets, whose values are derived derivatives are assets, whose values are derived from values of from values of underlying assets. These underlying assets can be commodities, underlying assets. These underlying assets can be commodities, underlying assets. These underlying assets can be commodities, metals, energy resources, and financial assets such as shares, bonds, metals, energy resources, and financial assets such as shares, bonds, metals, energy resources, and financial assets such as shares, bonds, and foreign currencies.” and foreign currencies.” 7.3 Further, the SEBI website in its section ‘frequently asked questions’ has exp 7.3 Further, the SEBI website in its section ‘frequently asked questions’ has exp 7.3 Further, the SEBI website in its section ‘frequently asked questions’ has explained the meaning of derivative as under: Q 1. What are Derivatives? A. The term the meaning of derivative as under: Q 1. What are Derivatives? A. The term the meaning of derivative as under: Q 1. What are Derivatives? A. The term “Derivative” indicates that it has no independent value, i.e. its value is entirely “Derivative” indicates that it has no independent value, i.e. its value is entirely “Derivative” indicates that it has no independent value, i.e. its value is entirely “derived” from the value of the underlying asset. The underlying asset can be “derived” from the value of the underlying asset. The underlying asset can be “derived” from the value of the underlying asset. The underlying asset can be securities, commodities, bullion, currency, live stock or anything else. In other words, commodities, bullion, currency, live stock or anything else. In other words, commodities, bullion, currency, live stock or anything else. In other words, Derivative means a forward, future option or any other hybrid contract of pre Derivative means a forward, future option or any other hybrid contract of pre Derivative means a forward, future option or any other hybrid contract of pre determined fixed duration, linked for the purpose of contract fulfillment to the value determined fixed duration, linked for the purpose of contract fulfillment to the value determined fixed duration, linked for the purpose of contract fulfillment to the value of a specified real or financial asset or to an index of securities. With Securities Laws real or financial asset or to an index of securities. With Securities Laws real or financial asset or to an index of securities. With Securities Laws (Second Amendment) Act,1999, Derivatives has been included in the definition of (Second Amendment) Act,1999, Derivatives has been included in the definition of (Second Amendment) Act,1999, Derivatives has been included in the definition of Securities. The term Derivative has been defined in Securities Contracts (Regulations) Securities. The term Derivative has been defined in Securities Contracts (Regulations) Securities. The term Derivative has been defined in Securities Contracts (Regulations) Act, as: A Derivative includes: rivative includes: - a. a security derived from a debt instrument, share, a. a security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or contract for differences or loan, whether secured or unsecured, risk instrument or contract for differences or loan, whether secured or unsecured, risk instrument or contract for differences or any other form of security; b. a contract which derives its value from the prices, or any other form of security; b. a contract which derives its value from the prices, or any other form of security; b. a contract which derives its value from the prices, or index of prices, of underlying securities; es, of underlying securities; It is further provided by SEBI that in It is further provided by SEBI that in Aug.2008 SEBI permitted exchange traded currency derivative. Aug.2008 SEBI permitted exchange traded currency derivative. 7.4 Considering the relevant provisions of the relevant Acts, discussed herein above in 7.4 Considering the relevant provisions of the relevant Acts, discussed herein above in 7.4 Considering the relevant provisions of the relevant Acts, discussed herein above in the light of Hon’ble Madras High Court and the answers given to frequently asked the light of Hon’ble Madras High Court and the answers given to frequently asked the light of Hon’ble Madras High Court and the answers given to frequently asked questions by the SEBI and the incorporation of exchange traded currency derivative questions by the SEBI and the incorporation of exchange traded currency derivative questions by the SEBI and the incorporation of exchange traded currency derivative from August, 2008, there remain no iota of doubt that the transaction of the assessee August, 2008, there remain no iota of doubt that the transaction of the assessee August, 2008, there remain no iota of doubt that the transaction of the assessee cannot be treated as speculative transaction. We have also gone through the copies cannot be treated as speculative transaction. We have also gone through the copies cannot be treated as speculative transaction. We have also gone through the copies

7 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd of the contract notes incorporated in the paper book filed before us. A perusal of the of the contract notes incorporated in the paper book filed before us. A perusal of the of the contract notes incorporated in the paper book filed before us. A perusal of the contract note shows that the assessee has either entered into call option or put ract note shows that the assessee has either entered into call option or put ract note shows that the assessee has either entered into call option or put option and on the settlement day the transaction has been settled by delivery, either option and on the settlement day the transaction has been settled by delivery, either option and on the settlement day the transaction has been settled by delivery, either the assessee has paid US dollar on the settlement day or has taken delivery of US the assessee has paid US dollar on the settlement day or has taken delivery of US the assessee has paid US dollar on the settlement day or has taken delivery of US dollar. 7.5 To sum up, the derivatives include foreign currency and call option/ put option, 5 To sum up, the derivatives include foreign currency and call option/ put option, 5 To sum up, the derivatives include foreign currency and call option/ put option, are transactions of derivative markets and cannot be termed as speculative in are transactions of derivative markets and cannot be termed as speculative in are transactions of derivative markets and cannot be termed as speculative in nature. Considering the totality of the facts and in the light of the judicial discussion nature. Considering the totality of the facts and in the light of the judicial discussion nature. Considering the totality of the facts and in the light of the judicial discussion herein above, we have no hesitation in setting aside the order of Ld. CIT(A). Appeal n above, we have no hesitation in setting aside the order of Ld. CIT(A). Appeal n above, we have no hesitation in setting aside the order of Ld. CIT(A). Appeal filed by the assessee is accordingly allowed. filed by the assessee is accordingly allowed.” 8. The Agra Bench of the Tribunal in the case of The Agra Bench of the Tribunal in the case of Nand Nandan Agrawal (supra) Nand Nandan Agrawal (supra) has considered this issue and held as follows: considered this issue and held as follows:-

(A) carried out electronically on screen carried out electronically on screen-based system through a stock broker or based system through a stock broker or sub-broker or through ... sub

8 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd (B) which, is supported by a time stamped contract note issued by such stock which, is supported by a time stamped contract note issued by such stock which, is supported by a time stamped contract note issued by such stock broker or sub broker or sub-broker or ... indicating in the contract note the unique client broker or ... indicating in the contract note the unique client identity number allotted any Act referred to in sub identity number allotted any Act referred to in sub identity number allotted any Act referred to in sub-clause (A) and the permanent account number allotted under this Act; permanent account number allotted

(ii) "recognised stock exchange" means a recognised stock exchange as referred to in clause "recognised stock exchange" means a recognised stock exchange as referred to in clause "recognised stock exchange" means a recognised stock exchange as referred to in clause (f) of section 2 of Securities Contract (Regulation) Act, 1956 (42 of 1956) and which (f) of section 2 of Securities Contract (Regulation) Act, 1956 (42 of 1956) and which (f) of section 2 of Securities Contract (Regulation) Act, 1956 (42 of 1956) and which fulfills such conditions as may be prescribed and notifie fulfills such conditions as may be prescribed and notifies by the Central Government for s by the Central Government for this purpose' this purpose' 14. Concerning the satisfaction of the condition with regard to an eligible transaction, Concerning the satisfaction of the condition with regard to an eligible transaction, Concerning the satisfaction of the condition with regard to an eligible transaction, it is a perusal of the contract notes, placed at APB 56 to 237 shows that the it is a perusal of the contract notes, placed at APB 56 to 237 shows that the it is a perusal of the contract notes, placed at APB 56 to 237 shows that the transactions are in relation to transactions carried out through an on transactions are in relation to transactions carried out through an on transactions are in relation to transactions carried out through an on-screen based system (Currency Derivatives Segment of MCX Stock Exchange Ltd.), through a stock Currency Derivatives Segment of MCX Stock Exchange Ltd.), through a stock Currency Derivatives Segment of MCX Stock Exchange Ltd.), through a stock broker, namely, Mansukh Securities & Finance Ltd. (SEBI Regn. No. INE260781431, broker, namely, Mansukh Securities & Finance Ltd. (SEBI Regn. No. INE260781431, broker, namely, Mansukh Securities & Finance Ltd. (SEBI Regn. No. INE260781431, Trading Member Code No.38500, PAN: AAACMIV01D). The contract notes bear the Trading Member Code No.38500, PAN: AAACMIV01D). The contract notes bear the Trading Member Code No.38500, PAN: AAACMIV01D). The contract notes bear the unique identity code AZNNI unique identity code AZNNI and PAN of the assessee i.e., AQZPA3204D. The contract and PAN of the assessee i.e., AQZPA3204D. The contract notes also mention order numbers, order time, trade no. and trade time, besides other notes also mention order numbers, order time, trade no. and trade time, besides other notes also mention order numbers, order time, trade no. and trade time, besides other details. Thus, all the conditions of an 'eligible transaction' are satisfied. So far as the details. Thus, all the conditions of an 'eligible transaction' are satisfied. So far as the details. Thus, all the conditions of an 'eligible transaction' are satisfied. So far as the condition of a 'recognised stock exchange' is concerned, the transaction has been ised stock exchange' is concerned, the transaction has been ised stock exchange' is concerned, the transaction has been carried out at MCX Stock Exchange Ltd., which is recognised by SO 1327(E) dated carried out at MCX Stock Exchange Ltd., which is recognised by SO 1327(E) dated carried out at MCX Stock Exchange Ltd., which is recognised by SO 1327(E) dated 22.05.2009 (note 24 at page 1.322 of Taxmann's Income tax Act, 2017). Thus this 22.05.2009 (note 24 at page 1.322 of Taxmann's Income tax Act, 2017). Thus this 22.05.2009 (note 24 at page 1.322 of Taxmann's Income tax Act, 2017). Thus this condition is also satisfied. condition is also satisfied. 15. The third condition is 'trading in derivatives' referred to in clause (ac) of section 2 third condition is 'trading in derivatives' referred to in clause (ac) of section 2 third condition is 'trading in derivatives' referred to in clause (ac) of section 2 of the Securities Contract (Regulation) Act, 1956 (42 of 1956). In the case of IVF of the Securities Contract (Regulation) Act, 1956 (42 of 1956). In the case of IVF of the Securities Contract (Regulation) Act, 1956 (42 of 1956). In the case of IVF Advisors (P.) Ltd. v. Asstt. CIT Advisors (P.) Ltd. v. Asstt. CIT[2015] 55 taxmann.com 469 (Mum.-Trib Trib.) (APB 272 - 277), the Mumbai Tribunal, has referred to the definition of derivatives as contained in 277), the Mumbai Tribunal, has referred to the definition of derivatives as contained in 277), the Mumbai Tribunal, has referred to the definition of derivatives as contained in clause (ac) of section 2 of the Securities Contract (Regulation) Act, 1956, referred to by clause (ac) of section 2 of the Securities Contract (Regulation) Act, 1956, referred to by clause (ac) of section 2 of the Securities Contract (Regulation) Act, 1956, referred to by the Hon'ble Madras High Court in its decision in the case of Raj the Hon'ble Madras High Court in its decision in the case of Raj the Hon'ble Madras High Court in its decision in the case of Rajshree Sugar & Chemicals Ltd. v. Axis Bank Ltd. AIR 2011 Mad 144, where the term 'derivatives' has Chemicals Ltd. v. Axis Bank Ltd. AIR 2011 Mad 144, where the term 'derivatives' has Chemicals Ltd. v. Axis Bank Ltd. AIR 2011 Mad 144, where the term 'derivatives' has been defined to include foreign currency as underlying security of derivatives, also been defined to include foreign currency as underlying security of derivatives, also been defined to include foreign currency as underlying security of derivatives, also referred to FAQ available on the SEBI website and the fact that the SEBI referred to FAQ available on the SEBI website and the fact that the SEBI referred to FAQ available on the SEBI website and the fact that the SEBI permitted exchange traded currency derivatives in August, 2008 and came to the conclusion that exchange traded currency derivatives in August, 2008 and came to the conclusion that exchange traded currency derivatives in August, 2008 and came to the conclusion that (para 7.5, APB 276) derivatives include foreign currency and call option/put option, (para 7.5, APB 276) derivatives include foreign currency and call option/put option, (para 7.5, APB 276) derivatives include foreign currency and call option/put option, are transactions of derivative markets. Thus, as rightly submitted, the trad are transactions of derivative markets. Thus, as rightly submitted, the trad are transactions of derivative markets. Thus, as rightly submitted, the trading of currency derivatives made by the assessee is covered by the definition of 'derivatives' currency derivatives made by the assessee is covered by the definition of 'derivatives' currency derivatives made by the assessee is covered by the definition of 'derivatives' as contained in clause (d) of the proviso to section 43(5) of the IT Act. This position as contained in clause (d) of the proviso to section 43(5) of the IT Act. This position as contained in clause (d) of the proviso to section 43(5) of the IT Act. This position also stands accepted by the CBDT in its Instruction no. 3/2010 (APB 342 also stands accepted by the CBDT in its Instruction no. 3/2010 (APB 342 also stands accepted by the CBDT in its Instruction no. 3/2010 (APB 342 -343). Thus, the assessee fully complies with the conditions prescribed under clause (d) of Proviso the assessee fully complies with the conditions prescribed under clause (d) of Proviso the assessee fully complies with the conditions prescribed under clause (d) of Proviso to section 43(5) of the Act, read with the explanation thereto. to section 43(5) of the Act, read with the explanation thereto. 16. The ld. CIT(A) has taken due note of the contention of assessee that the The ld. CIT(A) has taken due note of the contention of assessee that the The ld. CIT(A) has taken due note of the contention of assessee that the transactions of currency derivatives were conducted through a recognised stock currency derivatives were conducted through a recognised stock currency derivatives were conducted through a recognised stock broker, on a rccognised Stock Exchange and they were duly supported by time stamped broker, on a rccognised Stock Exchange and they were duly supported by time stamped broker, on a rccognised Stock Exchange and they were duly supported by time stamped contract notes. He examined the provisions of section 43(5) of the IT Act and the contract notes. He examined the provisions of section 43(5) of the IT Act and the contract notes. He examined the provisions of section 43(5) of the IT Act and the proviso thereto and held th proviso thereto and held that the case of the assessee could not be covered under at the case of the assessee could not be covered under clause (a) of the proviso to section 43(5) of the Act (i.e., the transactions could not be clause (a) of the proviso to section 43(5) of the Act (i.e., the transactions could not be clause (a) of the proviso to section 43(5) of the Act (i.e., the transactions could not be treated as hedging transactions), but to be considered under clause (d) of the proviso treated as hedging transactions), but to be considered under clause (d) of the proviso treated as hedging transactions), but to be considered under clause (d) of the proviso to section 43(5) of the IT Act and in the light of the cases relied on by the assessee. He IT Act and in the light of the cases relied on by the assessee. He IT Act and in the light of the cases relied on by the assessee. He has then referred to section 73(1) and explanation 2 to section 28. He also referred to has then referred to section 73(1) and explanation 2 to section 28. He also referred to has then referred to section 73(1) and explanation 2 to section 28. He also referred to

9 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd CBDT Instruction no. 3/2010 dated 23.03.2010 and based on his interpretation of the CBDT Instruction no. 3/2010 dated 23.03.2010 and based on his interpretation of the CBDT Instruction no. 3/2010 dated 23.03.2010 and based on his interpretation of the said Instruction, it was held that the loss incurred by the assessee was a notional loss , it was held that the loss incurred by the assessee was a notional loss , it was held that the loss incurred by the assessee was a notional loss as being carried out in 'marked to market' and thus, the ld. CIT(A) denied the benefit of as being carried out in 'marked to market' and thus, the ld. CIT(A) denied the benefit of as being carried out in 'marked to market' and thus, the ld. CIT(A) denied the benefit of set off of losses. 17. Instruction no. 3/2010, dated 23.03.2010, issued by the CBDT (APB 342 Instruction no. 3/2010, dated 23.03.2010, issued by the CBDT (APB 342 Instruction no. 3/2010, dated 23.03.2010, issued by the CBDT (APB 342-343) as rightly contended, is an internal instruction issued by the Board for the guidance of its rightly contended, is an internal instruction issued by the Board for the guidance of its rightly contended, is an internal instruction issued by the Board for the guidance of its officers with regard to the matter pertaining to trading in currency derivatives. It is officers with regard to the matter pertaining to trading in currency derivatives. It is officers with regard to the matter pertaining to trading in currency derivatives. It is broadly divided into two parts. One is actual loss in forex derivative broadly divided into two parts. One is actual loss in forex derivatives. The Board has s. The Board has drawn the attention of the officers to the statutory provisions contained in clause (d) drawn the attention of the officers to the statutory provisions contained in clause (d) drawn the attention of the officers to the statutory provisions contained in clause (d) of the proviso to section 43(5) read with the explanation thereof. This part of the of the proviso to section 43(5) read with the explanation thereof. This part of the of the proviso to section 43(5) read with the explanation thereof. This part of the Instruction supports the case of assessee, as above. The second par Instruction supports the case of assessee, as above. The second par Instruction supports the case of assessee, as above. The second part of the said Instruction is regarding loss on account of 'marked Instruction is regarding loss on account of 'marked-to-market' losses. As per the market' losses. As per the Instruction, losses arising on account of the position held in a financial instrument Instruction, losses arising on account of the position held in a financial instrument Instruction, losses arising on account of the position held in a financial instrument based on market price on the closing day of an accounting period is not th based on market price on the closing day of an accounting period is not th based on market price on the closing day of an accounting period is not the actual loss. Rather, it is a notional loss and should not be allowed. Rather, it is a notional loss and should not be allowed. 18. The ld. CIT(A), without looking into the position held by the assessee as on the close The ld. CIT(A), without looking into the position held by the assessee as on the close The ld. CIT(A), without looking into the position held by the assessee as on the close of the financial year and as to what was the loss on such position, which, at most, in of the financial year and as to what was the loss on such position, which, at most, in of the financial year and as to what was the loss on such position, which, at most, in accordance with the Board's Instruction, may be held to be a notional loss, has held the ance with the Board's Instruction, may be held to be a notional loss, has held the ance with the Board's Instruction, may be held to be a notional loss, has held the whole of the trading loss to be a notional loss. The assessee contends that though the whole of the trading loss to be a notional loss. The assessee contends that though the whole of the trading loss to be a notional loss. The assessee contends that though the transactions entered by it in currency derivatives are 'marked transactions entered by it in currency derivatives are 'marked-to-market', there was market', there was only transaction of 1,200 nos. of lot of currency derivatives sold by the assessee for a nly transaction of 1,200 nos. of lot of currency derivatives sold by the assessee for a nly transaction of 1,200 nos. of lot of currency derivatives sold by the assessee for a total amount of Rs. 65,555,211, which, on account of being 'marked to market', total amount of Rs. 65,555,211, which, on account of being 'marked to market', total amount of Rs. 65,555,211, which, on account of being 'marked to market', resulted into a loss of Rs. 51,789/ resulted into a loss of Rs. 51,789/- (APB 240) against a total loss of Rs. 1,709,120.61/ (APB 240) against a total loss of Rs. 1,709,120.61/- and hence, going by the reasoning of the ld. CIT (A), at the most, loss of Rs.51,789/ and hence, going by the reasoning of the ld. CIT (A), at the most, loss of Rs.51,789/ and hence, going by the reasoning of the ld. CIT (A), at the most, loss of Rs.51,789/- only could be disallowed and the balance Rs. 16,57,332/ only could be disallowed and the balance Rs. 16,57,332/- was liable to be allowed. was liable to be allowed. Even the said (notional) loss of Rs. 51,789/ Even the said (notional) loss of Rs. 51,789/- was liable to be allowed for assessment was liable to be allowed for assessment year 2014-15, together with the loss of Rs.1,184,370/ 15, together with the loss of Rs.1,184,370/- sustained during assessment sustained during assessment year 2014-15, as there no contract outstanding as on 31.03.2014. It has been clarified 15, as there no contract outstanding as on 31.03.2014. It has been clarified 15, as there no contract outstanding as on 31.03.2014. It has been clarified that the assessee had traded in total seven series of contracts during the year (APB that the assessee had traded in total seven series of contracts during the year (APB that the assessee had traded in total seven series of contracts during the year (APB 238). Ledger accounts in respect of each series of contracts are placed at APB 239 to 238). Ledger accounts in respect of each series of contracts are placed at APB 239 to 238). Ledger accounts in respect of each series of contracts are placed at APB 239 to 245. All series of contracts except for USD (26.04.2013) (APB 240) had expired before 245. All series of contracts except for USD (26.04.2013) (APB 240) had expired before 245. All series of contracts except for USD (26.04.2013) (APB 240) had expired before the close of the financial year, on 31.03.2013 and thus, there was no occasion that the close of the financial year, on 31.03.2013 and thus, there was no occasion that the close of the financial year, on 31.03.2013 and thus, there was no occasion that contracts for those series of transactions could be outstanding as on 31.03.2013. contracts for those series of transactions could be outstanding as on 31.03.2013. contracts for those series of transactions could be outstanding as on 31.03.2013. 19. The logic of the Board in terming loss in respect of unexpired contracts (or, in The logic of the Board in terming loss in respect of unexpired contracts (or, in The logic of the Board in terming loss in respect of unexpired contracts (or, in other words, in respect of position held as at the close of accounting period) has not other words, in respect of position held as at the close of accounting period) has not other words, in respect of position held as at the close of accounting period) has not found favour with the Courts and even the loss on account of 'marked to market' in und favour with the Courts and even the loss on account of 'marked to market' in und favour with the Courts and even the loss on account of 'marked to market' in respect of such outstanding position could not be treated as notional loss, because respect of such outstanding position could not be treated as notional loss, because respect of such outstanding position could not be treated as notional loss, because same is based / on the time same is based / on the time-tested and well accepted theory of valuing stock at lower tested and well accepted theory of valuing stock at lower of cost or market value. The Hon'ble Bombay High Court, by its order dated st or market value. The Hon'ble Bombay High Court, by its order dated st or market value. The Hon'ble Bombay High Court, by its order dated 15.10.2016, in ITA No. 896/2014, in 'CIT vs. Munjani Brothers' (copy placed on record), 15.10.2016, in ITA No. 896/2014, in 'CIT vs. Munjani Brothers' (copy placed on record), 15.10.2016, in ITA No. 896/2014, in 'CIT vs. Munjani Brothers' (copy placed on record), dismissed the revenue's appeal, where the substantial question of law for the dismissed the revenue's appeal, where the substantial question of law for the dismissed the revenue's appeal, where the substantial question of law for the consideration of the Hon'ble High Court was as under: Hon'ble High Court was as under: "Whether on the /acts and in circumstances of the case and in law, the Tribunal "Whether on the /acts and in circumstances of the case and in law, the Tribunal "Whether on the /acts and in circumstances of the case and in law, the Tribunal was right in deleting the addition of Rs. 59,90,341/ was right in deleting the addition of Rs. 59,90,341/- made by the Assessing Officer made by the Assessing Officer on account of disallowance of mark to market loss on forei on account of disallowance of mark to market loss on foreign exchange forward gn exchange forward contract loss and not appreciating the fact that the said loss was not a notional contract loss and not appreciating the fact that the said loss was not a notional contract loss and not appreciating the fact that the said loss was not a notional loss and cannot be allowed" loss and cannot be allowed"

10 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd The said appeal arose from the order dated 19.09.2013 passed by theITAT, Mumbai, The said appeal arose from the order dated 19.09.2013 passed by theITAT, Mumbai, The said appeal arose from the order dated 19.09.2013 passed by theITAT, Mumbai, passed in ITA no. 7628/Mum/2011 (copy filed) passed in ITA no. 7628/Mum/2011 (copy filed). A Similar view was taken by the . A Similar view was taken by the Hon'ble Tribunal in the case of the same assessee in ITA No. 6065/Mum/2012, vide Hon'ble Tribunal in the case of the same assessee in ITA No. 6065/Mum/2012, vide Hon'ble Tribunal in the case of the same assessee in ITA No. 6065/Mum/2012, vide order dated 2.12.2014 (cope placed on record). The Hon'ble High Court, held that no order dated 2.12.2014 (cope placed on record). The Hon'ble High Court, held that no order dated 2.12.2014 (cope placed on record). The Hon'ble High Court, held that no substantial question of law was involved in the matter in substantial question of law was involved in the matter in view of its order dated view of its order dated 1.10.2016, passed in the case of CIT v. D. Chetan & Co., 1.10.2016, passed in the case of CIT v. D. Chetan & Co., [2016] 75 [2016] 75 taxmann.com 300/243 Taxman 356 (Bom.) 300/243 Taxman 356 (Bom.). A copy of the said order has been filed. 20. The Hon'ble Bombay High Court, in ITA No. 30 of 2015, vide Order dated The Hon'ble Bombay High Court, in ITA No. 30 of 2015, vide Order dated The Hon'ble Bombay High Court, in ITA No. 30 of 2015, vide Order dated 24.07.2017 in the case of CIT v. Paper Products Ltd. (copy filed), relying on the 24.07.2017 in the case of CIT v. Paper Products Ltd. (copy filed), relying on the 24.07.2017 in the case of CIT v. Paper Products Ltd. (copy filed), relying on the Supreme Court decision in the case of CIT v. Woodward Governor India (P.) Ltd. Supreme Court decision in the case of CIT v. Woodward Governor India (P.) Ltd. Supreme Court decision in the case of CIT v. Woodward Governor India (P.) Ltd. [2009] 312 ITR 254/179 Taxman 326 312 ITR 254/179 Taxman 326, held that the loss due to foreign exchange fluctuation , held that the loss due to foreign exchange fluctuation in foreign currency transactions in derivatives has to be considered as on the last date in foreign currency transactions in derivatives has to be considered as on the last date in foreign currency transactions in derivatives has to be considered as on the last date of the accounting year and is deductible under section 37(1) of the Act and affirmed counting year and is deductible under section 37(1) of the Act and affirmed counting year and is deductible under section 37(1) of the Act and affirmed the order dated 28.03.2014 passed by the Tribunal in ITA No. 7761/Mum/2012. the order dated 28.03.2014 passed by the Tribunal in ITA No. 7761/Mum/2012. the order dated 28.03.2014 passed by the Tribunal in ITA No. 7761/Mum/2012. 21. Remarkably, though the reasoning of the Board to term the loss on account of Remarkably, though the reasoning of the Board to term the loss on account of Remarkably, though the reasoning of the Board to term the loss on account of 'market to market' tran 'market to market' transactions, as contained in Instruction no. 3/2010, was sactions, as contained in Instruction no. 3/2010, was disapproved by the Courts, it resurfaced in the Income Computation and Disclosure disapproved by the Courts, it resurfaced in the Income Computation and Disclosure disapproved by the Courts, it resurfaced in the Income Computation and Disclosure Standards (the 'ICDS') notified on 29.09.2016, made effective from the accounting Standards (the 'ICDS') notified on 29.09.2016, made effective from the accounting Standards (the 'ICDS') notified on 29.09.2016, made effective from the accounting period beginning on 1.04.2016, i.e., a period beginning on 1.04.2016, i.e., assessment year 2017-18. The 'ICDS' 18. The 'ICDS' -1 relating to accounting policies, in paragraph 4 held that: accounting policies, in paragraph 4 held that:— "4. Accounting policies adopted by a person shall be such so as to represent a true "4. Accounting policies adopted by a person shall be such so as to represent a true "4. Accounting policies adopted by a person shall be such so as to represent a true and fair view of the state of affairs and income of the business, professi and fair view of the state of affairs and income of the business, professi and fair view of the state of affairs and income of the business, profession or vocation. For this purpose, vocation. For this purpose, (i) The treatment and presentation of transaction and events shall be governed by their The treatment and presentation of transaction and events shall be governed by their The treatment and presentation of transaction and events shall be governed by their substance and not merely by the legal form; and substance and not merely by the legal form; and

(ii) Marked to market loss or an expected loss shall not be recognised unless the recognition Marked to market loss or an expected loss shall not be recognised unless the recognition Marked to market loss or an expected loss shall not be recognised unless the recognition of such loss is in accordance with the provisions of any other Income Computation and of such loss is in accordance with the provisions of any other Income Computation and of such loss is in accordance with the provisions of any other Income Computation and Disclosure Standard." Disclosure Standard." 22. The Hon'ble Delhi High Court, by its recent decision The Hon'ble Delhi High Court, by its recent decision in the case of The Chamber of in the case of The Chamber of Tax Consultants v. Union of India Tax Consultants v. Union of India [2017] 87 taxmann.com 92/[2018] 252 Taxman 77 ] 252 Taxman 77 (Delhi), while holding certain 'ICDS' as ultra , while holding certain 'ICDS' as ultra-virus, held that non-acceptance of the acceptance of the concept of prudence in ICDS I is per se contrary to the provisions of the Act and concept of prudence in ICDS I is per se contrary to the provisions of the Act and concept of prudence in ICDS I is per se contrary to the provisions of the Act and therefore, it cannot be countenanced. While holding so, the Hon'ble Delhi High Court in therefore, it cannot be countenanced. While holding so, the Hon'ble Delhi High Court in therefore, it cannot be countenanced. While holding so, the Hon'ble Delhi High Court in para 61 of its judgment held that: para 61 of its judgment held that:— "The Petitioners rightly point out that cases not governed by any specific ICDS are "The Petitioners rightly point out that cases not governed by any specific ICDS are "The Petitioners rightly point out that cases not governed by any specific ICDS are governed by ICDS-I, CBDT has in ICDS I, CBDT has in ICDS-I notified that expected losses and marked I notified that expected losses and marked- to-market losses are not be recoginized/allowed. It is rightly pointed out by the market losses are not be recoginized/allowed. It is rightly pointed out by the market losses are not be recoginized/allowed. It is rightly pointed out by the Petitioners that the concept of prudence is embedded in Section 37(1) of the Act s that the concept of prudence is embedded in Section 37(1) of the Act s that the concept of prudence is embedded in Section 37(1) of the Act which allows deduction in respect of expenses "laid out" or "expanded" for the which allows deduction in respect of expenses "laid out" or "expanded" for the which allows deduction in respect of expenses "laid out" or "expanded" for the purpose of business. The concept of prudence is inherent in this." purpose of business. The concept of prudence is inherent in this." 23. Thus, the instruction no. 3/2010 d Thus, the instruction no. 3/2010 dated 23.03.2010 is not in accordance with law, in ated 23.03.2010 is not in accordance with law, in so far as it terms the loss in respect of the position held as at the end of the accounting so far as it terms the loss in respect of the position held as at the end of the accounting so far as it terms the loss in respect of the position held as at the end of the accounting period as a 'notional loss' and calls for disallowance of the same and this aspect was period as a 'notional loss' and calls for disallowance of the same and this aspect was period as a 'notional loss' and calls for disallowance of the same and this aspect was discussed in various cases discussed in various cases referred before learned CIT (Appeals) also.

11 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd 24. The assessee also placed reliance on the order dated 13.02.2017 passed by the The assessee also placed reliance on the order dated 13.02.2017 passed by the The assessee also placed reliance on the order dated 13.02.2017 passed by the Income tax Appellate Tribunal, 'SMC Income tax Appellate Tribunal, 'SMC -3' Bench, New Delhi, in the case of 'Sri Kamal ' Bench, New Delhi, in the case of 'Sri Kamal Kishor v. ACIT' in (ITA No. 4952/Del/2016 (pag Kishor v. ACIT' in (ITA No. 4952/Del/2016 (page 74 - 85). In this case, adjustment to 85). In this case, adjustment to the returned income was made by the AO under section 143(1) of the Act in respect of the returned income was made by the AO under section 143(1) of the Act in respect of the returned income was made by the AO under section 143(1) of the Act in respect of loss of Rs. 1,550,100 on foreign currency derivatives. The Tribunal, allowing the appeal loss of Rs. 1,550,100 on foreign currency derivatives. The Tribunal, allowing the appeal loss of Rs. 1,550,100 on foreign currency derivatives. The Tribunal, allowing the appeal on the merits of the case, followed the de on the merits of the case, followed the decision of the ITAT, Mumbai in the case 'IVF cision of the ITAT, Mumbai in the case 'IVF Advisors (P) Ltd.' (APB 272 Advisors (P) Ltd.' (APB 272 -277) and in the case of 'Inventures Knowledge Services (P) 277) and in the case of 'Inventures Knowledge Services (P) Ltd.' (APB 317 -341). 25. In the case of Inventures Knowledge Services (P.) Ltd. v. ITO In the case of Inventures Knowledge Services (P.) Ltd. v. ITO[2016] 156 ITD 727/65 [2016] 156 ITD 727/65 taxmann.com 94 (Mumbai 94 (Mumbai - Trib.) , both the issues, i.e., applicability of clause (d) of the , both the issues, i.e., applicability of clause (d) of the proviso to section 43(5) and the notional loss in respect of unexpired / unsettled proviso to section 43(5) and the notional loss in respect of unexpired / unsettled proviso to section 43(5) and the notional loss in respect of unexpired / unsettled contracts were discussed. contracts were discussed. 26. In 'Inventures Knowledge Services' (supra), it has been held as follows: In 'Inventures Knowledge Services' (supra), it has been held as follows: In 'Inventures Knowledge Services' (supra), it has been held as follows: '7. Ld. DR on the other hand relied upon the orders of the authorities below. The R on the other hand relied upon the orders of the authorities below. The R on the other hand relied upon the orders of the authorities below. The Ld. DR submitted that these forward foreign exchange contracts are not backed Ld. DR submitted that these forward foreign exchange contracts are not backed Ld. DR submitted that these forward foreign exchange contracts are not backed by any business transactions and these are not hedging transactions and marked by any business transactions and these are not hedging transactions and marked by any business transactions and these are not hedging transactions and marked to market transaction cann to market transaction cannot be allowed as per Instruction of CBDT no. 3/2010 ot be allowed as per Instruction of CBDT no. 3/2010 dated 23th March 2010. The Ld DR relied upon the orders of Tribunal Mumbai in dated 23th March 2010. The Ld DR relied upon the orders of Tribunal Mumbai in dated 23th March 2010. The Ld DR relied upon the orders of Tribunal Mumbai in Araska Diamond (P.) Ltd. v. Asstt. CIT Araska Diamond (P.) Ltd. v. Asstt. CIT [2015] 152 ITD 203 (Mum.) 2015] 152 ITD 203 (Mum.) to contend that these losses are speculative in nature and cannot be allowed to be set off against these losses are speculative in nature and cannot be allowed to be set off against these losses are speculative in nature and cannot be allowed to be set off against business income other than speculative income. business income other than speculative income. 8. We have heard the rival submissions and carefully perused the relevant 8. We have heard the rival submissions and carefully perused the relevant 8. We have heard the rival submissions and carefully perused the relevant material on record and case laws relied upon by the parties. We have observed n record and case laws relied upon by the parties. We have observed n record and case laws relied upon by the parties. We have observed that the assessee company is a domestic company registered with the that the assessee company is a domestic company registered with the that the assessee company is a domestic company registered with the Development Commissioner, Vishakhapatnam Special Economic Zone as an Development Commissioner, Vishakhapatnam Special Economic Zone as an Development Commissioner, Vishakhapatnam Special Economic Zone as an approved SEZ and is a KPO primarily involved in the approved SEZ and is a KPO primarily involved in the revenue cycle management revenue cycle management for the clients across America and the assessee company is billing its overseas for the clients across America and the assessee company is billing its overseas for the clients across America and the assessee company is billing its overseas clients in foreign currency. The assessee company has a turnover of Rs. 5.83 crores clients in foreign currency. The assessee company has a turnover of Rs. 5.83 crores clients in foreign currency. The assessee company has a turnover of Rs. 5.83 crores during the assessment year under consideration. We have observed t during the assessment year under consideration. We have observed t during the assessment year under consideration. We have observed that assessee company has entered into forward foreign exchange contracts and the contract company has entered into forward foreign exchange contracts and the contract company has entered into forward foreign exchange contracts and the contract worth USD 4 Million were outstanding as un worth USD 4 Million were outstanding as un-expired as on 31st March 2009 on expired as on 31st March 2009 on which the assessee company has booked marked to market loss of Rs. which the assessee company has booked marked to market loss of Rs. which the assessee company has booked marked to market loss of Rs. 1,09,98,560/- on the da on the date of Balance Sheet as at 31st March 2009 based on the te of Balance Sheet as at 31st March 2009 based on the movement of value of United States Dollar vis movement of value of United States Dollar vis-a-vis in relation to Indian Rupees vis in relation to Indian Rupees based on prevailing rate as on 31 based on prevailing rate as on 31-03-2009. Before we proceed further, it would be relevant to analyse the provisions of Before we proceed further, it would be relevant to analyse the provisions of Before we proceed further, it would be relevant to analyse the provisions of Section 43(5) of the Act read with proviso (d) and explanation 1 to Section 43(5) Section 43(5) of the Act read with proviso (d) and explanation 1 to Section 43(5) Section 43(5) of the Act read with proviso (d) and explanation 1 to Section 43(5) of the Act which reads as under: of the Act which reads as under: Definitions of certain terms relevant to income from profits and gains of business Definitions of certain terms relevant to income from profits and gains of business Definitions of certain terms relevant to income from profits and gains of business or profession. 43. In sections 28 to 41 and in this sec 43. In sections 28 to 41 and in this section, unless the context otherwise tion, unless the context otherwise requires— ** ** **

12 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd (5) "speculative transaction" means a transaction in which a contract for the (5) "speculative transaction" means a transaction in which a contract for the (5) "speculative transaction" means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or purchase or sale of any commodity, including stocks and shares, is periodically or purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the ultimately settled otherwise than by the actual delivery or transfer of the ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips commodity or scrips: Provided that for the purposes of this clause Provided that for the purposes of this clause— (a) to (c)** ** ** (d) an eligible transaction in respect of trading in derivatives referred to in clause (d) an eligible transaction in respect of trading in derivatives referred to in clause (d) an eligible transaction in respect of trading in derivatives referred to in clause (ac) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) (ac) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) (ac) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) carried out in a recognised stock exchange; or carried out in a recognised stock exchange; or (e) ** ** ** shall not be deemed to shall not be deemed to be a speculative transaction, Explanation 1. be a speculative transaction, Explanation 1. - For the purposes of clause (d), the expressions purposes of clause (d), the expressions-(i) "eligible transaction" means any (i) "eligible transaction" means any transaction,- (A) carried out electronically on screen (A) carried out electronically on screen-based systems through a stock broker or based systems through a stock broker or sub-broker or such other int broker or such other intermediary registered under section 12 of the ermediary registered under section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) in accordance with Securities and Exchange Board of India Act, 1992 (15 of 1992) in accordance with Securities and Exchange Board of India Act, 1992 (15 of 1992) in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) and the rules, regulations or bye Depositories Act, 1996 (22 of 1996) and the rules, regulations or bye Depositories Act, 1996 (22 of 1996) and the rules, regulations or bye-laws made or directions issued under those Acts or by banks or mutual funds on a recognised or directions issued under those Acts or by banks or mutual funds on a recognised or directions issued under those Acts or by banks or mutual funds on a recognised stock exchange; and stock exchange; and (B) which is supported by a time stamped contract note issued by such stock (B) which is supported by a time stamped contract note issued by such stock (B) which is supported by a time stamped contract note issued by such stock broker or sub-broker or such other intermediary to every client indicating in the broker or such other intermediary to every client indicating in the broker or such other intermediary to every client indicating in the contract note the unique client identity number allotted under any Act referred to contract note the unique client identity number allotted under any Act referred to contract note the unique client identity number allotted under any Act referred to in sub-clause (A) and permanent account number allotted under this Act; A) and permanent account number allotted under this Act; A) and permanent account number allotted under this Act; (ii) "recognised stock exchange" means a recognised stock exchange as referred (ii) "recognised stock exchange" means a recognised stock exchange as referred (ii) "recognised stock exchange" means a recognised stock exchange as referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which fulfils such co of 1956) and which fulfils such conditions as may be prescribed and notified by nditions as may be prescribed and notified by the Central Government for this purpose;' the Central Government for this purpose;' Section 43(5) of the Act provides that a transaction in which a contract for the Section 43(5) of the Act provides that a transaction in which a contract for the Section 43(5) of the Act provides that a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or purchase or sale of any commodity, including stocks and shares, is periodically or purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by actual delivery or transfer of the commodity imately settled otherwise than by actual delivery or transfer of the commodity imately settled otherwise than by actual delivery or transfer of the commodity or scrips while proviso(d) to Section 43(5) of the Act inter or scrips while proviso(d) to Section 43(5) of the Act inter-alia provides that an alia provides that an eligible transaction in respect of trading in derivatives referred to in clause (ac) eligible transaction in respect of trading in derivatives referred to in clause (ac) eligible transaction in respect of trading in derivatives referred to in clause (ac) of Section 2 of the Securities Contracts (Regulation) Act, 1956 carried out in a n 2 of the Securities Contracts (Regulation) Act, 1956 carried out in a n 2 of the Securities Contracts (Regulation) Act, 1956 carried out in a recognized stock exchange shall not be deemed to be a speculative transaction. recognized stock exchange shall not be deemed to be a speculative transaction. recognized stock exchange shall not be deemed to be a speculative transaction. We would, also like to refer to the relevant definitions as contained in the We would, also like to refer to the relevant definitions as contained in the We would, also like to refer to the relevant definitions as contained in the Securities Contract (Regula Securities Contract (Regulation) Act, 1956 as under: Section 2(ac) of the Securities Contract (Regulation) Act, 1956 reads as under: Section 2(ac) of the Securities Contract (Regulation) Act, 1956 reads as under: Section 2(ac) of the Securities Contract (Regulation) Act, 1956 reads as under: Section 2 in the Securities Contracts (Regulation) Act, 1956 Section 2 in the Securities Contracts (Regulation) Act, 1956 2 Definitions. - In this Act, unless the context otherwise requires, In this Act, unless the context otherwise requires,— —

13 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd ** ** ** (ac) "derivative" includes ) "derivative" includes— (A) a security derived from a debt instrument, share, loan, whether secured or (A) a security derived from a debt instrument, share, loan, whether secured or (A) a security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or contract for differences or any other form of unsecured, risk instrument or contract for differences or any other form of unsecured, risk instrument or contract for differences or any other form of security; (B) a contract which derives its value from the prices, or index (B) a contract which derives its value from the prices, or index (B) a contract which derives its value from the prices, or index of prices, of underlying securities; underlying securities; Section 2(h) of the Securities Contract (Regulation) Act, 1956 reads as under: Section 2(h) of the Securities Contract (Regulation) Act, 1956 reads as under: Section 2(h) of the Securities Contract (Regulation) Act, 1956 reads as under: Section 2 in The Securities Contracts (Regulation) Act, 1956 Section 2 in The Securities Contracts (Regulation) Act, 1956 2 Definitions. - In this Act, unless the context otherwise requires, In this Act, unless the context otherwise requires,— — (h) "securities" include "securities" include- ** ** ** (ia) derivative; ** ** ** From the above, it is clear that speculative transaction is a transaction in which From the above, it is clear that speculative transaction is a transaction in which From the above, it is clear that speculative transaction is a transaction in which contract for purchase and sale of any commodity is settled otherwise than by contract for purchase and sale of any commodity is settled otherwise than by contract for purchase and sale of any commodity is settled otherwise than by actual delivery. It is not in dispute that in case of transaction in derivatives, the actual delivery. It is not in dispute that in case of transaction in derivatives, the actual delivery. It is not in dispute that in case of transaction in derivatives, the transaction is always settled otherwise than by actual delivery. The derivative n is always settled otherwise than by actual delivery. The derivative n is always settled otherwise than by actual delivery. The derivative derives its value from underlying asset which can be securities, commodities, derives its value from underlying asset which can be securities, commodities, derives its value from underlying asset which can be securities, commodities, bullion, currency etc. and in this instant case, tlie derivative transaction bullion, currency etc. and in this instant case, tlie derivative transaction bullion, currency etc. and in this instant case, tlie derivative transaction undertaken by the assessee comp undertaken by the assessee company, the underlying asset of derivative any, the underlying asset of derivative transaction is foreign currency. The word commodity is used in broadest sense in transaction is foreign currency. The word commodity is used in broadest sense in transaction is foreign currency. The word commodity is used in broadest sense in Section 43(5) of the Act as it mentions in the Section 43(5) of the Act that the Section 43(5) of the Act as it mentions in the Section 43(5) of the Act that the Section 43(5) of the Act as it mentions in the Section 43(5) of the Act that the commodity includes stock and shares. Thus, derivative commodity includes stock and shares. Thus, derivative will be included in the will be included in the definition of the word 'commodity' as held in Shree Capital Services Ltd. (supra). definition of the word 'commodity' as held in Shree Capital Services Ltd. (supra). definition of the word 'commodity' as held in Shree Capital Services Ltd. (supra). Hence, derivative transactions in foreign currency shall be exempted from Hence, derivative transactions in foreign currency shall be exempted from Hence, derivative transactions in foreign currency shall be exempted from purview of speculative transactions u/s 43(5) of the Act provided other con purview of speculative transactions u/s 43(5) of the Act provided other con purview of speculative transactions u/s 43(5) of the Act provided other conditions as contained in proviso (d) read with Explanation 1 to Section 43(5) of the Act are as contained in proviso (d) read with Explanation 1 to Section 43(5) of the Act are as contained in proviso (d) read with Explanation 1 to Section 43(5) of the Act are fulfilled. Our view is fortified by the Memorandum explaining the provisions in the fulfilled. Our view is fortified by the Memorandum explaining the provisions in the fulfilled. Our view is fortified by the Memorandum explaining the provisions in the Finance Bill, 2005 which introduced clause (d) ((2005) 194 CTR(St.) 147, the Finance Bill, 2005 which introduced clause (d) ((2005) 194 CTR(St.) 147, the Finance Bill, 2005 which introduced clause (d) ((2005) 194 CTR(St.) 147, the purpose of introduction of clause (d) has been explained, which reads as under: pose of introduction of clause (d) has been explained, which reads as under: pose of introduction of clause (d) has been explained, which reads as under: "Measures to rationalize the tax treatment of derivative transaction. "Measures to rationalize the tax treatment of derivative transaction. "Measures to rationalize the tax treatment of derivative transaction. Under the existing provisions (cl.( Under the existing provisions (cl.(5) of s.43) a transaction for the purchase and 5) of s.43) a transaction for the purchase and sale of any commodity including stocks and shares is deemed to be a 'speculative sale of any commodity including stocks and shares is deemed to be a 'speculative sale of any commodity including stocks and shares is deemed to be a 'speculative transaction', if it is settled otherwise than by actual delivery. However, certain transaction', if it is settled otherwise than by actual delivery. However, certain transaction', if it is settled otherwise than by actual delivery. However, certain categories of transactions are excluded from categories of transactions are excluded from the purview of said provision. the purview of said provision. Further, the unabsorbed speculation losses are allowed to be carried forward for Further, the unabsorbed speculation losses are allowed to be carried forward for Further, the unabsorbed speculation losses are allowed to be carried forward for eight years for set eight years for set-off against speculation profits in subsequent years. These off against speculation profits in subsequent years. These restrictions were essentially designed as an anti restrictions were essentially designed as an anti-evasion measure evasion measure to prevent claims of artificially generated losses in the absence of an appropriate claims of artificially generated losses in the absence of an appropriate claims of artificially generated losses in the absence of an appropriate institutional infrastructure. institutional infrastructure.

14 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd Recent systemic and technological changes introduced by stock markets have Recent systemic and technological changes introduced by stock markets have Recent systemic and technological changes introduced by stock markets have resulted in sufficient transparency to prevent generating fictiti resulted in sufficient transparency to prevent generating fictitious losses through ous losses through artificial transactions or shifting of incidence of loss from one person to another. artificial transactions or shifting of incidence of loss from one person to another. artificial transactions or shifting of incidence of loss from one person to another. The screen based computerized trading provides for an excellent audit trail. The screen based computerized trading provides for an excellent audit trail. The screen based computerized trading provides for an excellent audit trail. Therefore, the present distinction between speculative and non Therefore, the present distinction between speculative and non Therefore, the present distinction between speculative and non-speculative transactions, particularly relating to derivatives is no more required. transactions, particularly relating to derivatives is no more required. transactions, particularly relating to derivatives is no more required. The proposed amendment therefore, seeks to provide that an eligible transaction The proposed amendment therefore, seeks to provide that an eligible transaction The proposed amendment therefore, seeks to provide that an eligible transaction carried out in respect of trading in derivatives in a recognized stock exchange carried out in respect of trading in derivatives in a recognized stock exchange carried out in respect of trading in derivatives in a recognized stock exchange shall not be deemed to shall not be deemed to be a speculative transaction. The proposed amendment be a speculative transaction. The proposed amendment also seeks to notify relevant rules etc. regarding conditions to be fulfilled by also seeks to notify relevant rules etc. regarding conditions to be fulfilled by also seeks to notify relevant rules etc. regarding conditions to be fulfilled by recognized exchanges in this regard. Further it is also proposed to amend sub recognized exchanges in this regard. Further it is also proposed to amend sub recognized exchanges in this regard. Further it is also proposed to amend sub-s. (4) of s.73 so as to reduce the period of (4) of s.73 so as to reduce the period of carry forward of speculation losses from carry forward of speculation losses from eight assessment years to four assessment years. eight assessment years to four assessment years. These amendments will take effect from 1st April 2006 and will, accordingly, These amendments will take effect from 1st April 2006 and will, accordingly, These amendments will take effect from 1st April 2006 and will, accordingly, apply in relation to asst. ys 2006 apply in relation to asst. ys 2006-07 and subsequent years." From the above it is evid From the above it is evident that the eligible transactions in derivatives carried ent that the eligible transactions in derivatives carried out through recognized stock exchanges are exempted from the purview of out through recognized stock exchanges are exempted from the purview of out through recognized stock exchanges are exempted from the purview of speculation transactions u/s 43(5) of the Act provided other conditions are speculation transactions u/s 43(5) of the Act provided other conditions are speculation transactions u/s 43(5) of the Act provided other conditions are satisfied because of recent and systemic and techn satisfied because of recent and systemic and technological changes introduced by ological changes introduced by stock exchanges. We have observed that the assessee company has entered into derivative We have observed that the assessee company has entered into derivative We have observed that the assessee company has entered into derivative transactions in foreign currency through SEBI registered broker who is a member transactions in foreign currency through SEBI registered broker who is a member transactions in foreign currency through SEBI registered broker who is a member National Stock Exchange of India Limited and these deriv National Stock Exchange of India Limited and these derivative transactions are ative transactions are carried on through National Stock Exchange of India which is a recognized stock carried on through National Stock Exchange of India which is a recognized stock carried on through National Stock Exchange of India which is a recognized stock exchange and these transactions are backed by time stamped contract notes exchange and these transactions are backed by time stamped contract notes exchange and these transactions are backed by time stamped contract notes carrying unique client identity number and PAN allotted under the Act. The carrying unique client identity number and PAN allotted under the Act. The carrying unique client identity number and PAN allotted under the Act. The reliance of the Ld. DR on the case of Araska Diamond (P.) Ltd. (supra) is ance of the Ld. DR on the case of Araska Diamond (P.) Ltd. (supra) is ance of the Ld. DR on the case of Araska Diamond (P.) Ltd. (supra) is misconceived as in this case the assessee did not fulfill the conditions as stipulated misconceived as in this case the assessee did not fulfill the conditions as stipulated misconceived as in this case the assessee did not fulfill the conditions as stipulated under section 43(5) of the Act read with proviso and Explanation thereto to under section 43(5) of the Act read with proviso and Explanation thereto to under section 43(5) of the Act read with proviso and Explanation thereto to entitle the assessee to entitle the assessee to bring forward contract in foreign currency within four bring forward contract in foreign currency within four corners of exemption from being treated as non corners of exemption from being treated as non-speculative transaction as per speculative transaction as per mandate of Section 43(5) of the Act. mandate of Section 43(5) of the Act. Thus, we hold that these derivative transactions in foreign currency as entered Thus, we hold that these derivative transactions in foreign currency as entered Thus, we hold that these derivative transactions in foreign currency as entered into by the assessee company duly fulfil all the conditions as specified u/s 43(5) of by the assessee company duly fulfil all the conditions as specified u/s 43(5) of by the assessee company duly fulfil all the conditions as specified u/s 43(5) of the Act read with proviso (d) and Explanation 1 to Section 43(5) of the Act. We the Act read with proviso (d) and Explanation 1 to Section 43(5) of the Act. We the Act read with proviso (d) and Explanation 1 to Section 43(5) of the Act. We further hold that these transactions are covered by the exception as contained in further hold that these transactions are covered by the exception as contained in further hold that these transactions are covered by the exception as contained in proviso (d) to Section 43(5) of the Act and hence are not speculative transactions to Section 43(5) of the Act and hence are not speculative transactions to Section 43(5) of the Act and hence are not speculative transactions as defined under Section 43(5) of the Act. Thus, we hold that loss of Rs. as defined under Section 43(5) of the Act. Thus, we hold that loss of Rs. as defined under Section 43(5) of the Act. Thus, we hold that loss of Rs. 1,09,98,560/- incurred by the company on derivative transactions in foreign incurred by the company on derivative transactions in foreign incurred by the company on derivative transactions in foreign currency in the instant appeal is n currency in the instant appeal is not a speculative loss within the definition as ot a speculative loss within the definition as contained in Section 43(5) of the Act. contained in Section 43(5) of the Act. Regarding contention of the Revenue that, these marked to market loss of Rs. Regarding contention of the Revenue that, these marked to market loss of Rs. Regarding contention of the Revenue that, these marked to market loss of Rs. 1,09,98,560/- as at 31st March 2009 is a notional or contingent loss and cannot as at 31st March 2009 is a notional or contingent loss and cannot as at 31st March 2009 is a notional or contingent loss and cannot be allowed as revenue expenditure as in view of Revenue the assessee company s revenue expenditure as in view of Revenue the assessee company s revenue expenditure as in view of Revenue the assessee company has claimed the losses on unexpired derivative transactions in foreign currency has claimed the losses on unexpired derivative transactions in foreign currency has claimed the losses on unexpired derivative transactions in foreign currency based on the prevailing exchange rates of United States Dollar vis based on the prevailing exchange rates of United States Dollar vis- -a-vis in relation to Indian Rupee as on the to Indian Rupee as on the date of Balance Sheet as at 31st March 2009 while the date of Balance Sheet as at 31st March 2009 while the

15 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd actual loss has not yet crystallized in the view of revenue because the derivative actual loss has not yet crystallized in the view of revenue because the derivative actual loss has not yet crystallized in the view of revenue because the derivative transactions had not yet been squared/settled as on the date of Balance Sheet as transactions had not yet been squared/settled as on the date of Balance Sheet as transactions had not yet been squared/settled as on the date of Balance Sheet as at 31st March 2009, we are guided by t at 31st March 2009, we are guided by the decision of Tribunal Special Bench, he decision of Tribunal Special Bench, Mumbai in Bank of Bahrain & Kuwait (supra) as detailed here in under: Mumbai in Bank of Bahrain & Kuwait (supra) as detailed here in under: Mumbai in Bank of Bahrain & Kuwait (supra) as detailed here in under: "..., 59. We, accordingly, hold that where a forward contract is entered into by the "..., 59. We, accordingly, hold that where a forward contract is entered into by the "..., 59. We, accordingly, hold that where a forward contract is entered into by the assessee to sell the foreign currency at an agreed price at a assessee to sell the foreign currency at an agreed price at a future date falling future date falling beyond the last date of accounting period, the loss is incurred to the assessee on beyond the last date of accounting period, the loss is incurred to the assessee on beyond the last date of accounting period, the loss is incurred to the assessee on account of evaluation of the contract on the last date of the accounting period i.e. account of evaluation of the contract on the last date of the accounting period i.e. account of evaluation of the contract on the last date of the accounting period i.e. before the date of maturity of the forward contract." before the date of maturity of the forward contract." The transaction in derivatives in foreign currency as entered into by the assessee ion in derivatives in foreign currency as entered into by the assessee ion in derivatives in foreign currency as entered into by the assessee company are similar to forward contract in foreign currency as discussed in the company are similar to forward contract in foreign currency as discussed in the company are similar to forward contract in foreign currency as discussed in the decision of Bank of Bahrain & Kuwait (supra). Respectfully following the decision decision of Bank of Bahrain & Kuwait (supra). Respectfully following the decision decision of Bank of Bahrain & Kuwait (supra). Respectfully following the decision of Tribunal, Special Be of Tribunal, Special Bench, Mumbai in Bank of Bahrain & Kuwait (supra) we hold nch, Mumbai in Bank of Bahrain & Kuwait (supra) we hold that the marked to market losses of Rs. 1,09,98,560/ that the marked to market losses of Rs. 1,09,98,560/- determined by the assessee determined by the assessee company due to the movement in the prevailing exchange rate of foreign company due to the movement in the prevailing exchange rate of foreign company due to the movement in the prevailing exchange rate of foreign currency i.e. United States Dollar vis currency i.e. United States Dollar vis-a-vis in relation to Indian Rupee as on the relation to Indian Rupee as on the date of Balance Sheet viz 31st March 2009 is not a notional or contingent loss date of Balance Sheet viz 31st March 2009 is not a notional or contingent loss date of Balance Sheet viz 31st March 2009 is not a notional or contingent loss rather it is an ascertained liability which has crystallized whereby a pending rather it is an ascertained liability which has crystallized whereby a pending rather it is an ascertained liability which has crystallized whereby a pending obligation of derivative contract on the balance sheet date i.e obligation of derivative contract on the balance sheet date i.e 31st March 2009 is 31st March 2009 is determinable with reasonable certainty and accuracy. The Accounting Standard determinable with reasonable certainty and accuracy. The Accounting Standard determinable with reasonable certainty and accuracy. The Accounting Standard- 11 prescribed by ICAI also stipulate that in situation like this when the derivative 11 prescribed by ICAI also stipulate that in situation like this when the derivative 11 prescribed by ICAI also stipulate that in situation like this when the derivative transaction in foreign currency has not been settled/squared during the transaction in foreign currency has not been settled/squared during the transaction in foreign currency has not been settled/squared during the accounting period, the effect of exchange rate difference on the un counting period, the effect of exchange rate difference on the un counting period, the effect of exchange rate difference on the un-expired foreign currency contracts as at the end of accounting period is to be accounted foreign currency contracts as at the end of accounting period is to be accounted foreign currency contracts as at the end of accounting period is to be accounted for in the books of account prepared for the afore for in the books of account prepared for the afore-stated accounting period. The stated accounting period. The reliance of the DR o reliance of the DR on instruction no 17/2008 dated 26th November 2008 is n instruction no 17/2008 dated 26th November 2008 is misconceived as in the instant case under appeal it is not a contingent or notional misconceived as in the instant case under appeal it is not a contingent or notional misconceived as in the instant case under appeal it is not a contingent or notional liability rather it is an ascertained liability which has crystallized and can be liability rather it is an ascertained liability which has crystallized and can be liability rather it is an ascertained liability which has crystallized and can be determined with reasonable certainty determined with reasonable certainty based upon the adverse exchange rate based upon the adverse exchange rate prevailing between United States Dollars vis prevailing between United States Dollars vis-a vis in relation to Indian Rupees as a vis in relation to Indian Rupees as on the date of Balance Sheet as at 31st March 2009. Hence , We hold that the said on the date of Balance Sheet as at 31st March 2009. Hence , We hold that the said on the date of Balance Sheet as at 31st March 2009. Hence , We hold that the said loss of Rs. 1,09,98,560/ loss of Rs. 1,09,98,560/- incurred by the assessee company on account of marked pany on account of marked to market loss arising on the date of Balance Sheet as at 31st March 2009 on to market loss arising on the date of Balance Sheet as at 31st March 2009 on to market loss arising on the date of Balance Sheet as at 31st March 2009 on account of un-expired derivative transactions in foreign currency entered by the expired derivative transactions in foreign currency entered by the expired derivative transactions in foreign currency entered by the assessee company arising due to the adverse movement in the exchange rat assessee company arising due to the adverse movement in the exchange rat assessee company arising due to the adverse movement in the exchange rate prevailing between United State Dollar vis prevailing between United State Dollar vis-a-vis in relation to Indian Rupee as on vis in relation to Indian Rupee as on the date of Balance Sheet as at 31st March 2009 can not be considered as the date of Balance Sheet as at 31st March 2009 can not be considered as the date of Balance Sheet as at 31st March 2009 can not be considered as notional or contingent loss rather it is an ascertained loss which has already notional or contingent loss rather it is an ascertained loss which has already notional or contingent loss rather it is an ascertained loss which has already occurred during the occurred during the assessment year which can be computed with reasonable assessment year which can be computed with reasonable certainty and accuracy and is a fait accompli as held in Oil & Natural Gas Corpn. certainty and accuracy and is a fait accompli as held in Oil & Natural Gas Corpn. certainty and accuracy and is a fait accompli as held in Oil & Natural Gas Corpn. Ltd. (supra). 9. Thus in view of our above foregoing discussions, we allow the appeal of the 9. Thus in view of our above foregoing discussions, we allow the appeal of the 9. Thus in view of our above foregoing discussions, we allow the appeal of the assessee company on follo assessee company on following reasons: 1. That the assessee company has entered into derivative transactions in foreign currency That the assessee company has entered into derivative transactions in foreign currency That the assessee company has entered into derivative transactions in foreign currency through recognised stock exchange and has complied with the other conditions as through recognised stock exchange and has complied with the other conditions as through recognised stock exchange and has complied with the other conditions as stipulated in Section 43(5) read with proviso(d) and Explanation 1 t stipulated in Section 43(5) read with proviso(d) and Explanation 1 t stipulated in Section 43(5) read with proviso(d) and Explanation 1 to the said Section 43(5) of the Act for which cogent material is brought on record. 43(5) of the Act for which cogent material is brought on record.

16 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd 2. That the contract for derivatives in foreign currency are commodity as defined u/s 43(5) of That the contract for derivatives in foreign currency are commodity as defined u/s 43(5) of That the contract for derivatives in foreign currency are commodity as defined u/s 43(5) of the Act, the underlying asset being foreign currency and are hence entitled for exemption the Act, the underlying asset being foreign currency and are hence entitled for exemption the Act, the underlying asset being foreign currency and are hence entitled for exemption from being treated as speculative provided all other conditions as stipula from being treated as speculative provided all other conditions as stipula from being treated as speculative provided all other conditions as stipulated u/s 43(5) are complied with. complied with.

17 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd before the Assessing Officer, during the assessment proceedings ssessing Officer, during the assessment proceedings as is clear from the as is clear from the entries in the order sheet. Thus, this is not a case of non entries in the order sheet. Thus, this is not a case of non-application of mind. Non application of mind. Non- mentioning of the fact of verification o mentioning of the fact of verification of an issue in the assessment order, cannot be held issue in the assessment order, cannot be held against the assessee as the manner in which the assessment order is against the assessee as the manner in which the assessment order is against the assessee as the manner in which the assessment order is drafted, is not in control of the assessee.

10.1. A number of High Courts have considered similar issues and held as follows : A number of High Courts have considered similar issues and held as follows : A number of High Courts have considered similar issues and held as follows :-

 Narayan Tatu Narayan Tatu Rane vs. ITO (2016) 70 taxmann.com 227 (Mum) Rane vs. ITO (2016) 70 taxmann.com 227 (Mum) As per explanation 2 below sec. 263 explanation 2 below sec. 263, proceedings can be initiated where an order , proceedings can be initiated where an order is passed without making inquiries or verification which should have been made; is passed without making inquiries or verification which should have been made; is passed without making inquiries or verification which should have been made; Held, this provision does not authorize or give u Held, this provision does not authorize or give unfetterd power to the nfetterd power to the commissioner to revise each and every order, if in his opinion, same has been commissioner to revise each and every order, if in his opinion, same has been commissioner to revise each and every order, if in his opinion, same has been passed without making enquiries or verification which should have been made. passed without making enquiries or verification which should have been made. passed without making enquiries or verification which should have been made.  Gabriel India Ltd. (Bom) 203 ITR 108 Gabriel India Ltd. (Bom) 203 ITR 108 Section 263 of the Income of the Income-tax Act, 1961 - Revision - Of orders prejudicial to Of orders prejudicial to interests of revenue interests of revenue - Assessment year 1973-74 - Assessee claimed a sum of Rs. Assessee claimed a sum of Rs. 99,326 described 'as plant relay out expenses' as revenue expenditure and ITO, ed 'as plant relay out expenses' as revenue expenditure and ITO, ed 'as plant relay out expenses' as revenue expenditure and ITO, after making enquiries in regard to nature of said expenditure and considering after making enquiries in regard to nature of said expenditure and considering after making enquiries in regard to nature of said expenditure and considering explanation furnished by assessee in that regard, allowed assessee's claim explanation furnished by assessee in that regard, allowed assessee's claim explanation furnished by assessee in that regard, allowed assessee's claim - Subsequently, Commissioner, exercis Subsequently, Commissioner, exercising powers under section 263, cancelled order ing powers under section 263, cancelled order of ITO observing that order of ITO did not contain discussion in regard to allow of ITO observing that order of ITO did not contain discussion in regard to allow of ITO observing that order of ITO did not contain discussion in regard to allow ability of claim for deduction which indicated non ability of claim for deduction which indicated non-application of mind and that application of mind and that claim of assessee required examination as to whet claim of assessee required examination as to whether expenditure in question was her expenditure in question was a revenue or capital expenditure and directed ITO to make a fresh assessment on a revenue or capital expenditure and directed ITO to make a fresh assessment on a revenue or capital expenditure and directed ITO to make a fresh assessment on lines indicated by him lines indicated by him - Whether under section 263 substitution of judgment of Whether under section 263 substitution of judgment of Commissioner for that of ITO is permissible Commissioner for that of ITO is permissible - Held, no - Whether Whether ITO's conclusion can be termed as erroneous simply because Commissioner does not agree with his can be termed as erroneous simply because Commissioner does not agree with his can be termed as erroneous simply because Commissioner does not agree with his conclusion - Held, no Held, no - Whether ITO's order could be held to be 'erroneous' Whether ITO's order could be held to be 'erroneous' simply because in his order he did not make an elaborate discussion simply because in his order he did not make an elaborate discussion simply because in his order he did not make an elaborate discussion - Held, no - Whether provisions of section 263 were applicable to instant case and ther provisions of section 263 were applicable to instant case and ther provisions of section 263 were applicable to instant case and Held, no Commissioner was justified in setting aside assessment order Commissioner was justified in setting aside assessment order - Held, no  Malabar Co. Ltd. vs. CIT (SC) (2000) 243 ITR 83 Malabar Co. Ltd. vs. CIT (SC) (2000) 243 ITR 83 “The phrase 'prejudicial to the interests of the revenue' has to be The phrase 'prejudicial to the interests of the revenue' has to be The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of conjunction with an erroneous order passed by the Assessing Officer. Every loss of conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as revenue as a consequence of an order of the Assessing Officer cannot be treated as revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopts one o prejudicial to the interests of the revenue, for example, when an ITO adopts one o prejudicial to the interests of the revenue, for example, when an ITO adopts one of the courses permissible in law and it has resulted in loss of revenue; or where two the courses permissible in law and it has resulted in loss of revenue; or where two the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner views are possible and the ITO has taken one view with which the Commissioner views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the does not agree, it cannot be treated as an erroneous order prejudicial to the does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law. he revenue unless the view taken by the ITO is unsustainable in law. he revenue unless the view taken by the ITO is unsustainable in law.”

18 ITA No. 651/Kol/2018 Assessment Year: 2013-14 Rampuria Industries & Investments Ltd. Rampuria Industries & Investments Ltd 11. Applying the propositions of law laid down in the above referred case Applying the propositions of law laid down in the above referred case Applying the propositions of law laid down in the above referred case-law to the facts of the case on hand, we hold that the order passed u/ facts of the case on hand, we hold that the order passed u/s 263 of the Act, is bad in law s 263 of the Act, is bad in law as the Assessing Officer in this case considered the issue, examined the facts and had Assessing Officer in this case considered the issue, examined the facts and had Assessing Officer in this case considered the issue, examined the facts and had taken a legally possible view. taken a legally possible view.

Kolkata, the Kolkata, the 26th day of February, 2020 20.

Sd/- Sd/- [S.S. Godara] [J. Sudhakar Reddy J. Sudhakar Reddy] Judicial Member Accountant Member Accountant Member Dated : 26.02.2020 {SC SPS} Copy of the order forwarded to: 1. Rampuria Industries & Investments Ltd Rampuria Industries & Investments Ltd C/o. Subash Agarwal & Associates Associates Siddha Gibson 1, Gibson Lane 2nd Floor Suite-213 Kolkata – 700 069 2. Pr. Commissioner of Income Tax, Central (1), Kolkata Pr. Commissioner of Income Tax, Central (1), Kolkata 3.CIT(A)- 4. CIT- , 5. CIT(DR), Kolkata Benches, Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata.