CIT v. Soorajmull Nagarmull

129 ITR 169High Court1981#2069 most cited

What is CIT v. Soorajmull Nagarmull authority for?

Losses from foreign exchange forward contracts, when incidental to an assessee's regular business and undertaken to safeguard business interests, are treated as business losses and not speculative losses under section 43(5).

55

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2015 to 2026.

Also referred to as

CIT v. Soorajmull Nagarmull · 129 ITR 169 · section 43(5) · foreign exchange loss · forward contracts · speculation loss · business loss · incidental to business · hedging contracts · currency fluctuation loss · non-speculative transaction · deductibility of loss

Sections most often in play

Section 43(5)Section 115JBSection 143(3)Section 147Section 148Section 37(1)Section 80IC

Issues it is cited on

section 43(5)speculation lossspeculative transactionsection 14a(1)section 40(a)(ii)corporate guaranteebusiness expediencybusiness connectionsection 40(a)(i)interest u/s 234bsection 43section 2(24)(x)

Judgments citing CIT v. Soorajmull Nagarmull

Visteon Automotive Systems India Private Limited, Chengalput vs. DCIT, Chennai

In the result, the appeal of the assessee is partly allowed for

ITA 1551/CHNY/2015[2005-06]Status: DisposedITAT Chennai15 Mar 2017AY 2005-06

Bench: Shri N.R.S. Ganesan & Shri D.S.Sunder Singhआयकर अपील सं./Ita Nos.1551 & 1552/Mds/2015 "नधा"रण वष"/Assessment Years: 2005-06 & 2008-09 & आयकर अपील सं./Ita Nos.1394 & 1395/Mds/2016 "नधा"रण वष"/Assessment Years: 2006-07 & 2007-08

Section 43(5)

…oss or gain arising from such transaction is a business loss or gain and relied on the decision of D Kishorekumar & Co. v. DCIT (2005) 2 SOT 769, CIT v. Badridas Gauridu Private Limited (2003) 261 ITR 268 (Bombay HC) and CIT vs. Soorajmull Nagamull (1981) 129 ITR 169 (HC) (Calcutta). The AO noticed that the assessee’s main activities were manufacturing of control systems, plastic components, etc., for automobiles. The AO further observed that the assessee has not entered into such forward contract for earlier year 2004-05 and this is a new venture. The assessee was also not sure of importing any material w…

DCIT 5(2), Mumbai vs. London Star Diamond Co. India P.Ltd, Mumbai

In the result, the appeal filed by the Revenue in ITA No

ITA 1359/MUM/2014[2010-11]Status: DisposedITAT Mumbai07 Nov 2016AY 2010-11

Bench: Shri Mahavir Singh & Shri Ramit Kocharआयकर अपील सं./I.T.A. No. 1359/Mum/2014 ("नधा"रण वष" / Assessment Year : 2010-11) The Deputy Commissioner Of London Star Diamond बनाम/ Income Tax 5(2) Company (India) Private V. Room No. 571, Aayakar Limited Bhawan, M K Road, Mumbai- 1610/1611 , 400 020 Prasad Chambers, Opera House, Mumbai-400 004 "थायी लेखा सं./Pan : Aaacl0576B .. (अपीलाथ" /Appellant) (""यथ" / Respondent)

For Appellant: Shri Harsh Kothari
Section 143(3)Section 43(5)

…exporter of cotton & not dealer in foreign exchange, relating to the FCs entered into with the Banks, constitutes business loss and allowable for set off against the business profits. In the process, judgment in the case of CIT v. Sooraj Mull Nagarmull [1981] 129 ITR 169/5 Taxman 289 (Cal.) (para 3) from Calcutta High court is followed. Thus, Ld Counsel is critical of the conclusions of the CIT (A) and manner of distinguishing the said binding judgment on frivolous grounds. Ld Counsel is also critical of the CIT (A)'s conclusions, who mistook the impugned FCs as currency derivatives, and mentioned that these deri…

JCIT 16(3), Mumbai vs. Shree Ramkrishna Export, Mumbai

In the result, the appeal filed by the assessee in ITA No

ITA 112/MUM/2013[2009-10]Status: DisposedITAT Mumbai07 Nov 2016AY 2009-10

Bench: Shri C.N. Prasad & Shri Ramit Kocharआयकर अपील सं./I.T.A. No. 7311/Mum/2012 ("नधा"रण वष" / Assessment Year : 2009-10) M/S Shree Ramkrishna The Jt. Commissioner Of बनाम/ Exports Pvt. Ltd., Income Tax – 16(3), V. (Earlier Shree Ramkrishna Matru Mandir, Exports) Mumbai – 400 007. Ee 6011, Bharat Diamond Bourse, G Block, Bandra-Kurla Complex, Bandra East, Mumbai – 400 005. "थायी लेखा सं./Pan : Earlier Pan Aaafs6758D (Now Pan Aarcs2442Q) .. (अपीलाथ" /Appellant) (""यथ" / Respondent)

For Respondent: Shri Manjunatha Swamy
Section 143(2)Section 143(3)

…ssee has relied upon the following decisions : (i) DCIT vs. Bank of Bahrain & Kuwait 132 TTJ 505 (Mumbai)(SB) (ii) Woodward Governor India (P) Ltd. 312 ITR 254(SC) (iii) ONGC 322 ITR 180(SC) (iv) Badridas Gauridu (P) Ltd. 261 ITR 256 (v) Soorajmul Nagarmull 129 ITR 169 (Cal.) The A.O. considered the submissions of the assessee and observed that the assessee has entered into forward foreign exchange contracts , which are outstanding as at the end of the previous year which has been valued by the assessee on the basis of rates applicable on the closing day of the previous year , though the contracts were still o…

Shree Ramkrishna Export, Mumbai vs. Jtcit 16(3), Mumbai

In the result, the appeal filed by the assessee in ITA No

ITA 7311/MUM/2012[2009-10]Status: DisposedITAT Mumbai07 Nov 2016AY 2009-10

Bench: Shri C.N. Prasad & Shri Ramit Kocharआयकर अपील सं./I.T.A. No. 7311/Mum/2012 ("नधा"रण वष" / Assessment Year : 2009-10) M/S Shree Ramkrishna The Jt. Commissioner Of बनाम/ Exports Pvt. Ltd., Income Tax – 16(3), V. (Earlier Shree Ramkrishna Matru Mandir, Exports) Mumbai – 400 007. Ee 6011, Bharat Diamond Bourse, G Block, Bandra-Kurla Complex, Bandra East, Mumbai – 400 005. "थायी लेखा सं./Pan : Earlier Pan Aaafs6758D (Now Pan Aarcs2442Q) .. (अपीलाथ" /Appellant) (""यथ" / Respondent)

For Respondent: Shri Manjunatha Swamy
Section 143(2)Section 143(3)

…ssee has relied upon the following decisions : (i) DCIT vs. Bank of Bahrain & Kuwait 132 TTJ 505 (Mumbai)(SB) (ii) Woodward Governor India (P) Ltd. 312 ITR 254(SC) (iii) ONGC 322 ITR 180(SC) (iv) Badridas Gauridu (P) Ltd. 261 ITR 256 (v) Soorajmul Nagarmull 129 ITR 169 (Cal.) The A.O. considered the submissions of the assessee and observed that the assessee has entered into forward foreign exchange contracts , which are outstanding as at the end of the previous year which has been valued by the assessee on the basis of rates applicable on the closing day of the previous year , though the contracts were still o…

Mahendra Brothers Exports Pvt. Ltd., Mumbai vs. Addl. C.I.T.5(2), Mumbai

Appeal stands dismissed

ITA 7449/MUM/2011[2008-09]Status: DisposedITAT Mumbai25 Jul 2016AY 2008-09

Bench: Shri G S Pannu & Shri Amit Shukla

Section 10(34)Section 143(3)Section 14A

…xchange contract is only incidental to the assessee’s regular course of the business. While coming to this conclusion, the Hon’ble High Court relied upon the decision of Hon’ble Calcutta High Court in the case of CIT v Soorajmull Nagarmull, reported in [1981] 129 ITR 169. That apart, Hon’ble Gujarat High Court in the case of CIT vs Star and Star Shipping P Ltd / Friends and Friends Shipping Pvt. Ltd [2013] 35 taxmann.com 553 (Gujarat) came to the same conclusion and finding. ITAT Mumbai Bench in the case of London Star Diamond Company (I) P Ltd had also held and relied upon aforesaid decisions and held that, if t…

DCIT 5(2), Mumbai vs. Mahendra Brothers Exports P. Ltd, Mumbai

Appeal stands dismissed

ITA 7319/MUM/2011[2008-09]Status: DisposedITAT Mumbai25 Jul 2016AY 2008-09

Bench: Shri G S Pannu & Shri Amit Shukla

Section 10(34)Section 143(3)Section 14A

…xchange contract is only incidental to the assessee’s regular course of the business. While coming to this conclusion, the Hon’ble High Court relied upon the decision of Hon’ble Calcutta High Court in the case of CIT v Soorajmull Nagarmull, reported in [1981] 129 ITR 169. That apart, Hon’ble Gujarat High Court in the case of CIT vs Star and Star Shipping P Ltd / Friends and Friends Shipping Pvt. Ltd [2013] 35 taxmann.com 553 (Gujarat) came to the same conclusion and finding. ITAT Mumbai Bench in the case of London Star Diamond Company (I) P Ltd had also held and relied upon aforesaid decisions and held that, if t…

ACIT 10(2), Mumbai vs. Foods & Inns Ltd, Mumbai

ITA 6271/MUM/2014[2010-11]Status: DisposedITAT Mumbai07 Jun 2016AY 2010-11

Bench: Shri Jason P. Boaz & Shri Sandeep Gosainm/S. Foods & Inns Ltd. Acit, Circle 10(2) Punjabwadi, Sion Trombay Room No. 432, 4Th Floor Vs. Road, Deonar Aayakar Bhavan, M.K. Road Mumbai 400088 Mumbai 400020 Pan - Aaacf0521C Appellant Respondent

For Appellant: Shri Keshav B. BhujleFor Respondent: Shri G.M. Doss
Section 14ASection 40

…assessee was entitled to claim deduction in respect of Rs. 13.50 lakhs as a business loss. This matter is squarely covered by the judgment of the Calcutta High Court, with which we agree, in the case of CIT v. Soorajmull Nagarmull (1981) 22 CTR Cal) 8: (1981) 129 ITR 169 (Cal)”. 5.3.5 Taking into account the facts and circumstances of the case as discussed above and the judicial pronouncement referred to (supra), we are of the considered view that the orders of the learned CIT(A) for assessment years 2009-10 and 2010-11 holding that foreign exchange losses of `16,72,65,011/- and `6,53,06,057/- for assessment year…

ACIT 10(2), Mumbai vs. Foods & Inns Ltd, Mumbai

ITA 6629/MUM/2012[2009-10]Status: DisposedITAT Mumbai07 Jun 2016AY 2009-10

Bench: Shri Jason P. Boaz & Shri Sandeep Gosainm/S. Foods & Inns Ltd. Acit, Circle 10(2) Punjabwadi, Sion Trombay Room No. 432, 4Th Floor Vs. Road, Deonar Aayakar Bhavan, M.K. Road Mumbai 400088 Mumbai 400020 Pan - Aaacf0521C Appellant Respondent

For Appellant: Shri Keshav B. BhujleFor Respondent: Shri G.M. Doss
Section 14ASection 40

…assessee was entitled to claim deduction in respect of Rs. 13.50 lakhs as a business loss. This matter is squarely covered by the judgment of the Calcutta High Court, with which we agree, in the case of CIT v. Soorajmull Nagarmull (1981) 22 CTR Cal) 8: (1981) 129 ITR 169 (Cal)”. 5.3.5 Taking into account the facts and circumstances of the case as discussed above and the judicial pronouncement referred to (supra), we are of the considered view that the orders of the learned CIT(A) for assessment years 2009-10 and 2010-11 holding that foreign exchange losses of `16,72,65,011/- and `6,53,06,057/- for assessment year…

Foods and Inns Ltd, Mumbai vs. ACIT 10(2), Mumbai

ITA 1262/MUM/2011[2007-08]Status: DisposedITAT Mumbai07 Jun 2016AY 2007-08

Bench: Shri Jason P. Boaz & Shri Sandeep Gosainm/S. Foods & Inns Ltd. Acit, Circle 10(2) Punjabwadi, Sion Trombay Room No. 432, 4Th Floor Vs. Road, Deonar Aayakar Bhavan, M.K. Road Mumbai 400088 Mumbai 400020 Pan - Aaacf0521C Appellant Respondent

For Appellant: Shri Keshav B. BhujleFor Respondent: Shri G.M. Doss
Section 14ASection 40

…assessee was entitled to claim deduction in respect of Rs. 13.50 lakhs as a business loss. This matter is squarely covered by the judgment of the Calcutta High Court, with which we agree, in the case of CIT v. Soorajmull Nagarmull (1981) 22 CTR Cal) 8: (1981) 129 ITR 169 (Cal)”. 5.3.5 Taking into account the facts and circumstances of the case as discussed above and the judicial pronouncement referred to (supra), we are of the considered view that the orders of the learned CIT(A) for assessment years 2009-10 and 2010-11 holding that foreign exchange losses of `16,72,65,011/- and `6,53,06,057/- for assessment year…

Hiraco India P.Ltd, Mumbai vs. DCIT 5(1), Mumbai

In the result, the appeal filed by the assessee is allowed

ITA 2300/MUM/2015[2009-10]Status: DisposedITAT Mumbai20 Jan 2016AY 2009-10

Bench: S/Shri B.R.Baskaran, Am & Amarjit Singh, Jm आमकय अऩीर सं./I.T.A. N.2300/Mum/2015 (ननधधायण वषा / Assessment Year:2009-10) बनाम/ M/S Hiraco India Pvt.Ltd, Dy.Commissioner Of Income Gw 2050, Tax-5(1), Vs. Bharat Diamond Bourse, Aayakar Bhavan, Bandra Kurla Complex, M K Road, Babdra (E), Mumbai-400020. Mumbai-400051 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) ..

…mental laws: In this regard, relevant decisions include the decision in the case of D Kishore kumar and Co supra, binding judgment of the Bombay High Court in the case of CIT vs. Badridas Gauridu Pvt Ltd (supra), judgment in the case of Sooraj Muill Magarmull 129 ITR 169 (para 3) from Calcutta High Court. The judgments from the High Court of Ahmedabad in the cases of Friends and Friends Shipping Pvt. Ltd (supra) and in the case of Panchamahal Steel Ltd (supra) are also relevant. These decisions / judgments are unanimously relevant for the proposition that the FC transactions, when entered into with the banks for…

Jayant Kumar Bhura, Mumbai vs. I.T.O WD - 35(2), Kolkata

In the result, the appeal of assessee is allowed

ITA 901/KOL/2013[2009-10]Status: DisposedITAT Kolkata29 Oct 2015AY 2009-10

Bench: Shri Mahavir Singh, Jm & Shri Waseem Ahmed, Am]

For Appellant: Shri S. K. Tulsiyan & Shri Ravi Tulsiyan, FCAFor Respondent: Shri Sanjit Kr. Das, JCIT, Sr. DR
Section 143(3)Section 43(5)

…ssessee in accordance with RBI guidelines. The AO and CIT(A) were wholly unjustified in treating the business loss as speculative in nature. 10. This issue is now covered by the judgment of the Hon'ble Calcutta High Court in CIT v Soorajmull Nagarmull, (1981) 129 ITR 169 (Cal), wherein the assessee was a firm 10 Jayant Kr. Bhura AY 2000-10 engaged in the business of import and export of jute and in course of business, the assessee would enter into forward contract in foreign exchange in order to cover the loss which may arise due to difference in foreign exchange valuation. In one such contract, the assessee had…

M/S. Bechtel India Pvt. Ltd., New Delhi vs. DCIT, New Delhi

In the result, the appeal of the assessee is partly allowed on transfer

ITA 882/DEL/2014[2009-10]Status: DisposedITAT Delhi14 Oct 2015AY 2009-10

Bench: Shri S.V. Mehrotra & Shri Chandra Mohan Garg

For Appellant: S/Shri S.D. Kalipa, R.R.Maurya, Praveen SharmaFor Respondent: S/Shri Ravi Jain, CIT DR, Subhakant Sahoo, Sr. DR
Section 119Section 143(3)Section 144CSection 144C(5)Section 234BSection 271(1)(c)Section 92

…Forward Contracts are to be treated as commodity as held in 38 taxmann.com 338 (Mumbai-Trib.). Reliance on the decision or the Bombay High Court in the case of CIT v. Badridas Gauridu Pvt Ltd 2004 134 Taxrnan 376 (Bombay) and UT v. Soorajmull Nagarmull [1981] 129 ITR 169 (Cal) in the case of London Star Diamond Company (I) P. Ltd v. DCIT [2013] 38 taxrnann.com 338 (Mumbai- Trib.). Relevant extract of para 19 of the judgment reads as under: "Para /9. The above------- .Although there is decision of the Tribunal where it is held that the FCs are not commodities, considering the judgment of Hon’ble High court of Cal…

Majestic Exports, Tiruppur vs. ACIT, Tiruppur

In the result, the appeals of the assessee are partly allowed

ITA 3072/CHNY/2014[2010-2011]Status: DisposedITAT Chennai24 Jul 2015AY 2010-2011

Bench: Shri Chandra Poojari & Shri V. Durga Raoआयकर अपील सं./ I.T.A. Nos.1336 & 3072/Mds/2014 ("नधा"रण वष" / Assessment Years : 2009-2010 & 2010-2011)

For Appellant: Shri. T. Banusekar, C.A ""For Respondent: Shri. Krishnamurthy, IRS, CIT
Section 43Section 43(5)Section 73Section 8

…he circumstances, the assessee was entitled to claim deduction in respect of Rs. 13.50 lakhs as a business loss. This matter is squarely covered by the judgment of the Calcutta High Court, with which we agree, in the case of CIT v. Soorajmull Nagarmull [1981] 129 ITR 169. 5.3 The ld. Authorised Representative for assessee relied on the order of the Co-Ordinate Bench, Mumbai in the case of D. Kishore Kumar & Co vs. DCIT, 2 SOT 769 wherein it was held that ‘’ assessee engaged in importing rough diamonds and exporting cut and polished ones, profits from cancellation of forward contracts in foreign exchange entered…

Majestic Exports, Tiruppur vs. JCIT, Tiruppur

In the result, the appeals of the assessee are partly allowed

ITA 1336/CHNY/2014[2009-2010]Status: DisposedITAT Chennai24 Jul 2015AY 2009-2010

Bench: Shri Chandra Poojari & Shri V. Durga Raoआयकर अपील सं./ I.T.A. Nos.1336 & 3072/Mds/2014 ("नधा"रण वष" / Assessment Years : 2009-2010 & 2010-2011)

For Appellant: Shri. T. Banusekar, C.A ""For Respondent: Shri. Krishnamurthy, IRS, CIT
Section 43Section 43(5)Section 73Section 8

…he circumstances, the assessee was entitled to claim deduction in respect of Rs. 13.50 lakhs as a business loss. This matter is squarely covered by the judgment of the Calcutta High Court, with which we agree, in the case of CIT v. Soorajmull Nagarmull [1981] 129 ITR 169. 5.3 The ld. Authorised Representative for assessee relied on the order of the Co-Ordinate Bench, Mumbai in the case of D. Kishore Kumar & Co vs. DCIT, 2 SOT 769 wherein it was held that ‘’ assessee engaged in importing rough diamonds and exporting cut and polished ones, profits from cancellation of forward contracts in foreign exchange entered…

Star Exports & Imports, Bangalore vs. Add.C.I.T., Bangalore

Appeal of the assessee is allowed

ITA 997/BANG/2012[2009-10]Status: DisposedITAT Bangalore06 Feb 2015AY 2009-10

Bench: Shri N.V.Vasudevan & Shri Abraham P George

For Appellant: Shri H.N.Khincha, CAFor Respondent: Shri P.Dhivahar, JCIT
Section 43(5)

…Ltd. 126 ITD 59(Bang) had held that foreign exchange forward contract transactions giving rise to loss or gains would be speculative in nature. Again as per the AO, the decision of the Hon’ble Calcutta High Court in the case of CIT Vs Soorajmull Nagar Mull 129 ITR 169, relied on by the assessee was distinguishable on facts. He thus, held that the speculative transactions resulted in a speculative loss which could not be set off against normal profits of the business of the assessee. He thus made and addition of Rs.1,52,81,124/- and completed the assessment. 5. In its appeal before the CIT(A) argument of the…