IN THE INCOME-TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER &

SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No. 5657/MUM/2025 (A.Y. 2017-18)

Deputy Commissioner of v/s. Foods and Inns Limited Income Tax – 2(1)(1) बनाम Udhyog Bhavan, 2nd Floor, 29 561, 5th Floor, Aaykar Walchand Hirachand Marg, Bhavan, M.K. Road, New Ballard Estate, Mumbai GPO, Marine Lines, Mumbai – Mumbai – 400 001, 400 020, Maharashtra Maharashtra स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAACF0521C Appellant/अपीलार्थी .. Respondent/प्रतिवादी

Assessee by : Ms. N.V.Kulkarni,AR Revenue by : Ms. Kavitha Kaushik,(Sr. DR)

Date of Hearing 04.11.2025 Date of Pronouncement 17.11.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :-

The present appeal arising from the appellate order dated

16.06.2025 is preferred by the Revenue against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 14.12.2019 for the Assessment Year [A.Y.] 2017-18.

2. The grounds of appeal are as under:-

1. “Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) is justified in treating the earning on foreign exchange forward contracts as regular business income and not speculation gain disregarding the fact that the provision of section 43(5) are applicable in this case?”

3. The registry has pointed out that the appeal is delayed by 11 days. Considering the delay being negligible, we condone the same. 4. Briefly stated facts of the case are that the assessee company filed its return of income declaring income of Rs. 5,99,07,110/- under normal provisions of the Act and at Rs. 12,45,38,643/- u/s 115JB of the Act which was later revised modifying the returned income. In the course of assessment proceedings, it was noted by the ld.AO that during the year, the assessee had earned Foreign Exchange gain of Rs. 11,50,83,853/- on Forward contracts. In response to the query made in this regard, it was submitted that the forward contract was in nature of hedging to avoid loss in foreign currency rate fluctuations and the same was covered by the first proviso to section 43(5) of the Act. The assessee also relied on various case laws that the forward contract gain was not speculative in nature. However, the AO did not accept the contentions by observing that the assessee was dealing in Fruit Pulp and allied items and was not a dealer in Foreign exchange. Delivery of foreign exchange had not been taken or given and were dealt with in form of forward contracts only. It was not the case of the assessee that forward contract gain on account of raw material dealt by him i.e. fruit pulp. It was on account of the foreign exchange and it was held that forex gain on forward contract for not hedging contracts and therefore, held to be speculative in nature. In view of the specific provisions of the speculative transactions u/s 43(5) of the Act, the above stated gain was held to be Speculative gain.

5. In the subsequent appeal, the ld.CIT(A) observed that the issue was covered in favour of the assessee as on identical facts, the coordinate bench of ITAT, Mumbai in the case of assessee itself had allowed similar deduction claimed. Facts remaining same, therefore following the judgement of Hon’ble ITAT in appellant’s own case and CIT (A)’s order for A.Y-2015-16 and ITAT order of “F” Bench Mumbai for A.Y 2013-14, 2014-15 and 2015-16, addition made by the AO of Rs. 11,50,83,853/-

treating speculative gain was deleted.

6. Before us, the ld.DR has placed reliance on the assessment order while the ld.AR has pleaded that the issue in hand is squarely covered by the ITAT, Mumbai bench orders in its own case where similar deduction was held to be allowable. He also placed on record order passed by hon’ble Bombay High Court in its own case for AY 2016-

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