आदेश/ORDER

Per Madhusudan Sawdia, A.M.:

This appeal is filed by Revenue, feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) dated 25.09.2025 for the A.Y.2019-20.

2. The Revenue has raised the following grounds of appeal:

1. The learned CIT(A) erred in law and on facts in deleting the addition of Rs.2,16,66,064/- made by the Assessing Officer towards speculation loss, without appreciating that the assessee failed to establish that the derivative/hedging transactions were undertaken to hedge actual borrowings and were not speculative in nature and without substantiating the hedging expenses of Rs.7,88,53,268/- claimed for a loan taken.

2. The CIT(A) erred in admitting additional evidence (books, audit report, financial statements, etc.) without recording the findings of admission of additional evidences and reasons thereof in the appellate order as required mandatorily in Rule 46A(2).

3. The CIT(A) erred in taking into account the additional evidences produced without affording a reasonable opportunity to the AO to examine or rebut the additional evidences as required mandatorily in Rule 46A(3).

4. The CIT(A) erred in passing cryptic order allowing the assessee's claim in para 6.2.1 of the appellate order without giving clear findings on the additional evidences produced by the assessee or remanding the issue back to the Assessing Officer.

5. The learned CIT(A) failed to appreciate that mere submission of loan agreements and MTM statements does not conclusively establish that the transactions fall under the exclusion clause of Section 43(5) of the Income-tax Act, 1961, and CIT(A) failed to record any finding of the purpose of the loan whether on revenue account or for capital purpose, as any hedging cost or loss incurred for hedging the interest rate risk on such foreign currency borrowings, if for capital purposes have to be on capital account and the same cannot be allowed as revenue expenditure.

6. The learned CIT(A) erred in relying on CIT v. Woodward Governor India Pvt. Ltd. and ONGC v. DCIT without verifying whether the factual matrix of the present case was comparable, rendering the order perverse and unsustainable in law.

7. The learned CIT(A) erred in law in treating Ind-AS disclosures and accounting treatment as determinative of the allowability of losses under the Income-tax Act, contrary to the principle laid down in Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT (227 ITR 172) (SC).

8. The order of the learned CIT(A) being contrary to facts, contrary to statutory provisions, and passed in violation of the prescribed procedure, is erroneous in law and liable to be set aside.

3. Brief facts of the case are that the assessee is a company engaged in contract business and filed its return of income for Assessment Year 2019-20 under section 139 of the Income Tax Act, 1961 (“the Act”) on 05.10.2019 declaring loss of Rs.1,14,55,669/-. Subsequently, on the basis of information available with Learned Assessing Officer (“Ld. AO”), reassessment proceedings under section 147 of the Act were initiated in the case of the assessee. After passing order under section 148A(d) of the Act on 06.04.2023, the Ld. AO issued notice under section 148 of the Act to the assessee on 06.04.2023. In response to the notice issued under section 148 of the Act, the assessee furnished its return of income on 25.04.2023 declaring business loss of Rs.1,14,50,359/-. Thereafter, notice under section 143(2) of the Act was issued by the Ld. AO on 24.06.2024. During the course of assessment proceedings, considering the submissions of the assessee, the Ld. AO disallowed an amount of Rs.46,81,600/- under section 37(1) of the Act on account of sub-contract payment made by the assessee to M/s Patel KNR JV. The Ld. AO also disallowed claim of business loss of Rs.2,16,66,064/- incurred by the assessee in foreign currency transactions by treating the same as s