Forward Contracts not by way of Trading in Foreign Exchange Derivatives: SC dismisses SLP filed by Income Tax Dept [Read Order]

The Supreme Court dismissed a special leave petition (SLP) filed by the Income Tax Department, challenging the order of the Delhi High Court regarding forward contracts not by way of trading in foreign exchange derivatives.

The Delhi High Court observed that “In the present case, however, the assessee had entered into derivative contracts in order to hedge its exchange risk in respect of export proceeds receivable by it in foreign exchange. Forward contracts entered into by the assessee were not by way of trading per se in foreign exchange derivatives. Consequently, CBDT Circular No.3/2010 dated 23rd March, 2010 has no application to the facts of the present case.”

Challenging the order of the Delhi High Court the Income Tax Department filed a SLP before the Supreme Court.

A Two-Judge Bench of Justice Abhay S Oka and Justice Ujjal Bhuyan observed that “Delay condoned. No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is, accordingly, dismissed.”

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates