As per RBI guidelines user can undertake derivative transaction to hedge, specially reduce or extinguish an existing identified risk on an ongoing basis during life of derivative transactions or for transformation of risk exposure as specially permitted by RBI. Assessee engaged in business of manufacturing of yarn, processed fabrics, sugar and export of cotton yarn, entered into forex derivative transactions through its bankers to hedge its foreign currency risk, business loss arising out of foreign exchange fluctuation could not be termed as speculative under section 43(5) of the Act.Loss allowable as business loss. (AY. 2011-12