Egger Pumps India Pvt. Ltd. Vs ITO (ITAT Chennai)
ITAT Chennai dismissed the assessee’s appeal concerning Assessment Year 2011-12 and upheld the disallowance of Rs.7,02,000/- claimed as foreign exchange fluctuation loss arising on restatement of an External Commercial Borrowing (ECB). Egger Pumps India Pvt. Ltd., engaged in manufacture of industrial pumps, had received a Euro 3,24,982.65 ECB from its Swiss parent company in 2006. The assessee claimed Rs.7,02,000/- as forex loss on year-end restatement of the outstanding ECB. The AO treated the loss as capital in nature and disallowed it, and the CIT(A) confirmed the action by following the Tribunal’s decision in the assessee’s own case for AY 2012-13. Before the Tribunal, the assessee submitted that its appeal against the AY 2012-13 decision had been admitted by the Madras High Court. However, the Tribunal noted that no change in facts or law had been pointed out and respectfully followed its earlier decision. The appeal was accordingly dismissed.
ITAT Chennai on Forex Loss from Restatement of ECB
Background and Disallowance of Rs.7.02 Lakh
The appeal was preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/Addl./JCIT(A)-10, dated 04.11.2024 for AY 2011-12.
The sole issue before the Tribunal concerned the action of the Ld.CIT(A) confirming the AO’s treatment of the loss arising from foreign exchange fluctuation on restatement of External Commercial Borrowings amounting to Rs.7,02,000/- as capital in nature and consequently disallowing the same by order passed under sections 143/147 of the Income Tax Act, 1961 dated 04.07.2018.
