Case Law Details
DCIT Vs Green Star Fertilizers Ltd. (ITAT Chennai)
The issue of disallowance of expenditure on account of foreign exchange fluctuation loss incurred for acquisition of domestic asset is revenue in nature deductible u/s.37(1) or not has been considered by the coordinate Bench of this Tribunal in the case of M/s.Hyundai Motor Company Ltd. Vs. DCIT (supra), where the Tribunal considering ratio laid down by the Supreme Court in the cases of CIT vs. Tata Iron & Steel Co.Ltd. (supra) and CIT vs. Woodward Governor India P.Ltd. (supra) held that in absence of applicability of section 43A and in the absence of any other provision of the Income Tax Act dealing with the issue of forex loss, the claim of exchange fluctuation loss taken by the assessee cannot be treated as capital in nature and added back to cost of assets.
In this view of the matter and by respectfully following the decision of co-ordinate Bench in the case of M/s.Hyundai Motor Company Ltd. Vs. DCIT (supra), which in turn followed the decision of M/s. Cooper Corporation Vs. CIT and also by following the decision of Hon’ble Supreme Court in the case of CIT vs. Tata Iron & Steel Co.Ltd. (supra), we are of the considered view that there is no error in the findings recorded by the learned CIT(A) that in absence of applicability of section 43A of the Act, loss claimed by the assessee on account of exchange fluctuation loss on ECB loan availed for acquisition of indigenous assets revenue in nature deductible u/s.37(1) of the Act cannot be considered as capital in nature and added back to the cost of assets. Hence, we are inclined to uphold the findings of the learned CIT(A) and reject the grounds taken by the Revenue for both the assessment years.
FULL TEXT OF THE ITAT JUDGEMENT
These two appeals filed by the Revenue are directed against
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