Case Law Details
Venture Lighting India Vs ACIT / DCIT (ITAT Chennai)
ITAT noted that the assessee is consistently following a policy and method of accounting admitting foreign exchange gain or loss on year-on-year basis. The assessee before us filed complete chart from assessment year 2010-11 to 2016-17 as noted above. Before us, the ld. Senior DR could not contradict the chart placed before us. On query from the Bench in respect of treatment of gains in certain years by the Revenue, he could not contradict that it was accepted by the Revenue as part of total income of the assessee. Thus, this factual matrix remained uncontroverted and unchallenged.
In the course of hearing, a query was also raised before ld. Counsel of the assessee to demonstrate the accounting procedure adopted for the reversal of reinstatement of assets and liabilities as on 31st March of every year on account of exchange fluctuations, for which the ld. Counsel referred to the paper-book compilation submitted before us and demonstrated the accounting methodology adopted by the assessee for the same.
Hon’ble Supreme Court in the case of Woodward Governor India P. Ltd., held that the loss suffered by assessee on account of foreign exchange difference as on the date of balance sheet is an item of expenditure allowable u/s.37(1) of the Act. Further, it was held that the accounting method followed by an assessee continuously for a given period of time needs to be presumed to be correct till AO comes to conclusion for reasons to be given that said systems does not reflect true and correct profits. Hence, in the present case before us also the facts being identical,
ITAT follow the said SC judgment and allow the loss suffered by assessee on account of foreign exchange difference as on the date of balance sheet.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
