Commitment charges paid towards foreclosure of business agreement are allowable u/s 37

Brief of the case

In the case of D.C.I.T. vs Autoline Industries Ltd, Pune Tribunal held that foreign exchange cover taken by the assessee from DBS Bank was in order to prevent itself from future currency rate fluctuations. Later, it had to close its agreement with DBS Bank in view of the offer made by the principal lender i.e. Citi Bank. The pre-payment charges/commitment charges paid to DBS Bank relating to the cancellation of the said foreign exchange cover was on account of business agreement entered into

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