Macrotech Developers Limited (MDL) Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that consulting charges is revenue item and accordingly, foreign exchange loss arising thereon is allowable as revenue expenditure. Accordingly, appeal of revenue dismissed.
Facts- During assessment, the assessing officer noted that assessee has made a provision of doubtful debts against the advances made to various parties. The assessing officer doubted advances of Rs. 1.83 crore though the assessee has made provision of 3.13 crore. CIT(A) allowed relief to the assessee on appreciating the fact that assessee has claimed business loss u/s. 28. Being aggrieved, revenue has preferred the present appeal.
During assessment, the assessing officer noted that assessee has shown loss on foreign currency exchange of Rs. 1,12,449/-. Assessing officer disallowed Rs. 1.12.449/- and added to the income of assessee. CIT(A) by following the decision of assessee’s own case for A.Y. 2018-19 held that consulting charges is a revenue item and foreign exchange loss arising thereon should be allowed as revenue expenditure. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that the assessee has made advances in the course of business activities for purchase of land. Neither the deals of land was materialised nor the amount has not been recovered, therefore, it is a pure business loss. Thus, we affirmed the order of ld. CIT(A), with our additional observation.
