Case Law Details
La Opala RG Ltd. Vs DCIT (ITAT Kolkata)
In the case of La Opala RG Ltd. Vs DCIT, heard in the Income Tax Appellate Tribunal (ITAT) Kolkata, the appellant, La Opala RG Ltd., filed two appeals against separate orders of the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi. These orders were passed against the assessment orders by the Deputy Commissioner of Income Tax (DCIT), Circle-12(1), Kolkata, under section 143(3) of the Income-tax Act, 1961, for the assessment years 2013-14 and 2014-15.
The grounds taken by the appellant for the assessment year 2013-14 included objections to the CIT(A)’s decision to pass the order under section 250 without providing an opportunity for a hearing via Video Conferencing (VC), and the upholding of the disallowance of Rs. 39,19,131/- made by the DCIT on account of Forward Contract Loss incurred towards hedging the foreign exchange fluctuation loss on the FCNRB Loan Account. For the assessment year 2014-15, the grounds included similar objections regarding the opportunity of hearing via VC and the upholding of various disallowances made by the DCIT.
In both appeals, the first ground was dismissed as not pressed by the appellant.
The appeal for the assessment year 2013-14 primarily focused on the disallowance of the claim for hedging foreign exchange fluctuation loss on FCNRB loan interest. The appellant argued that the premium paid for hedging should be treated as a revenue expenditure, not a capital loss, as it was incurred to reduce the effective cost of funds. The tribunal agreed with the appellant, emphasizing that the payment was not speculative and was a legitimate business expense. Therefore, the tribunal allowed the appellant’s claim.
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