Loss due to fluctuation in foreign exchange liabilities allowable

The assessee debited an amount of Rs. 17,34,716/- being foreign exchange loss that arose due to re-statement of current liabilities. The liability had arisen in the earlier years due to consultancy services rendered by Alfred Mcalphine, UK. The assessee contended that the loss arising due to fluctuation in foreign exchange liabilities, when such liabilities are re-instated as on 31st March, is ascertained liability and not contingent liability. The AO rejected the contention of the assessee. The CIT(A) followed the judgment of Hon’ble Supreme Court in the case of CIT vs. Woodward Governor India (P) Ltd. (312 ITR 254) (SC) and held that the loss suffered by the assessee is allowable. We find no infirmity in the order of the ld. CIT(A) which is also in consonance with the principles laid down by the Special Bench of the Tribunal in the case of ONGC Ltd. vs. CIT (83 ITD 151) (Del) (SB). Hence, we uphold the finding of the first appellate authority and dismiss the sole ground of the Revenue.

INCOME TAX APPELLATE TRIBUNAL,MUMBAI

I.T.A. No. 3236/Mum/2010 – (A.Y. 2004- 05)

I.T.A.No. 2023/Mum/2010 – (A.Y. 2004- 05)

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