Bando (India) Private Limited Vs DCIT (ITAT Delhi)
ITAT Delhi held that provision of section 43A of the Income Tax Act not invocable when there is only reinstatement of fluctuation loss as per accounting standards and there is no actual payment or remittance. Thus, appeal allowed.
Facts- The assessee claimed expenses on account of foreign exchange fluctuation of Rs.6,42,33,238/-and the Assessing Officer has disallowed Rs.4,20,57,880 representing foreign exchange fluctuation loss on reinstatement of the ECB loans borrowed near the end of FY 2011-2012. Notably, CIT(A) has made disallowance by relying section 43A.
Conclusion- Held that disallowance under section 37 and under section 43A of the Act, both operate in different Section 43A is a deeming provision for adding or deducting, the fluctuation loss or profit, from the cost of asset. Disallowance under section 37 is however for the reasons that capital expenditures are specifically disallowed.
Held that there was merely reinstatement of losses as per accounting standards and there was no actual payment or remittance so as to invoke Section 43A. It also comes admittedly that the issue has some sort of consistency.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal of the Assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals)-2, Gurugaon [hereinafter referred to as ‘Ld. CIT(A)’] in Appeal No.617/2016-17 dated 20/09/2018 against the order passed by Deputy Commissioner of Income Tax, Circle-1(1), Gurugaon (hereinafter referred to as the ‘Ld. AO’) u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on 23/12/2016.
