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2012 (11) TMI 56 - AT - Income TaxWhether Administrative & Other Expenses on account of exchange loss compensation and termination fee due to premature termination of contract deduction would be allowable to the assessee. Premature termination of Contract - Following the judgement of Supreme Court in case of [Bharat Earth Movers Vs. CIT 2000 (8) TMI 4 - SUPREME COURT] if a business liability has definitely arisen in the accounting year, deduction should be allowed although the liability may have to be quantified and discharged at a future date. Therefore, in the interest of justice and equity, and in the light of the judgement of the Hon’ble Supreme Court of India, the amount paid as termination fee has to be allowed to the assessee in the assessment year 2004-05 and not in subsequent years - in favour of assessee. Exchange rate fluctuations - Held that:- As there is no written covenant with regard to the same, it cannot be construed that either of the parties are liable to compensate for loss on account of fluctuation in exchange rates. Therefore, the amount paid by the assessee to M/s. SMTPL on account of compensation for loss suffered due to exchange rates cannot be held to be an allowable expenses in the hands of the assessee – in favour of revenue.
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