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2011 (6) TMI 1017 - AT - Income Tax

Issues involved:
The judgment involves the appeal filed by the Revenue against the order of the CIT(A), Amritsar, u/s 250(6) of the Income-tax Act, 1961 for the assessment year 2004-05.

Grounds of Appeal:
1. The legality of the CIT(A)'s order is questioned.
2. Deletion of Rs.8,25,000/- addition for exchange fluctuation loss on revaluation of debtors is disputed.
3. Holding that the loss on revaluation of debtors due to exchange rate difference is allowable u/s 37(1) is contested.
4. Request to vacate CIT(A)'s order and restore that of the AO.
5. Provision for amending or adding more grounds of appeal is sought.

Facts of the Case:
The assessee, engaged in manufacturing and exporting chess and board games, claimed loss on exchange rate fluctuation on revaluation of debtors during assessment. The AO disallowed the loss, citing various case laws and amendments in section 43A of the Act. The CIT(A) later deleted the disallowance, leading to the Revenue's appeal.

Arguments and Decision:
The Revenue's arguments were based on the AO's order, while the assessee's counsel cited relevant case laws supporting the claim. The CIT(A) considered the issue in detail, relying on accounting standards and legal precedents. The judgment highlighted that the loss on revaluation of debtors due to exchange rate difference is an allowable expenditure u/s 37(1) of the Act. The order was upheld based on proper appreciation of legal and factual aspects, including the rule of consistency in accounting practices. The judgment also referenced the decision of the Supreme Court in a similar case, emphasizing the recognition of losses in the Profit & Loss account. Consequently, the appeal of the Revenue was dismissed.

Conclusion:
The judgment pronounced on 9th June 2011 upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

 

 

 

 

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