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2020 (2) TMI 1649 - ITAT CHENNAI"Mark to market" loss - whether the exchange difference arising on the loan transaction with foreign subsidiary company could be considered as a notional loss? - HELD THAT:- We find that the Revenue had not understood the transaction carried out by the assessee in the instant case. This is a simple case of loan given by the assessee to its foreign subsidiary in the earlier years and at the time of re-statement of the said loans in earlier years at the exchange rate prevailing at the end of the year, it had resulted in exchange gain which has been duly offered to tax by the assessee voluntarily and assessed as such by the Revenue in the scrutiny assessment proceedings completed u/s. 143(3). During the year under consideration, when the said loans were received back by the assessee and the assessee had actually incurred exchange loss, the revenue had considered the same as transaction carried out in forex derivatives and treating the same as "mark to market" loss, which in our considered opinion, is against the facts of the assessee and material available on record. We find that the issue is squarely covered by the decision of Hon'ble Supreme Court in the case of CIT vs. Woodward Governor India (P.) Ltd. [2009 (4) TMI 4 - SUPREME COURT] and respectfully following the same, we hold that the exchange fluctuation loss incurred by the assessee during the year under consideration is a regular revenue loss and is squarely allowable as deduction. Accordingly, the grounds raised by the assessee are allowed.
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