2017 (5) TMI 1160 - GUJARAT HIGH COURT

Disallowance of expenditure in respect of interest and administrative expenses under Section 14A - Held that:- The assessee was already having its own surplus fund and that too to the extent of ₹ 2319.17 Crores against which investment was made of ₹ 111.09 Crores, there was no question of making any disallowance of expenditure in respect of interest and administrative expenses under Section 14A of the Act, therefore, there was no question of any estimation of expenditure in respect of interest and administrative expenses of ₹ 54,39,916/= under rule 8D of the Rules. Thus it cannot be said that the learned Tribunal has committed any error in deleting the disallowance of expenditure incurred in respect of interest and administrative expenses under Section 14A of the Act. We are in complete agreement with the view taken by the learned Tribunal. - Decided against revenue.

Disallowance of expenditure incurred towards foreign exchange gain - Held that:- The money was borrowed by the assessee in foreign exchange for the purpose of expanding its business and making investment. Therefore, as rightly observed by the learned CIT [A] as well as the learned Tribunal, the purpose was, on capital account and any exchange fluctuation resulting into profit or loss should be treated on capital account and adjusted from the cost of the asset, but it cannot have any impact on the revenue account. At this stage, it is required to be noted that in the case of the very assessee, the assessee had incurred loss in the same account in the earlier assessment years as well as subsequent assessment year and the treatment given by the assessee has been accepted. Therefore, the learned CIT [A] as well as the Tribunal has rightly deleted the disallowance made on account of foreign gain. - Decided against revenue.