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2020 (2) TMI 419 - ITAT PUNEForeign exchange fluctuation (loss) arising on repayment of ECB Loan - allowable deduction u/s 37(1) - HELD THAT:- Co-ordinate Bench of Cochin in the case of Baby Memorial Hospital Ltd. Vs. ACIT [2019 (11) TMI 703 - ITAT COCHIN] after considering various case laws including the decision of Sutlej Cotton Mills Ltd. Vs. CIT [1978 (9) TMI 1 - SUPREME COURT] and other decisions has held that foreign exchange loss arising out of foreign exchange fluctuation in respect of loan in foreign currency used for acquiring fixed assets should be allowed as revenue expenditure by charging the same into Profit and Loss Account and not as capital expenditure by deducting the same from cost of respective fixed assets. Revenue has not placed any contrary binding decision in its support nor has demonstrated as to how the decision of Cochin Tribunal in the case of Baby Memorial Hospital Ltd. Vs. ACIT (supra) would not be applicable to the present facts. In such situation, we are of the view that the Assessing Officer was not justified in denying the claim of revenue expenditure. Assessing Officer has allowed depreciation on the amounts capitalized. Since we are holding the amount of expenditure claimed by assessee to be revenue expenditure, we direct the Assessing Officer to withdraw the benefit of depreciation on those assets that was allowed by him to the assessee and re-work the depreciation thereon. Grounds raised by the assessee are allowed.
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