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2020 (10) TMI 1164 - MADRAS HIGH COURTPremium for hedging foreign exchange fluctuations on loans - capital expenditure u/s 43A - depreciation claim - appellant's business is a capital loss by treating it as capital expenditure u/s 43A when an asset was purchased in India - Tribunal having held that the premium on forward contract was not liable as Revenue expenditure, the same is to be added to the cost of the capital assets on which depreciation is to be allowed is not a correct proposition, since there is no provision under the Act which allows such expenses - as contended that the assets was purchased in India based on the loan taken in Indian Currency only and the premium paid on forward contract is not even remotely connected with the cost of the asset and therefore, allowing depreciation does not arise - HELD THAT:- Initially the loan was borrowed by the assessee from State Bank of India in Indian Currency, subsequently, the loan was converted into a Foreign Currency loan and the assessee has paid the premium of ₹ 1.9 lakhs and mark the premium paid over a period of three years and one-third of premium to the extent of ₹ 36,33,333/-. It cannot be said that the loan borrowed in Foreign currency is not even remotely connected with the cost of the asset when it is an admitted position that the loan was borrowed for acquiring a capital asset. Therefore, the assessee cannot be put to disadvantage on both grounds. So far as the claim of the assessee that the expenses is Revenue in nature, it was rejected by the Tribunal and we have confirmed the said decision M/S. CONTINUUM WIND ENERGE (INDIA) PVT. LTD. (FORMERLY KNOWN AS M/S. SURAJBARI WINDFARMS DEVELOPMENT PVT. LTD.) [2020 (10) TMI 420 - MADRAS HIGH COURT] . So far as the claim for depreciation, the Tribunal rightly took note of the facts of the case and observed that the loss suffered in Foreign Exchange Fluctuations would definitely increase the cost of the project to the extent of loss suffered by the assessee. Tribunal was right in allowing the plea of depreciation raised by the assessee. - Decided against the Revenue.
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