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2022 (6) TMI 1278 - ITAT MUMBAIDisallowance with regard to foreign exchange loss arising on restatement / revaluation of foreign currency loans due to adverse foreign exchange fluctuations claimed u/s 37(1) - HELD THAT:- We infer that the assessee has extended loans / advances facility to its subsidiaries only for the purpose of business, as the nature of assessee’s business relates to constructions and development of real estate properties. The contention of the Revenue that the impugned loss was only notional loss does not hold good. The reasoning that since there was no settlement of loan as on 31/03/2017 will not entitle the assessee to claim as per method of accounting followed and the provisions of section 43AA read with Income Computation Disclosure Standard (ICDS)-VI has been countered by the assessee stating that assessee has been following AS-11 which states that unrealised foreign exchange gain / loss should be booked at the year end. Though the principle of res judicata does not apply to taxing statute, principle of consistency does apply wherein the income from gain in forex fluctuation of the impugned loan in earlier year was considered by the Revenue and as such the method of accounting as per section 145 followed by the assessee was also not disputed earlier, by placing reliance on the decision of Hon’ble Apex Court CIT vs M/s Woodward Governor India P. Ltd (2009 (4) TMI 4 - SUPREME COURT], we hold that the addition made on account of foreign exchange fluctuation loss claimed as deduction under section 37(1) is disallowable, is not tenable. Assessee appeal allowed.
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