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2014 (2) TMI 836 - AT - Income TaxRevision u/s 263 - Deductibility of expenses u/s 37(1) of the Act – Fluctuation in rate of exchange - Held that:- The decision in CIT v. Woodward Governor India (P.) Ltd. [2009 (4) TMI 4 - SUPREME COURT] followed – the loss suffered by the assessee is on revenue account towards foreign exchange difference as on the date of balance sheet and is an item of expenditure deductible u/s 37(1) - The loss due to foreign exchange fluctuation in foreign currency transactions in derivatives has to be considered on the last date of accounting year and it is deductible u/s 37(1) of the Act - the view taken by AO to allow loss while making assessment u/s 143(3) on account of derivative contract outstanding is not an erroneous view taken by AO, nor the action of AO is prejudicial to the interest of revenue - the order of Commissioner of Income Tax u/s 263 of the Act to hold that the action of AO is erroneous to the extent the loss considered as allowable on account of derivative contracts outstanding as on the date of balance sheet i.e. 31.3.2008 is neither justified nor in accordance with law – the order of the CIT set aside – Decided in favour of Assessee.
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