Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2014 (3) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (3) TMI 731 - HC - Income TaxAllowability of expenditure - Fees paid to ROC, printing and postage in respect of bonus issue – Held that:- The decision in Commissioner of Income-Tax Versus General Insurance Corporation [2006 (9) TMI 116 - SUPREME Court] followed - the expenditure on issuance of bonus shares is revenue expenditure – Decided in favour of Assessee. Computation of business income - Disallowance of interest and additional expenditure – Expenses incurred on account of exchange fluctuation – Applicability of section 43A of the Act – Held that:- The decision in Commissioner of Income-tax v. Woodward Governor India P. Ltd. [2009 (4) TMI 4 - SUPREME COURT] followed - paragraph 9 of AS-11 recognises exchange differences as income or expenses in the period in which they arise - Section 43A, as it stood originally, would have application in a case where an asset is acquired and the liability existed before the change in the exchange rate takes place - Adjustments in the cost are thus made depending on the fluctuation in the currency rate. There is no denial of fact that the amount drawn from the loan should be utilized for the purpose approved and strictly subject to the terms and conditions stipulated by the Reserve Bank of India vide their letter dated 21st September, 1994 - when the object and the purpose of loan clearly points out to the purpose of the loan given as for capital expenditure on modernization and expansion, the fact that the exchange fluctuation had been added on to the cost under Section 43-A(1), however, does not, lead to the inference that as far as the balance amount is concerned, the interest payment difference on exchange fluctuation would fall under Revenue head – there was no ground to uphold the contention of the assessee that the difference in the interest on the balance of principal amount on account of exchange fluctuation to be treated as revenue expenditure. The Tribunal's findings are upheld that the assessee had failed to support its contention through any concrete evidence - The assessee in its accounts admitted the foreign exchange loan as capital for acquisition of machineries and assets and accordingly the scheme was capitalized - there was no evidence that the funds were utilized for the purpose other than what was stated in the annual accounts - in the cash flow statement and the balance sheet, the assessee could not point out that the assessee had obtained the foreign loan with the approval of the RBI for financing export operations meant for inter-corporate investments – Decided against Assessee.
|