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2014 (5) TMI 668 - HC - Income TaxValidity of notice for reopening of assessment – Income escapement – Loss arisen due to fluctuation in rate of exchange – Deduction in computation of business income - Held that:- Following CIT Versus M/s Woodward Governor India P. Ltd. & M/s Honda Siel Power Products Ltd [2009 (4) TMI 4 - SUPREME COURT] - the loss suffered by the assessee on account of fluctuation in the rate of foreign exchange as on the date of the balance sheet is an item of expenditure u/s 37(1) of the Act - under the mercantile system of accounting, what is due is brought into credit before it is actually received - it also brings into debit an expenditure for which a legal liability has been incurred before it is actually disbursed - the assessment years being prior to the amendment in Section 43A of the Act with effect from 1st April, 2003 the Assessee would be entitled to adjust the actual cost of the imported capital assets, acquired in foreign currency, on account of fluctuation in the rate of exchange at each of the relevant balance sheet dates pending actual payment of the varied liability – thus, the notice is set aside – Decided in favour of Assessee.
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