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2015 (2) TMI 808 - HC - Income TaxReopening of assessment - exchange loss calculated on the basis of fluctuation in foreign exchange rate was not supported by actual remittance, thus cannot be allowed as deduction in computing the total income under the Act - Held that:- Supreme Court in case of Woodward Governor India P. Ltd. (2009 (4) TMI 4 - SUPREME COURT) held that 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 under section 37(1) of the Act and further that 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. As in the original assessment order, against the loss of ₹ 1.44 crores under the normal computation, the assessment was framed on book profit of ₹ 2.89 crores under section 115JA of the Act. Even if, therefore, expenditure of ₹ 116.86 lakhs is disallowed, there would be no resultant change in the petitioner's tax liability since the petitioner has already paid much higher tax. - Reopening quashed - Decided in favor of assessee.
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