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2017 (6) TMI 1330 - AT - Income TaxDisallowance being the premium paid on forward contracts to cover the exchange fluctuations on the repayment of loan - assessee admittedly borrowed loan in Indian currency from State Bank of India for the purpose of setting up of plant / project, namely, Surajbari I Project - HELD THAT:- The said loan was converted into foreign currency loan and the assessee has paid premium. The assessee amortized the premium paid over a period of three years and 1/3rd of premium has been claimed as revenue expenditure, during the year under consideration. Both the authorities below concurrently found that the premium paid by the assessee was in the course of setting up of project Surajbari I Project, therefore, the loss, if any, is on the capital field and it cannot be allowed as revenue loss. Assessee now claims alternatively that if it is capital loss, it will definitely go to increase the cost of the project, hence, the assessee shall be given depreciation on the enhanced value of asset. Admittedly, the loan was borrowed for setting up of plant for generation of wind energy, therefore, the loss suffered in foreign exchange fluctuation would definitely go to increase the cost of the project to the extent of loss suffered by the assessee. As rightly found in JSW Steel Ltd. [2010 (5) TMI 716 - ITAT BANGALORE] the assessee is entitled for depreciation on the enhanced value. Accordingly, while confirming the orders of the lower authorities that the loss suffered by the assessee is capital loss, the Assessing Officer is directed to grant depreciation to the assessee as applicable on the enhanced value of the project after commencement of its business. Disallowance u/s 14A - HELD THAT:- It is not in dispute that the investments were made in subsidiary companies. When the investments were made in wholly owned subsidiary companies, this Tribunal M. BASKARAN [2015 (3) TMI 192 - ITAT CHENNAI] consistently taking a view that it cannot be construed that investment is made for earning exempt income. Investment made in wholly owned company is only for the purpose of business. Moreover in Redington [2017 (1) TMI 318 - MADRAS HIGH COURT] held that when there was no exempt income, there cannot be any disallowance under Section 14A - This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
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