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2016 (5) TMI 978 - AT - Income TaxTreatment of Foreign Exchange Fluctuation Gain - revenue or capital gain - Held that:- The foreign exchange fluctuation gain to the extent it relates to foreign currency loans utilised for purchase of indigenous plant and machinery in the assessee’s wind power units did not attract the provision of section 43A of the Act. Section 43A of the Act only makes a reference to acquisition of asset from a country outside India and in consequence of the change in the rate of exchange after the acquisition there is an increase of reduction in the liability of the assessee as expressed in Indian currency at the time of making payment and compared to the liability existing at the time of acquisition of the asset. The section is not attracted where the asset is not acquired from a country outside India. This aspect has been considered and accepted by the Hon’ble Ahmedabad Bench in the decision referred to by the ld. Counsel for the assessee. Besides the above as is clear from the chart given in the earlier part of the order such gain or loss has been consistently neither offered to tax nor claimed as deduction by the assessee while computing the total income. In the light of the facts and circumstances stated above, we are of the view that the claim made by the Assessee deserves to be accepted. AO is directed to exclude the foreign exchange fluctuation gain to the extent of ₹ 5,79,10,209/- from the total income of the assessee as it is a capital receipt not chargeable to tax. Disallowance of 'Net Present Value' (NPV) - Held that:- As decided in assessee's own case this issue has been considered by this Co-ordinate Bench decision to held that NPV paid by assessee is held to be revenue expenditure, thus liable u/s 37(1) of the Act. Disallowance u/s 14A - Held that:- Computation of 1% of exempt income as disallowance u/s.14A of the Act was proper
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