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2016 (12) TMI 1284 - HC - Income TaxDeduction claimed against the gain in repayment of foreign loans due to fluctuations in Foreign Exchange Rate - Held that:- The decision in Woodward (2009 (4) TMI 4 - SUPREME COURT ) was correctly applied. Section 43A of the Income Tax Act, 1961 which applies in such circumstances, inter alia requires the treatment of foreign exchange fluctuation to follow the purpose of the borrowing; yet it also highlights that, “the amount by which the liability aforesaid is so increased or reduced during the previous year shall be added to, or, as the case may be, deducted from, the actual cost of the asset.” This Court notices that there is no finding by the AO that the cost of the asset had been reduced or increased, as the case may be, on account of foreign exchange fluctuation. In the circumstances, the findings rendered are not only factual but, in our opinion, in conformity with the previous rule in Woodward (supra). The question of law sought to be urged by the revenue is answered against it. Allowance of advertisement and promotion expenses - Held that:- Under the Trade Mark Act, especially Section 48, as long as the arrangement existed, the assessee, who was a licensee of the products, was entitled to claim them as business expenditure though in the ultimate analysis they might have enhanced the brand of the overseas owner. No doubt, if the arrangements were terminated, the brand presence of the overseas owner of the articles/IPR would have subsisted. But that would nevertheless subsist in any event on the theory of trans-national reputation of the IPR owner. In the circumstances, disallowing a certain proportion on an entirely artificial and notional basis from the expense otherwise deductible, in our opinion, was not justified. The question of law is answered against the revenue.
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