Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (9) TMI 399 - AT - Income TaxAddition on account of foreign exchange loss u/s 37(1) - loss claimed on account of reinstatement of advances received from customers - AO was of the view that the amount as claimed as the advance was no longer payable by the assessee to DOW, also no supply of the goods by the assessee to DOW against such advance - HELD THAT:- Authorities below has taken contradictory stand meaning thereby the Revenue on one hand has accepted the liability shown by the assessee as discussed above and on the other hand the forex losses in relation to such trading liability was not allowed as deduction. Once the Revenue has accepted trading liability shown by the assessee, then the Revenue cannot make the disallowance of the corresponding loss in relation to such advance being a trading asset. Assessee has been showing such advance in its accounts since beginning which was accepted till the immediate preceding assessment year. As such we note that there was no change in the facts and circumstances of the case in the year under consideration, therefore in our considered view the assessee is entitled for the deduction of such forex loss on account of principles of consistency. It is because till the immediate preceding assessment year the Revenue has accepted all the losses and gains qua to the impugned advance shown by the assessee. Assessee is entitled for the deduction on the basis of principle of consistency. Assessee in the subsequent assessment year has offered the amount of trading advance as income including the effect of forex losses and gain. This fact has not been doubted and disputed by the authorities below. Addition on account of such loss in the year under consideration will lead to the double addition to the income of the assessee which is contrary to the provisions of law. Assessee is entitled for deduction on account of forex loss in relation to such trade advance. See CIT VERSUS M/S WOODWARD GOVERNOR INDIA P. LTD. & M/S HONDA SIEL POWER PRODUCTS LTD. [2009 (4) TMI 4 - SUPREME COURT] - assessee is entitled for the forex loss in the given facts and circumstance as it is arising in the course of its business. - Decided in favour of assessee.
|