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2020 (10) TMI 420 - HC - Income TaxPremium for hedging foreign exchange fluctuations on loans taken for the purpose of appellant's business - whether a capital loss by treating it as capital expenditure u/s 43A - asset was purchased within India - HELD THAT:- The findings/observations made ELECON ENGINEERING CO. LTD. [2010 (2) TMI 23 - SUPREME COURT] would squarely cover the case of the assessee - nature of transaction in the said judgment was identical to that of the transaction done by the assessee herein - exchange difference is required to be capitalized because liability has been incurred by the assessee for the purpose of acquiring fixed asset namely plant and machinery. The decision of the Hon'ble Supreme Court in the case of Elecon Engineeing Co. Ltd., was followed in the case of CIT Vs. Indian Rayon & Industries Ltd. [2010 (3) TMI 299 - BOMBAY HIGH COURT]. The decision of the Hon'ble Supreme Court in the case of Punjab State Industrial Development Corporation Ltd. Vs. CIT [1996 (12) TMI 6 - SUPREME COURT] would also support the stand taken by the Revenue by treating the expenditure as capital expenditure. In the decision of this Court in the case of Tube Investments of India Vs. JCIT [2014 (3) TMI 731 - MADRAS HIGH COURT] the question was as to whether the Tribunal was right in confirming the disallowance of interest and additional expenditure incurred on account of exchange fluctuation. It was held that if any part of the loan was not used for purchase of a capital asset, the corresponding loss had to be treated as a capital expenditure - Decided against assessee.
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