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2021 (7) TMI 306 - HC - Income TaxMarked to market loss - FCNR loss - foreign currency transactions entered into by the assessee - whether it is speculative and notional in nature and is therefore liable to be disallowed? - HELD THAT:- As liability was crystalised and ascertained. The assessee had entered into a binding obligation when it entered into a foreign currency contract and the contract was entered into to protect the assessee from foreign exchange fluctuation. The working capital loan was used for the purpose of business and therefore, the same could not have been considered either as notional or speculative transaction. It is pertinent to note that if the assessee has to repay the loan and square off the contract on 31.03.2008, the assessee in addition to prepayment charges, has to make a payment - Therefore, the finding recorded by the Tribunal that the decision of WOODWARD GOVERNOR INDIA P. LTD. [2009 (4) TMI 4 - SUPREME COURT] do not apply to the fact situation of the case, cannot be sustained in the eye of law. The working capital loan was used by the assessee for the purpose of business and therefore, the assessee had incurred the loss in the course of business and is entitled to claim deduction under Section 37(1) - Decided in favour of assessee.
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