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2021 (11) TMI 143 - AT - Income TaxExchange Fluctuation gain on the GDR - Nature of receipt - revenue or capital gain - real income theory - HELD THAT:- Even if the assesse had treated one receipt as an income and in real situation the said receipt was not an income, it was the duty of the A.O. being a quasi judicial authority to tax the real income and not what had been offered by the assessee. Whether the exchange rate fluctuation gain was a revenue receipt or the capital receipt in the hands of the assessee? - Assessee company issued the GDRs with the objectives to finance ongoing expansion of capital investment, it was a onetime activity and it was not the intention of the assessee to park the money abroad solely with the aim of gaining out of such funds and it was also not the intention of the assessee to keep money in foreign banks and that its liquidity position was bad as alleged by the A.O. In the present case, we have earlier mentioned in the former part of this order that no documentary evidence was placed on record by the Department which substantiate that the assessee company was facing any liquidity crunch during the period under consideration. As assessee raised money through GDR’s and issued the equity share capital which was treated to be a share capital, therefore the gains on account of foreign exchange fluctuation on such share capital collected in foreign exchange was only the capital receipt - A.O. had not disputed the fact that the money was raised by the assessee by way of GDRs against capital equity therefore the exchange gain which had arisen on account of holding the GDR proceeds, was capital in nature and not liable to tax - Decided in favour of assessee.
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