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2022 (4) TMI 709 - AT - Income TaxRevision u/s 263 - Allowability of foreign exchange fluctuation loss - HELD THAT:- There is no dispute that in the assessment order there is no reference about the examination of foreign exchange fluctuation loss. However, we find that during the assessment proceeding the AO issued notice first notice dated 26.08.2015 and sought various information therein. In para 2(x) of the said notice, the AO sought complete details of expenses including loss of foreign exchange loss on foreign currency. We find that the assessee vide its reply furnished the details of expenses including loss of foreign currency. The assessee further in response to order sheet entry furnished the fluctuation account /export. Thus, the issue was examined and verified by the AO. As recorded there is no reference in the assessment order about the verification of the issue. However, it is clearly discernible from the copy of show cause notice and the reply thereto and the relevant evidence in support of such claim that issue was examined by the AO. The Hon’ble Supreme Court in CIT Vs Woodward Governor India (P) ltd. [2009 (4) TMI 4 - SUPREME COURT] held that the loss suffered by the assessee on account of foreign exchange fluctuation difference as on the date of balance sheet is an item of expenditure allowable under section 37. Therefore, the order of AO in allowing the foreign exchange loss in assessment order will not render his action as erroneous. Pr. CIT while issuing show cause notice on his observation as recorded in para 2(i)(ii) that the statutory auditor has qualified foreign exchange loss in absence of details. We find that the assessee filed detailed reply to the said show cause notice under section 263. The ld. Pr.CIT instead of giving any independent finding on the reply so furnished by the assessee repeated his observation that assessment order was passed without making enquiries or verification. The Hon'ble Jurisdictional High Court in Aryan Arcade Ltd., [2017 (8) TMI 535 - GUJARAT HIGH COURT] held that merely because Commissioner held a different belief that would not permit him to take the order in revision, it if further held that when Assessing Officer made full enquiry, he made up his mind, the notice of revision is not valid - Decided in favour of assessee.
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