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2023 (2) TMI 256 - ITAT MUMBAIDisallowing foreign exchange loss - claim by the assesse on outstanding External commercial Borrowing loans - as argued said exchange loss is a business loss fully allowable under of the Income Tax Act, 1961 and hence the disallowance may be deleted - HELD THAT:- We observe that assessee has borrowed funds from ECB and incurred forex loss on account of outstanding ECB loan. This fact is also accepted by the tax authorities that assessee has borrowed funds from ECB and utilized the same to purchase the assets out of these funds were indigenous assets. Since borrowing for the purpose of business and incurring expenditure and loss is also the part of the business expenditure. It is also admitted fact that assessee has borrowed ECB to reduce the interest expenditure. On similar facts on record, we observe that ITAT bench of Pune Tribunal in the case of Cooper Corporation (P.) Ltd. v. DCIT [2016 (5) TMI 809 - ITAT PUNE] has considered the same facts and decided the issue in favour of the assessee as held in the absence of applicability of section 43A of the Act to the facts of the case and in the absence of any other provision of the Income Tax Act dealing with the issue, claim of exchange fluctuation loss in revenue account by the Assessee in accordance with generally accepted accounting practices and mandatory accounting standards notified by the ICAI and also in conformity with CBDT notification can not be faulted. No inconsistency with any provision of Act or with any accounting practices has been brought to our notice. Otherwise also, in the light of fact that the conversion in foreign currency loans which led to impugned loss, were dictated by revenue considerations towards saving interest costs etc. we have no hesitation in coming to the conclusion that loss being on revenue account is an allowable expenditure under S. 37(1) - Appeal filed by the assessee is allowed.
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