2022 (10) TMI 1282 - HC - Income Tax

Gain on foreign exchange fluctuation - whether was in connection with its business activity? - HELD THAT - The issue involved in the present Appeal which relates to deleting the addition made by the AO on account of gain on foreign exchange fluctuation is similar and identical to the issue identical to the issue involved 2012 (7) TMI 1178 - GUJARAT HIGH COURT which has been answered in favour of assessee and against the Revenue as noticed hereinabove. Substantial question of law in this Appeal is answered against the Revenue.

Summary

The Gujarat High Court, through an oral order by Chief Justice Aravind Kumar, disposed of Tax Appeal No. 155 of 2012 filed by the Revenue against the Income Tax Appellate Tribunal's order in ITA No. 2750/Ahd/2009. The appeal concerned the deletion of an addition of Rs. 6,09,97,186/- made by the Assessing Officer on account of gain from foreign exchange fluctuations.The Court noted that a connected appeal (Tax Appeal No. 188 of 2012) involving an identical issue had already been dismissed in favor of the assessee, with the Tribunal's factual finding that the foreign exchange gains were "not in connection with its business activity" being affirmed. The Court held that this finding was a "finding of fact" and no substantial question of law arose.Relying on the principle of consistency and the earlier decision, the Court answered the substantial question of law against the Revenue and in favor of the assessee, thereby upholding the deletion of the addition. The Court concluded: "No substantial question of law arises for consideration," and accordingly disposed of the appeal. Civil Application No. 1 of 2022 was rejected as infructuous.