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2008 (4) TMI 465 - HC - Income TaxBusiness loss- The assessee had taken a loan in foreign exchange from the Citi Bank, UK. It appears that a part of the loan amount was utilized for purchase of capital equipment and that was included in capital work-in-progress. The remaining amount of was utilized by the assessee for its business purposes that is of money-lending and bill discounting. Due to fluctuation in the rate of foreign exchange the assessee suffered a loss and claim deduction. The Assessing officer as well as Commissioner (Appeals) held that since the amount borrowed on capital account the loss would not be treated as revenue loss. Tribunal reversed the order. Held that- though the assessee might have originally borrowed the amount for the purpose of import of capital goods or setting up of plant at the time when the amount was utilized the loan amount had undergone a change and had assumed a new character of stock in trade or circulating capital and, therefore any loss suffered by the assessee on account of Foreign Exchange fluctuation would have to be treated as revenue loss. Thus dismiss the appeal of revenue.
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