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Issues Involved:
1. Deletion of addition on account of foreign exchange fluctuation. Summary: Issue: Deletion of addition on account of foreign exchange fluctuation Revenue filed an appeal against the order of CIT (Appeals) which deleted the addition of Rs. 7,06,173 on account of foreign exchange fluctuation. The Assessing Officer had added this amount to the income of the assessee, considering it a notional loss due to reinstatement of foreign currency loans/transactions not retired during the financial year 2003-04. The CIT (Appeals) observed that the assessee had shown a net gain of Rs. 4,05,665 from exchange fluctuations on outstanding liabilities/current assets as on 31-3-2004. The Assessing Officer treated the gain as income but did not allow the loss, which was inconsistent. The CIT (Appeals) relied on the Special Bench decision in Oil & Natural Gas Corpn. v. Dy. CIT [2002] 83 ITD 151 (Delhi), which favored the assessee, and thus deleted the addition. The Tribunal noted that the issue was settled by various decisions, including the jurisdictional High Court. The learned DR for the Revenue could not provide any contrary case law. The Tribunal referred to several cases, including Oil & Natural Gas Corpn. Ltd., Dy. CIT v. Maruti Udyog Ltd. [2006] 99 ITD 666 (Delhi), and CIT v. Woodward Governor India (P.) Ltd. [2007] 294 ITR 451, which supported the assessee's claim for deduction of loss due to foreign exchange fluctuation. The Tribunal concluded that the CIT (Appeals) was correct in allowing the deduction, as the loss was not notional but a fait accompli. The order of CIT (Appeals) was upheld, and the appeal filed by the Revenue was dismissed.
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