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2018 (6) TMI 88 - AT - Income TaxLoss on account of fluctuation of foreign currency - allowable busniss expenditure - notional loss or not - Held that:- Loss on account of fluctuation of foreign currency on the date of balance sheet is not a notional loss as held by the A.O and the CIT(A) and in allowable as expenditure if it is on revenue account. Loss disallowed on the ground that it is capital loss - whether the FCCB issue expenses are in the nature of capital or Revenue? - Held that:- Till the bonds are converted into share capital, they remain as a loan fund and cannot be held as equity fund and thus capital in nature [See M/s Crane Software Ind Ltd.- 2011 (2) TMI 1414 - ITAT BANGALORE]. From the financial statements for the F.Y 2008-09, and schedule 4 thereof, it is seen that unsecured loans include FCCBs worth ₹ 101,72,00,000/- The assessee has stated that the disallowance is made only in A.Y 2009.10, whereas the balance of the expenditure which has been claimed in subsequent assessment years, has been allowed as a deduction in the assessment completed u/s 143(3) r.w.s 147 of the IT Act for the A.Y 2010-11. We hold that the assessee, which is following a uniform and consistence method of accounting, and has claimed the expenditure in accordance with the notification of the Min of Corporate Affairs and the A.O has allowed the same in the subsequent assessment years, the revenue cannot take a contrary stand only for the A.Y 2009-10. In the result, the grounds of the appeal of the assessee on this issue are allowed.
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