Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (12) TMI 515 - AT - Income TaxClaim towards exchange fluctuation loss - whether loss claimed by the assessee on account of foreign exchange fluctuation is allowable under Section 37(1)? - Additional depreciation - Held that:- As carefully gone through the judgment of Apex Court in Tata Iron And Steel Co. Ltd.[1997 (12) TMI 5 - SUPREME COURT] the manner or mode of repayment of the loan has nothing to do with the cost of asset acquired by the assessee for the purpose of business. The Apex Court has also found that even if the borrowed funds were not repaid, it will not alter the cost of the asset. The Apex Court further found that the cost of raising money for purchase of the asset and the cost of the asset are two different and independent transactions. Therefore, for the purpose of depreciation, the cost of asset cannot be reduced or increased due to exchange rate fluctuation. As referring to Section 43A of the Act which provides for capitalization of such losses arising out of fluctuation in foreign currency on acquisition of capital asset outside India COOPER CORPORATION (P.) LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX [2016 (5) TMI 809 - ITAT PUNE] found that it may not be applicable for acquisition of asset in India. Referring to Accounting Standard – 11, the Pune Bench found that the loss or gain arising from conversion of liability at the closing rate should be recognized in the Profit & Loss account for the reporting period. As relying on COOPER CORPORATION (P.) LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX [2016 (5) TMI 809 - ITAT PUNE] Assessing Officer is directed to allow the loss suffered in exchange rate fluctuation on foreign currency loan as revenue expenditure. - Decided in favour of assessee
|