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2019 (7) TMI 1158 - HC - Income TaxAllowability of Foreign exchange fluctuation loss u/s 37 - difference between amount given by it as loan to its subsidiary in the USA and the amount realized due to fluctuation is claimed as ‘exchange loss’ - non conducting any enquiry - HELD THAT:- Without conducting any inquiry of the fact whether there was any loss on account of the fluctuation in the foreign exchange and rate of the US Dollar within the relevant time, the AO simply disallowed the above amount. This is despite the return being scrutinized under Section 143(3) of the Act. The disallowance could not have been without a preceding inquiry into the claim made by the Assessee. In fact the ITAT in its order noted the submission on behalf of the Assessee that as against US $ 10 million given as loan it received US$10,01,50,000 and US$ 1,50,000 was offered as income of the Assessee for the current AY which was accepted by the AO. However, due to fluctuation in the rate of $ vis-a-vis Rupee, the Assessee realized ₹ 443,07,10,000/-. The difference between the Rupee value of the 10 million US$ advanced in 2008 and received back in 2010 was ₹ 35,42,20,000/- (478,49,30,000 minus 443,07,10,000). This difference was claimed as loss on account of foreign exchange fluctuation. Therefore, the CIT and ITAT were right in reversing the above disallowance.- Decided against revenue
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