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2024 (6) TMI 987 - HC - Income TaxTreatment of Exchange Rate Losses - distinction between exchange rate losses on capital account and revenue account - Tribunal justification in law by not considering the exchange rate losses as incidental to the nature of business of the assessee - whether loss arising on the assignment of a loan granted by a foreign parent company to its Indian subsidiary is a capital loss within the meaning of section 2 14 or incidental to the nature of business of the assessee? - HELD THAT - We find that the learned Tribunal rightly affirmed the order passed by the Commissioner of Income Tax (Appeals) which followed the decision in the case of V.S. Dempo Co. (P.) Ltd. 1993 (7) TMI 63 - BOMBAY HIGH COURT As not in dispute that the assessee is an NBFC and suffered loss on account of foreign exchange fluctuation on receipt of repayment of loan to a foreign company. The revenue sought to place the decision in the case of Bestobell India 1978 (9) TMI 42 - CALCUTTA HIGH COURT as rightly pointed out by assessee that in the said case it was not contended that it had incurred extra expenditure in order to secure the loan and it is at the point of repayment that the assessee had to provide extra amount of rupees by reason of devaluation on the relevant date. Furthermore it was not the case of a financial company. The revenue also placed reliance on the decision in the case of M/s. Siemens Nixdorf Information Systemse GmbH 2023 (5) TMI 501 - SC ORDER In the said decision the Hon ble Supreme Court affirmed the interpretation given by the learned Tribunal as well as the High Court as it related to one particular transaction. Therefore the Court did not go into the other aspects of the mater.Therefore both the decisions relied on by the revenue will not be of any assistance to their case. Issue decided against revenue. Allowing the insurance and audit fees expenses on the ground that the agreement between assessee and Ballarpur Industries did not cover the said expenses - HELD THAT - We have gone through the factual findings recorded both by the CIT (A) as well as by the Tribunal and we find that the factual position has not been shown to be wrong. Therefore we find that no substantial question of law arises as suggested by the revenue. Disallowance u/s 14A - HELD THAT - Tribunal took note of the decision of the High Court of Delhi in PCIT Vs. Era Infrastructure Ltd. 2022 (7) TMI 1093 - DELHI HIGH COURT which had taken note of the decision in the case of Cheminvest Ltd. 2015 (9) TMI 238 - DELHI HIGH COURT wherein it was held that amendment by the Finance Act 2022 of Section 14A of the Act by inserting a non-obstante clause and explanation we take effect from 01.04.22 and cannot be presumed to have retrospective effect and therefore on facts the amendment cannot be applied to the assessment year under consideration. We find no error in such conclusion arrived at by the learned Tribunal. No upward adjustment u/s 115JB 2 c for liabilities shown in Provision for doubtful loans advances - HELD THAT - The submissions by the revenue before the learned Tribunal was that the order passed by the first Appellate Authority should be set aside. Tribunal in the above paragraph has noted that the department could not show any factual matrix which may lead the Tribunal to take a view that impugned amount was not certain and was merely a provision. Thus we find the matter being factual and substantial questions of law arise for consideration as suggested by the revenue in question.
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