TMI Blog2012 (7) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigated by the Revenue Authorities. - matter remanded back. Foreign exchange fluctuation loss - held that:- the statement of account of “exchange rate variation” needs to be verified by the Assessing Officer. - matter remanded back. - I.T.A. No.233/Ahd/2009 - - - Dated:- 25-6-2012 - SHRI MUKUL Kr.SHRAWAT, And SHRI ANIL CHATURVEDI, JJ. Appellant by : Shri S.N. Soparkar, Sr.Adv. Respondent by : Shri B.L. Yadav, Sr.D.R. O R D E R PER SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER : This is an appeal filed by the assessee arising from the order of Learned CIT(Appeals)-VI, Baroda dated 5.11.2008 and the grounds raised are hereby decided as follows. 2. Ground No.1 reads as under:- 1. The Ld.CIT(A) has erred in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturer to improve the process and meet the specifications of the buyers. The Assessing Officer has therefore concluded that the R D expenses were not justifiable because not such activity was carried out by the assessee. Not only the R D expenses but the depreciation has also been disallowed. Being aggrieved the matter was carried before the first appellate authority. 3. The Learned CIT(Appeals) has given a finding on fact that the expenditure during the period of January to March-2004 were related to salary expenses, consumables and environment protection expenses. Another factual finding given by the Learned CIT(Appeals) was that the R D activity was perhaps carried out by the sister-concern, namely Snehal Pharmachem. The disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirmed. Ground No.1 therefore fails. 4. From the side of the appellant, ld.AR Mr.S.N.Soparkar appeared and drawn our attention on the details of expenses as placed on page 12 of the compilation to demonstrate that those expenditure were otherwise allowable u/s.37(1) of the I.T.Act being wholly and exclusively for the purpose of day-to-day running of the business of the assessee. He has pleaded that the expenditure were in the nature of bonus expenses, computer expenses, consultancy charges, electricity expenses, etc.etc. He has pleaded that alternatively the Assessing Officer should have examined the nature of expenses to allow the same being incurred in respect of the business activity of the assessee. Likewise, the depreciation is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f capital expenditure or not being in the nature of personal expenses; but laid out or expended wholly and exclusively for the purpose of the business shall be allowed in computing the profits of the business. Meaning thereby, a capital expenditure is otherwise not an allowable expenditure but an exception is also prescribed in the Income-tax Act itself, such as, amortization of certain preliminary expenses u/s.35D of the I.T.Act. Simultaneously, section 35 also says that in respect of an expenditure on scientific research laid out or expended on scientific research related to the business not being in the nature of capital expenditure is to be allowed as prescribed therein. The assessee s vehement contention is that the nature of expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e passing the impugned order. 7.1. Considering the smallness of the quantum involved and the pecuniary nature of the issue, ld.AR though it proper not to press this ground, hence dismissed being not pressed. 8. Ground No.3 reads as under: 3. The Ld. CIT(A) has erred in confirming disallowance of Rs.1,70,912/- made by AO on a/c of balance foreign exchange fluctuation loss claimed by the appellant in the Profit Loss a/c. Ld. CIT(A) ought not to have confirmed the said disallowance. 8.1 The assessee has claimed a sum of Rs.1,70,912/- on account of foreign exchange fluctuation loss in Profit Loss account. The assessee has submitted the details according to which need of all debit and credit entries was on account of exchange rate va ..... X X X X Extracts X X X X X X X X Extracts X X X X
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