9911796707
TMI Blog2014 (4) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... ords placed before us, the present order is passed. 2. Revenue is on appeal as against the order passed by the Income Tax Appellate Tribunal and the Tax Case (Appeal) is admitted on the following substantial question of law: "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in setting aside the order of the Commissioner of Income Tax and hold that loss arising out of fluctuation in foreign exchange for restatement liabilities as at the end of the financial year is not the contingent liability is valid in law?" 3. The assessment year under consideration is 2000-01. The assessee is engaged in the business of manufacture and sale of UPS. The assessee effected sales both locally as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apex Court reported in 227 ITR 172 [Alkali Chemicals and Fertilizers Ltd.] and thus confirmed the proposal to treat the loss as contingent liability. 4. Aggrieved by this, the assessee went on appeal before the Income Tax Appellate Tribunal, which allowed the appeal filed by the assessee and following the decision of the Special Bench of the Tribunal in the case of Oil and Natural Gas Corporation vs. Deputy CIT reported in 83 ITD 151 (Del) holding that the loss amount from the restatement of foreign liabilities on account of exchange fluctuation was not a contingent liability but an ascertained liability as on a particular date. The Tribunal held that the assessee had taken a loan in foregin currency and the liability was restated. Even i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed on revenue account was allowable under Section 37(1) and that the assessee was entitled to adjust the actual cost acquired in foreign exchange in terms of Section 43A. 7. Extending the said decision to the facts of the case herein, the restatement of the liability itself came at the end of the accounting year on account of the foreign exchange rate fluctuation and thereby the assessee was stated to have been saddled with the loss arising out of the restatement of the liability. Following the decision of the Apex Court cited above on the admitted factual position that the restatement had come at the end of the accounting year and that the present liability itself was on account of the exchange fluctuation, we have no hesitation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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