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M/s. Walchandnagar Industries Ltd. Versus The ACIT, Range 5 (3) , Aayakar Bhavan, Mumbai

2014 (8) TMI 1129 - ITAT MUMBAI

Disallowance being marked to market losses on account of exchange rate fluctuation - Held that:- The Hon’ble Supreme Court in the case of Woodward Governor India (2009 (4) TMI 4 - SUPREME COURT) has held that loss suffered by the assessee on account of fluctuation in the rate of foreign exchange as on the date of the balance sheet is an item of expenditure u/s. 37(1) of the Act. Respectfully following the decision of the Hon’ble Supreme Court, the AO is directed to delete the disallowance. Groun .....

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ordingly set aside this issue to the file of the AO. The AO is directed to show that the assessee has actually incurred certain expenditure for earning the exempt income considering the facts and the figures of the balance sheet of the assessee. The assessee is directed to file necessary details before the AO. This ground of the assessee is allowed for statistical purpose. - I.T.A. No. 3826/Mum/2013 - Dated:- 21-8-2014 - SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM Appellant by: Smt. Va .....

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u/s. 14A of the Act read with Rule 8D. 3. The assessee is a manufacturer of engineering goods. The return of income was filed on 30.9.2009 declaring total income of ₹ 33, 31,95,858/-. The same was revised on 15.1.2010 and the income was revised at ₹ 30,85,58,881/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. 3.1. During the course of the assessment proceedings, the Assessing Officer noticed that the asse .....

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nge rate fluctuation loss should not be treated as speculation loss. The assessee explained the difference between forward contracts and option contracts. The AO did not accept the detailed submission of the assessee. The AO was of the opinion that the loss arising from revaluation as on 31.3.2009 is a notional loss and cannot be allowed as expenditure u/s. 37(1) of the Act. The AO accordingly disallowed ₹ 2,28,01,707/-. Proceeding further, the AO noticed that the assessee has earned divid .....

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ourt in the case of CIT Vs Woodward Governor India Pvt. Ltd. 312 ITR 254. 6. The Ld. Departmental Representative fairly conceded to this. 7. We find force in the contention of the Ld. Counsel. The Hon ble Supreme Court in the case of Woodward Governor India (Supra) has held that loss suffered by the assessee on account of fluctuation in the rate of foreign exchange as on the date of the balance sheet is an item of expenditure u/s. 37(1) of the Act. Respectfully following the decision of the Hon .....

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