TMI Blog2018 (11) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... OURT] and CIT VERSUS M/S WOODWARD GOVERNOR INDIA P. LTD. & M/S HONDA SIEL POWER PRODUCTS LTD. [2009 (4) TMI 4 - SUPREME COURT] CIT(A) has relied upon the books of accounts of the succeeding year i.e. pertaining to A.Y. 2010-11, wherein the assessee has claimed to have accounted for this loss and after setting off this loss it has disclosed net profit of ₹ 301.55 lakhs as foreign exchange fluctuation gains. We noticed that these materials were not confronted to the Assessing Officer. Since the loss of ₹ 489.66 lakhs is held to be allowable in AY 2009-10, the same is liable to be disallowed in AY 2010- 11. Otherwise, it will lead to double deduction of same amount, which is not permitted under the Act. We notice that the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign exchange assets and liabilities as at the year end. Technically it is called mark to market loss . The Assessing Officer noticed that the assessee has not accounted for this loss in the books of account which is in violation of requirements of Accounting Standard-11 issued by the Institute of Chartered Accountant of India. Further the CBDT, in its instruction No. 3 of 2010, has taken the view that mark to market loss is notional loss. Hence, the Assessing Officer disallowed the above said claim of the assessee. 4. The learned CIT(A) took the view that the assessee could claim loss even if it is not accounted for its books of account as per the decision rendered by Hon'ble Supreme Court in the case of Kedarnath Jute Manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason that the assessee has failed to debit liabilities in its books of account. In the second case, it was held that unrealized loss due to foreign exchange fluctuation relating to trading assets and liabilities as on the last date of accounting year is allowable as deduction. We further noticed that the learned CIT(A) has placed reliance on the decision rendered by Hon'ble Bombay High Court in the case of CIT Vs. D. Chetan Co., wherein also an identical issue was decided in favour of the assessee. 6. However, we noticed that the learned CIT(A) has also relied upon the books of accounts of the succeeding year i.e. pertaining to A.Y. 2010-11, wherein the assessee has claimed to have accounted for this loss and after setting of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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