TMI Blog2018 (12) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the issue and for a proper adjudication of case, we admit the same on record. Since the additional evidences are taken on record, in the interest of justice and equity, the same need to be examined by the AO. Accordingly, we remit the issue to the Assessing Officer for de novo consideration. AO shall examine whether the amount of two Million USD was received by the assessee in the past years as trade advance in the course of its business of export of seafood and whether the foreign exchange fluctuation loss incurred by the assessee was on account of repaying the above trade advance. If the foreign exchange loss is on account of repayment of trade advance and is on revenue front, necessarily same is to be allowed as business loss. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny has received the amount on export commitment and not on Capital Goods. 3. Brief facts of the case are as follows:- The assessee is a company engaged in export of seafood. For the assessment year 2001-2002 the return of income was filed on 31.10.2001 disclosing a total loss of ₹ 3,90,48,193. The assessment was completed u/s 143(3) of the I.T.Act vide order dated 11.02.2004, wherein the total loss was reduced to ₹ 2,38,47,637. In the said assessment order, the Assessing Officer had disallowed a sum of ₹ 1,51,99,504 claimed as loss incurred on account of foreign exchange fluctuation. The relevant observation of the Assessing Officer while disallowing the loss of ₹ 1,51,99,504 reads as follow:- As s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer. The relevant finding of the CIT(A) reads as follow:- 3. I carefully examined the facts of the issue and also considered the rival contentions. It is not in dispute that the loss claimed to have been sustained is in respect of the transaction of the earlier years and nothing to do with the current year transaction. It is also not in dispute that the export advance received for the supply of goods had been returned back to the rate prevailing at the time of remittance during the year under consideration. The only dispute is whether the foreign exchange fluctuation loss pertains to previous years transactions but the liability was ascertained and quantified during the year under consideration, can be allowed as deduction or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss was incurred. This is also not an expenditure incurred in the course of earning profit during the year under consideration but pertains to the transaction carried out in the earlier years. Further, as ruled by the Hon ble ITAT, Cochin Bench in the case of Apollo Tyres Ltd. v. DCIT in ITA No.31/Coch/ 2010/ dt. 29.05.2013, foreign exchange fluctuation loss shall necessarily be treated as capital loss if it is not incurred in the course of earning profit. In the background of foregoing, I am of the considered opinion that the appellant has no case to argue. 5. Aggrieved by the order of the CIT(A), the assessee has filed the present appeal before the Tribunal. The learned Counsel for the assessee has filed a paper book enclosing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the assessment year 1996-97 it had received from Ocean Diamond Inc., based in USA, interest free export advances for the supply of goods amounting to two Million US Dollars. It was stated by the assessee that it could not execute the supply of goods and the amount had to be returned back during the relevant assessment year. Therefore, it was submitted that the exchange fluctuation loss incurred during the relevant assessment year pertains to the carrying on of the business and is an allowable business expenditure. It further submitted that the same could be quantified / ascertained only at the time of repayment of the advance to Ocean Diamond Inc., USA. 8. We noticed that the assessee has filed additional evidences in the form of f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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