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TMI Blog2021 (10) TMI 1156X X X X Extracts X X X X X X X X Extracts X X X X ..... - MADRAS HIGH COURT] confirmed by the Hon ble Apex Court 2014 (3) TMI 1127 - SC ORDER] by the Revenue. For the reasons aforesaid, the finding of the Tribunal that the increase or decrease in liability on account of fluctuation in foreign exchange as on the date of the balance sheet would increase or decrease the liability of the assessee and such liability would be on capital account as such, the gain or loss would be on capital account and not taxable cannot be faulted with. Hence, the challenge made by the Revenue on this issue is answered against the Revenue and in favour of the assessee. - I.T.A.No.684/2015 - - - Dated:- 1-10-2021 - HON BLE MRS.JUSTICE S. SUJATHA AND HON BLE MR. JUSTICE RAVI V. HOSMANI APPELLANT (BY SRI JEEV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of assessment under section 143[3] of the Act for the assessment year 2008-09 accepting the claim of the assessee for deduction under Section 35D of the Act on the aforesaid two claims. The CIT in exercise of his powers under Section 263 of the Act exercised the revisional powers on the ground that allowing the aforesaid two claims made by the assessee was erroneous and prejudicial to the interest of the Revenue and held that no evidence was placed to support the claim. In the absence of evidence, the assessee s claim was rejected. On appeal preferred by the assessee before the Tribunal, the same has been reversed holding that FCCBs are instruments issued to investors for raising funds which is repayable after certain period. It is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner exercising the powers under Section 263 having observed that the assessee on one hand states that any exchange gain/loss arising on account of restatement of liability with respect to the funds sourced for investments would have to be adjusted in accordance with Section 43A of the Act, on the other hand, states that an amount of ₹ 1,929,600,000/- being foreign currency loss was added back in its return of income. The same being contradictory and in the absence of full evidence, the claim of the assessee could not be verified. Thus, the Assessing officer was directed to examine the same and to bring the gain to tax accordingly. The arguments of the learned counsel for the assessee that the loss was not created because it was capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justment in the actual cost of the assets, in terms of un-amended Section 43A is the change in the rate of exchange subsequent to the acquisition of asset in foreign currency. The Section mandates that any time there is change in the rate of exchange, the same may be given effect to, by way of adjustment of the carrying cost of the fixed assets acquired in foreign currency. Thus, it has been observed that increase or decrease in liability in the repayment of foreign loan should be taken into account to modify the figure of actual cost in the year in which the increase or decrease in liability arises on account fluctuation in the rate of exchange. Thus, the adjustments in the actual cost are to be made irrespective of the date of actual paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther on the condition that the obligation shall be void if a specified act is performed, or is not performed, as the case may be [P.Ramanatha Aiyar s Advanced Law Lexicon 3rd Edition 2005 Page 565 Debt]. Securities typically are regarded as consisting of notes, debentures and bonds. Technically, a debenture is an unsecured corporate obligation while a bond is secured by a lien or mortgage on corporate property. However, in commercial parlance, the expression bond is often used indiscriminately to cover both bonds and debentures. Bonds are in essence interest bearing instruments which represent a loan. 13. In the case of R.D. Goyal and Another V/s. Reliance Industries Ltd., [(2003) 1 SCC 81], the Hon'ble Apex Court observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus, argued that only those forms and modes of investments as prescribed under sub Section (5) of Section 11 of the Act, would be entitled for exemption for the purposes of Section 11 and the investment in other forms of bonds, by necessary implication of inference had to be excluded from the exemption list. Sub Section 5 of Section 11 deals with the investment in bonds of financial corporation, State Government or Central Government. No doubt, specific provision is made in respect of investment in these particular kinds of bonds, however, that would not mean that when we deal with the investment in debentures‟, which also clarifies for exemption, we have to give restrictive meaning to the term debenture more particularly when thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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