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TMI Blog2024 (3) TMI 1360X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing the 'marked to Market' (MTM) losses on account of fluctuation in foreign currency in respect of hedging of forward contracts claimed by the Appellant? II. Whether the Impugned Order is untenable in the eyes of law as the ITAT has erred in contradicting and reviewing its own order in the first round of litigation wherein the ITAT itself in principle agreed with the ratio laid down by the Apex Court in CIT . Woodward Governor (2009) 312 ITR 254, which is not permissible? III. Whether the Impugned Order of the ITAT is untenable in the eyes of law as it ignored the principle of consistency by ignoring the position of law settled in Appellant's own case in AY 2008-09?" 2. Having heard learned counsels for parties, we find that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there is no allegation that the Assessee has not been following the system of accounting consistently. In CIT v. Woodword Governor India Pvt. Ltd. (supra), the Supreme Court had referred to AS-11. In terms of AS-11, the exchange difference arising on foreign currency transactions are necessary to be recognized as income or expense in the period in which they arise, except in cases of exchange differences arising on repayment of liabilities for acquiring fixed assets. . 28. In the present case, the Assessee had stated that it was reinstating its debtors and creditors in connection with execution of contracts entered into with foreign entities on the basis of the value of the foreign exchange. Thus, clearly the loss on account of Forward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses/gains under the Forward Contracts, thus, were also required to be accounted for to arrive at the real profits. It would be anomalous if, on the one hand, debtors and creditors, in respect of current assets, are stated at the current value of foreign exchange and the corresponding loss on the hedging transaction is not accounted for. In essence, the Assessee has stated his income by taking into account the foreign exchange value as it stands on the due date. It is well settled that the CBDT Instructions and circulars which are contrary to law are not binding." 3. We additionally take note of the legislative amendments which have been introduced pursuant to the view which was expressed by the Supreme Court in Commissioner of Income Tax v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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