2011 (5) TMI 244

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ismissed the appeal of assessee vide order dated 6.12.2004. The assessee had filed miscellaneous application bearing number 133/D/2005. This miscellaneous application was also dismissed by the Tribunal vide its order dated 15th June, 2005. The assessee had filed a SLP before the Hon'ble Supreme Court challenging the orders of the Tribunal as well as of the Hon'ble High Court. Hon'ble Supreme Court has set aside the orders of the Hon'ble High Court as well as of the Tribunal and remitted the issue back to the Tribunal for deciding the issue denovo. The order passed by the Hon'ble Supreme Court on 2nd December, 2010 in civil appeal No. 10219 of 2010 read as under:-   "Heard learned counsel on both sides.   Leave granted. &nbsp....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....tuation in the foreign exchange rates in respect of outstanding foreign currency loan obtained and utilised exclusively for working capital purpose.   3. Ld. Counsel for the assessee submitted that it has raised a loan of 1 million USD from Perfetti SPA Italy in August, 1995. During the year under appeal, there was an increase in the liability in respect of the loan because of fluctuation in the foreign exchange rate due to which the assessee was liable to increase the loss of Rs. 38,30,000/-. In the course of asstt. proceeding, the assessee brought these facts to the notice of AO and contended that since the loan amount forms part of the circulating capital of the assessee, exchange loss is in nature of revenue and allowable. This ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....oss. It was disallowed to the assessee by the Ld. AO as well as Ld. CIT(A) on the ground that it is a notional loss. The tribunal confirmed the disallowance on the ground that assessee failed to produce evidence exhibiting the utilization of the loan for working capital. He pointed out that there is no change in the facts and circumstances. Loan was taken in 1995. It was considered by the AO in earlier years as well as subsequent years that it was utilised for the purpose of working capital. It became part of circulating capital of the assessee. It is established that a loss occurred to the assessee on account of exchange rate fluctuation and such loss is in the revenue account then it is allowable as held by the Hon'ble Supreme Court in th....