TaxTMI 
TaxTMI 
2014 (2) TMI 1030
X X X X Extracts X X X X
X X X X Extracts X X X X
....unt of disallowance of foreign exchange loss as: a) Hon'ble Supreme Court in the case of Dwarkadas Kesardeo Morarka vs CIT 441 ITR 529 and in Joint Family of Udayan Chinubhai vs. CIT 63 ITR 416 has decided that each year's assessment is separate from that of earlier years, therefore, the taxing authorities are not bound to follow the decision taken in earlier years. b) With regard to section 43A of the I.T.Act, the assessee has himself admitted that the loan was taken for acquisition of capital assets and therefore the same should have been capitalized as per the judgment of Hon'ble Supreme Court in the case of Sutlej Cotton Mills vs. CIT 116 ITR 1. 2. The appellant craves leave for reserving the right to amend, modify, alter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rrency Fluctuation Loss on short term loan amounting to Rs.49,98,072/- is an actual expenditure incurred during the year on the purchase of forward contacts for repayment of FCNR(B) Loan and not notional or contingent as stated by the Ld. AO. - It is also admitted that by this FCNR(B) Loan, no fixed assets has been acquired in foreign currency by the appellant in earlier years or in this year. This fact is also supported by the audited accounts of earlier year and this year. - It is evident from the extract of balance sheet that the debentures have been repaid and new loans are raised at lower finance cost. The appellant is able to reduce the cost of financing by Rs.6,967,717/-. It is also clear from the submission made before me. - In r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....benture, the whole interest of Rs.1,500,000/- would be allowed as a deductible expenditure. However, since the assessee has paid the debenture by obtaining another loan, the reduced cost of that loan of Rs.4,998,072/- would not be allowed as a deductible expenditure. This would result into absurd situation i.e. the higher interest on debenture is an allowable expenditure whereas expenditure incurred to arrange finance for the redemption would not be allowed. 12. Further, the issue of allowability of foreign exchange loss has been no more res-integra in view of the decision of the Apex court in the case of CIT vs Woodward Governor India (P) Ltd. 312 ITR 254 wherein it has held that exchange fluctuation arising on revenue account transaction....
X X X X Extracts X X X X
X X X X Extracts X X X X
....egal positions the subject expenditure are revenue expenditure allowable in the year under consideration. Hence, the above grounds 3 & 3.1 of appeal are allowed." 3. We have heard both the sides on the issue. We find that the assessee has taken FCNR (B) loan from banks on 27.01.2000 and the same was utilized for repayment of 15% Unsecured Redeemable Non-Convertible Debentures of Rs.10 crores. This amount of Rs.49,98,072/- was an actual expenditure incurred by the assessee for the purchase of forward contracts for repayment of FCNR (B) loan, therefore, it was not a notional or contingent but actual expenditure. Further, we find that by taking FCNR (B) loan, the assessee has not acquired any fixed asset in foreign currency either in earlier ....