2017 (5) TMI 677

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....xpenses and a sum of Rs. 53,95,253 on account of the gain due to fluctuation in foreign exchange. 2. Brief facts of the case are that in the assessment proceedings the Assessing Officer found that the assessee claimed a sum of Rs. 70,25,636 towards expenses relatable to the pre-operative period and a sum of Rs. 53,95,253 was reduced by the assessee towards gain on foreign exchange fluctuation (net) from the taxable income. Finding that the assessee has only acquired land and manufacturing facilities during the previous year 2007-08 and the business of the assessee was not set up in the year under consideration and placing reliance on the decisions including the ones reported in CIT v. Sponge Iron India Ltd. [1993] 201 ITR 770 (AP), CIT v. ....

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....harges, he held that such expenses are allowable under section 57(iii) of the Act since such an expenditure was essential for maintaining the corporate entity of the assessee. In total out of Rs. 70,25,636 disallowed by the Assessing Officer, the learned Commissioner of Income-tax (Appeals) confirmed the disallowance to a tune of Rs. 49,50,674 while deleting Rs. 21,09,962. 3.2 In respect of Rs. 53,95,253 addition on account of gain on foreign exchange fluctuations the learned Commissioner of Income-tax (Appeals) placed reliance on the decision reported in CIT v. Jagatjit Industries Limited [2011] 337 ITR 21 (Delhi) ; [2010] 191 Taxman 154 and held that such addition has to be deleted treating it as capital receipt. 4. Challenging these fi....

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....09,962 under section 57(iii) of the Act and a sum of Rs. 53,95,253 on account of gains due to fluctuation in foreign exchange. 8. We have carefully gone through the orders of the authorities below and the decisions cited before us. There is no appeal by the assessee in so far as the confirmation of the additions to a tune of Rs. 49,15,674. Only the Revenue challenged the deletion of Rs. 21,09,962 the expenditure incurred on account of audit fees, salaries, staff welfare expenses, legal and professional charges, other financial charges and bank charges. The Assessing Officer does not speak anything against the genuineness of these expenditures. Only ground of disallowance of these expenses is on the ground that they relate to the period pri....