TaxTMI 
TaxTMI 
2018 (2) TMI 867
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....d disposing of the same by this common order. 2. The only issue arises for consideration is disallowance of loss on foreign exchange fluctuation. 3. Smt. J. Sree Vidya, the Ld.counsel for the assessee, submitted that the CIT(Appeals) by following his own order for the assessment year 2012-13, confirmed the disallowance made by the Assessing Officer. Placing reliance on the order of this Tribunal in I.T.A. No.508/Mds/2017 dated 31.07.2017, the Ld.counsel submitted that the order of the CIT(Appeals) for assessment year 2012-13 was reversed by this Tribunal by placing reliance on the judgment of Apex Court in CIT v. Woodward Governor India (P) Ltd. (2009) 312 ITR 254. In view of the above, according to the Ld. counsel, the loss on foreign ex....
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....e assessee has to be capitalized. Similarly, the fluctuation in foreign exchange also needs to be capitalized. 7. We have carefully gone through the judgment of Apex Court in CIT v. Woodward Governor India (P) Ltd. (2009) 312 ITR 254. In the case before the Apex Court, the assessee borrowed loan in Indian currency for acquisition of windmill for expansion of its existing business in generation of electricity. The assessee before the Apex Court offered the gain on foreign exchange fluctuation for taxation and wherever there was loss due to foreign exchange fluctuation, the same was claimed as revenue expenditure. The Revenue also taxed the gain on foreign exchange fluctuation as revenue receipt. However, the loss was disallowed. Referring....
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....eavy reliance was placed on the judgment of this court in the case of Indian Molasses Company P. Ltd. [1959] 37 ITR 66. Relying on the said judgment, it was sought to be argued that the increase in liability at any point of time prior to the date of payment cannot be said to have gone irretrievably as it can always come back. According to the learned counsel, in the case of increase in liability due to foreign exchange fluctuations, if there is a revaluation of the rupee vis-a-vis foreign exchange at or prior to the point of payment, then there would be no question of money having gone irretrievably and consequently, the requirement of "expenditure" is not met. Consequently, the additional liability arising on account of fluctuation in the ....