TaxTMI 
TaxTMI 
2011 (3) TMI 1795
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....is condoned. 3. In this appeal the Revenue has deleted the addition made by the AO first in respect of additions on account of interest and bank charges, secondly on account of foreign exchange fluctuation loss and thirdly on account of profit on conversion of foreign currency. 4. The brief facts of the issue are that the AO while doing the scrutiny assessment disallowed the following : . "Add : Interest 563209 Add : Bank charges 528435 Add: Foreign Exchange fluctuation loss 1038998 Add: Profit on conversion of foreign currency 210821" By observing that "The nature of business of the assessee company stated to be processing and blending of tea. During the year the company has sold ....
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.... foreign currency out of export. But it is not mandatory to keep deposit foreign currency in the EEFC account being current account. The deposit in foreign currency is not a fixed deposit. Keeping amount in the EEFC account is also cannot be business of the assessee as per MOA. Besides keeping foreign currency in order to earn profit is not a recognized business. Since, the loss is not attributable to the business the claim is not admissible. Rule 115 of IT Rule 1962 also not applicable in the case of the assessee when it did not make any export or brought any export value in convertible foreign exchange. Similar view was also taken in the earlier assessments. Therefore, the loss on foreign exchange of Rs. 1038998/- is disallowed a....
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....is allowed. 4.3. I have carefully considered the facts and submissions of the appellant and find that the AO has taken a diagonally opposite view in this year in respect of the loss in the EEFC A/c due to valuation at the close of the year. The profit or loss due to valuation of the foreign currency balance in the EEFC a/c has been a regular feature in the preceding years and have been included in the income of the appellant. The AO appears to have disallowed the amount due to some misconceived notion that such loss was disallowed in the preceding year, which is not correct. Moreover in any case the loss due to such valuation is a business loss and an allowable deduction. Similar view has been taken by me in the appeal of M/s....
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....erest by observing that I do not find any justification for disallowing the bank charges. As regards interest, I find that there is no material to show that nay part of the packing credit loan taken in the preceding year was used for non-business purposes. Moreover the income from interest during the year was for Rs. 24,57,582/- which fully set off of the interest paid during the year amounting to Rs. 5,63,209/-, after which there still remained income form interest of Rs. 18,94,373/- and the ld. DR could not contradict the above findings of the ld. CIT(A). We find no infirmity in the orders of the ld. CIT(A). Therefore, we confirm the same. 7.1. Similarly, the bank charges of Rs. 2,28,435/- has already been paid by the assessee on....