2019 (6) TMI 1434

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....ough the appeals filed by the assessee are for two different assessment years but the facts and issues involved in both the appeals are identical except for the assessment year and the amounts involved and therefore the submissions made by them while arguing one appeal would be equally applicable to the other appeal also and thus both the appeals can be heard together. In view of the aforesaid submissions of both the parties, we, for the sake of convenience, proceed to dispose of both the appeals by a consolidated order but however, proceed with narrating the facts in ITA No.2656/PUN/2017 for assessment year 2012-13. 3. The relevant facts as culled out from the material on record are as under :- Assessee is a company engaged in the bu....

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....g inter-connected are considered together. 6. First ground is with respect to invocation of Sec.43A of the Act. 6.1. During the course of assessment proceedings, it was noticed that assessee had claimed expenditure of Rs. 25,28,675/- on account of fluctuation of Foreign Exchange loss. The assessee was asked to explain the admissibility of expenses in view of provisions of Sec.43A of the Act and also to explain as to why the amount should not be capitalized. Assessee inter-alia submitted that it had availed unsecured loan from the holding company for purchase of capital asset. The submission of the assessee was not found acceptable to the AO. AO was of the view that foreign exchange was utilized for the purchase of capital equipment an....

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....iod as capital expenditure as the foreign currency loan was approved by the RBI for the purpose of capital expenditure. The Court also held that the asset need not be purchased from outside India. In view of this decision of the High Court and there are no other contradictory decisions, the view of the same has to be adopted in the appellant's case also. In the present case also, the RBI had granted permission for raising foreign exchange loan of parent company subject to the conditions stipulated therein. The foreign loan was also utilized for the purchase of capital assets. As the facts are similarly placed, following the decision of the Madras High Court, the loss has to be treated as capital expenditure. 6. The appellant ha....

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....TJ 0727. He also placed on record the copy of the aforesaid decision. Ld.D.R. on the other hand, supported the order of lower authorities. 8. We have heard the rival submissions and perused the material on record. The issue in the present ground is with respect to invoking the provisions of Sec.43A of the Act. It is an undisputed fact that assessee had obtained a loan from a holding company. It is also a fact that the loan was utilized for acquisition of capital assets in India and was not utilized for acquisition of capital asset from outside India. We find that Sec.43A of the Act becomes applicable when the assets are acquired from a country outside India and does not apply to acquisition of indigenous assets. Similar view was taken by....