TaxTMI 
TaxTMI 
TaxTMI 
2020 (2) TMI 419
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....tated to be engaged in the business of manufacturing of Automotive electronic components and research in automotive electronic components. It filed its return of income for A.Y. 2012-13 on 30.11.2012 declaring total income at Rs. 41,46,684/-. The case was taken up for scrutiny and thereafter, assessment was framed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') vide order dated 27.03.2015 and the total income was determined at Rs. 45,41,460/-. Aggrieved by the order of Assessing Officer, assessee carried the matter before Ld.CIT(A), who vide order dated 26.09.2016 (in appeal No.PN/CIT(A)-1/DCIT.Cir.11/PN/67/15-16) dismissed the appeal of assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal b....
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.... 66,067/- and disallowed the balance expenditure of Rs. 3,94,774/- (Rs. 4,57,841 - Rs. 66,067). Aggrieved by the order of Assessing Officer, assessee carried the matter before the CIT(A), who upheld the order of Assessing Officer by observing as under:- "7. I have carefully considered the facts of the case as well as reply of the appellant. In this case, it is seen that ECB was utilized for acquiring assets in India. This being so, provisions of section 43A of the I.T. Act, 1961 cannot be applied in the present case. This being so, the important point to be decided is treatment of foreign exchange loss on account of ECB for assets acquired in India. The appellant has relied upon the decision of Hon. Supreme Court in the case of Tata Iron....
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....n in the case of Tata Locomotive & Engg. Co. Ltd. (TELCO-(1996) 60 ITR 405 (SC). The aforesaid decisions were later consistently followed by some High Courts in the context of ECB holding that if foreign exchange fluctuation loss arises on restatement of ECB utilized for acquiring capital assets indigenously in India, then such loss will be capital in nature. The details of the judgments are as under: (i) Bestobell (India) Ltd. (1979) 2 Taxmann 62 (Cal) (ii) Union Carbide India (1981) 130 ITR 351 (Cal) (iii) Oil India Ltd. (1982) 137 ITR 156 (Cal) (iv) Bharat Gen. & Textile Indust. Ltd. (1986) 157 ITR 158 (Cal) (v) Groz Beckert Saboo Ltd. (1981) 127 ITR 608 (P&H) (vi) Sandoz India Ltd. (1994) 206 ITR 599 (Bom) (vii) Electric L....
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....hat on the principle of consistency, the Assessing Officer was not right in denying the claim and making the addition. He further submitted that Pune Tribunal in the case of M/s. Neuman & Esser Compressor Application Centre Pvt. Ltd. Vs. DCIT in ITA Nos.2656 & 2657/PUN/2017 has held that foreign currency loan which was claimed by assessee as revenue expenditure was held by the Assessing Officer to be capital expenditure by invoking provisions of section 43-A of the Act. He submitted that the Hon'ble Bench has decided the issue in favour of assessee and held that foreign currency loss was the revenue expenditure. He submitted that the facts of case in assessee's case are identical to that of M/s. Neuman & Esser Compressor Application Centre ....
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....undisputed fact that loss is on account of reinstatement of foreign currency loan which has been taken by the assessee for acquisition of assets in India. We find that the CIT(A) has given a finding that provisions of section 43-A of the Act are not applicable to the present case. We find that the Co-ordinate Pune Tribunal in the case of M/s. Neuman & Esser Compressor Application Centre Pvt. Ltd. Vs. DCIT (supra) has held that the provisions of section 43-A of the Act are applicable when the assets acquired from outside India. It further held that the said provisions are not applicable to the acquisition of indigenous assets. We further find that the Co-ordinate Bench of Cochin in the case of Baby Memorial Hospital Ltd. Vs. ACIT (supra) aft....