TaxTMI 
TaxTMI 
2020 (11) TMI 731
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....f Income Tax (Appeals) [Ld. CIT(A)] has erred in confirming the disallowance of Rs. 2,59,97,240/- being the amount of exchange fluctuation loss provided at the year end on business advance received in foreign exchange. 1.1 That the said disallowance of exchange fluctuation loss as confirmed by the Ld.CIT(A) is against the binding precedents of the Apex court and jurisdictional Delhi High Court in the cases reported in 322 ITR 180 (SC) - Oil and Natural Gas Corporation Ltd. Vs. CIT, [2009] 312 ITR 0254 (SC) - CIT Vs. Woodward Governor India P. Ltd. and 311 ITR 475 (Del.) - CIT vs. Taiko Chander Nagar Chemicals P. Ltd. wherein such exchange fluctuation loss has been held allowable as business expenditure u/s 37(1) of the Act. 1.2 That the....
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..... 2.59 crores (approx.). 5. Before the CIT(A), the assessee pointed out that the appeals for the earlier years have been decided in favour of the assessee by the CIT(A) and written submissions were filed in this regard. However, the said submissions did not find favour with the CIT(A) on the ground that after lapse of considerable time when advance was first received in Financial Year 2007-08, no work has been rendered against the said advance. It was also observed that the said advance was received in India and the same was also accounted for in Indian Rupees only. The CIT(A) was of the view that the alleged advance shown in the books was a contingent liability against which no work had been carried out by the assessee nor the amount was ....
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....rnor India P.Ltd. 312 ITR 254(SC) it was held as under: "21. "So, following the decision rendered by Hon'ble Apex Court in CIT vs. Woodward Governor India P. Ltd. (supra), we are of the considered view that loss suffered by the assessee on account of foreign exchange rate fluctuation as on date of balance sheet is an item of expenditure u/s 37(1) of the Act and is not liable to be disallowed u/s 14A of the Act. So, the loss suffered by the asses see on account of fluctuation in the rate of foreign exchange is a revenue loss and not a capital loss as held by Id. CIT (A) in Assessment Year 2008-09 and contended by Id. DR for the Revenue. In view of what has been discussed above, we are of the considered view that claim of foreign exchange f....