TaxTMI 
TaxTMI 
2020 (12) TMI 456
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....luctuation loss as notional loss. 2. Brief facts of the case are that the assessee filed its return of income for the assessment year 2011-12 on 29.11.2011 declaring total income of Rs. NIL/-. The return of income filed by the assessee was selected for scrutiny and notice under section 143(2) of the Income Tax Act, 1961 ["Act" in short] was issued and served on the assessee. Since the assessee company had international transactions exceeding Rs. 15 crores with their Associate Enterprises, the case was referred to the Transfer Pricing Officer under section 92CA of the Act. Accordingly, the TPO issued show cause notice and after considering various facts and circumstances, the TPO has opined that ". The case was discussed with ....
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....ore, the claim of forex loss should be allowed and prayed for deleting the addition of Rs. 1,04,60,000/-. 4. On the other hand, the ld. DR has submitted that the assessee re-valued its foreign exchange norms outstanding at the year-end in the Indian currency and claimed the difference between the respective amounts as on the 1st day of the assessment year and as on the last day of the assessment year as revenue loss under section 37(1) of the Act, which is not permissible under the law. Moreover, it was submitted that the assessee has not made any payment for such loans and it is a notional liability, which was not crystallized, cannot be allowed as loss under section 37(1) of the Act. 5. We have heard both the sides through video c....
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.... of the Act when the assessee is following mercantile system of accounting. Applying those factors, as enunciated in the above case, to the facts in the case of Oil & Natural Gas Corporation Ltd. v. CIT 322 ITR 180, as relied on by the assessee, the Hon'ble Supreme Court has held that the loss claimed by the assessee on account of fluctuation in rate of foreign exchange as on date of balance-sheet was allowable as an expenditure under section 37(1) of the Act. 5.2 However, in the present case, even though the assessee may be following mercantile system of accounting, but, the parameters as envisaged in the case of CIT v. Woodward Governor India (P) Ltd. (supra) have been fulfilled or not was not emanating from the appellate order since....
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....ing authority. 2. The effective dispute in this appeal filed by assessee with tribunal is with respect to denial of deduction on account of foreign exchange loss arising out of conversion of the balances outstanding in foreign exchange into Indian currency as at the year end to the tune of Rs. 1,04,60,000/- by AO as well learned CIT(A) terming the same to be notional loss. The learned counsel for the assessee on being asked by the Bench during the course of hearing before tribunal as to whether the said loss was incurred on transactions entered by the assessee in foreign exchange were on Revenue account or Capital account stated that the transactions were on Revenue account but fairly submitted that the said details are not emanating from ....
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....actions that the assessee has raised External Commercial Borrowings(ECB) from its associated company abroad namely Shin-Etsu Polymer Co. Limited situated in Japan. We have also observed from Schedule 14 that the assessee has acquired fixed assets from its associated companies abroad, namely Shin-Etsu Polymer Co. Limited situated in Japan, Shin-Etsu Polymer situated at Malaysia, Shin-Etsu Polymer situated at Mexico, Shin-Etsu Polymer Shanghai Company Limited situated at China and Shin-Etsu Polymer, Singapore Pte. Ltd. situated at Singapore. The authorities below has commented that the said exchange difference loss on conversion of foreign exchange balance outstanding as at year end into Indian Rupee to the tune of Rs. 1,04,60,000/- which sto....