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2022 (2) TMI 695
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....g grounds of appeal:- "1. The order in ITA No. 102/CIT (A) 2/2016-17 dated 29-09- 2017 passed under section 250 (6) of the Income-tax Act, 1961 by the Commissioner of Income-tax (Appeals) 2, Chennai, is erroneous, opposed to law and facts of the appellant's case. 2. The learned Commissioner of Income-tax (Appeals) erred in dismissing the appeal filed by the appellant. 3. The learned Commissioner of Income-tax (Appeals) erred in upholding the Assessing Officer's finding that the loss due to foreign exchange fluctuation in respect of the foreign currency loan availed by the appellant for working capital is not an allowable deduction. 4. The learned Commissioner of Income-tax (Appeals) similarly erred in uph....
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....ange fluctuation loss on restatement of foreign currency loans, disallowance of travelling expenses and also ad-hoc disallowance of general expenses. Aggrieved by the learned CIT(A) order, the assessee is in appeal before us. 4. The first issue that came up for our consideration from ground No. 2 to 4 of assessee appeal is disallowance of foreign exchange loss on restatement of working capital loans and gold loans. The assessee has borrowed foreign currency working capital loan from Indian Overseas Bank. The assessee had also borrowed gold loan for purchase of gold. The assessee has restated its liability towards foreign currency working capital loan and gold loan on the basis of certificate issued by bank, as per which there is a loss d....
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.... loan liability as per books of account and certificate issued by the bank. Therefore, same cannot be considered as notional loss. Similarly, the learned AR for the assessee referring to gold delivery challan and sale invoice issued by bank submitted that when the assessee has taken gold loans, value of gold has been fixed at Rs. 30 lakhs per kg., whereas when delivery has been taken, value has been increased which resulted in loss of Rs. 25 lakhs. Since the assessee has taken gold loan for trading purpose, which is in the nature of working capital and hence, any increase or decrease in repayment due to fluctuation in foreign currency is in the nature of revenue loss which can be allowed as deduction. In this regard, he relied upon certain ....
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....ks of account as per certificate issued by bank which resulted in loss of Rs. 5,17,700/-. The assessee has debited loss arisen on account of restatement of loan liability and claimed as expenditure. Therefore, we are of the considered view that when the assessee has taken foreign currency working capital loan for business purpose, then loss on account of any appreciation or depreciation in the value of foreign currency at the end of the relevant accounting year is in the nature of revenue expenditure which can be allowed as deduction. This principle is supported by the decision of the Hon'ble Supreme Court in the case of M/s. Sutlej Cotton Mills Ltd. (supra), where it was categorically held that profit or loss arises to an assessee on a....
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.... the assessee. Therefore, the Assessing Officer has disallowed travelling expenses claimed by the assessee by holding that various travelling expenses incurred by members of HUF to various destinations are tourism centres and also without any proof for any business transactions. 9. The learned AR for the assessee submitted that the learned CIT(A) has erred in confirming disallowance of entire travelling expenses incurred by the assessee for purpose of business. The learned DR, on the other hand, supported order of the learned CIT(A) . 10. Having heard both sides and considered material available on record, we find that although the assessee has claimed that travelling expenses claimed in the books of account is related to business pur....
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....tc. on the ground that the assessee has failed to file necessary supporting bills and vouchers to prove expenses incurred for purpose of business of the assessee. It was explanation of the assessee before the Assessing Officer that various expenses debited into profit & loss account are supported by self-made vouchers and which are genuine in nature and also incurred for the purpose of business of the assessee. 12. Having heard both the sides and considered material available on record, we find that both parties have failed to justify their cases with necessary evidences and reasons. Although, the assessee claims to have incurred those expenditure for purpose of business, but failed to justify those expenditure with necessary evidences. ....