TaxTMI 
TaxTMI 
2022 (4) TMI 856
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....w and facts and circumstances of the case. 2. The Id. CIT(A) erred in deleting disallowance of loss on claim of Foreign Exchange loss by overlooking the fact that notional loss in Foreign Exchange rate claimed by the assessee in the instant case was not incurred in connection with loan for revenue purposes so as to allow the deduction as revenue expenditure as per the decision of Hon'ble Supreme Court in M/s. Woodward Governor Pvt. Ltd. 3. The Id. CIT(A) erred in not appreciating the fact that investment made in a foreign subsidiary company as advance is only capital in nature and hence loss due to fluctuation in Foreign Exchange rate is only a capital loss on investment." 3. Brief facts of the case are that the assesse company is e....
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....sallowance of forex loss on the ground that loss incurred by the assessee for restatement of its loan liability is revenue in nature, because external commercial borrowings availed by the assessee is for working capital requirements, but not for acquisition of any asset in India or outside India. The relevant findings of the learned CIT(A) are as under:- "5. The submissions of the assessee are examined, As per the submissions, it is seen that the assessee company had claimed a net exchange loss of Rs. 177.48 lakhs during the year on account of foreign exchange fluctuation loss. The external commercial bank loans which had been taken for the purpose of fulfilling the working capital loans of the assessee had been restated by taking the pre....
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....ks both in respect of losses and gains is as per nationally accepted accounting standards; (vi) whether the system adopted by the assessee is fair and reasonable or is adopted only with a view to reducing the incidence of taxation. 6. The decision of the Hon'ble Supreme Court as well as the decisions of the ITAT Pune Tribunal in M/s. Cooper Corporate Pvt. Ltd. and Chennai Tribunal in M/s. Hyundai Motor India Ltd. are examined. The assessee company has consistently followed the practice of restating its gain and liability by restating the present value of the ECB loan. This regular accounting practice of the assessee needs to be accepted. The decision of Hon'ble Supreme Court in M/s. Woodward Governor Pvt. Ltd. is conclusive on this issue....
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....finding that external commercial borrowings availed by the assessee is for the purpose of working capital requirements and thus, restatement of said loan liability as on date of balance sheet on the basis of prevailing exchange rate is revenue in nature which cannot be disallowed. The learned CIT(A) recorded further finding that forex loss claimed by the assessee is in the nature of revenue account, because no part of external commercial borrowings has been utilized for the purpose of purchase of any capital goods, imported or domestic. Therefore, the learned CIT(A) opined that loss claimed by the assessee on account of restatement of loan and resultant loss is revenue in nature, which cannot be disallowed as capital in nature or comes unde....