2025 (7) TMI 1663

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....aps. The return of income for AY 2006-07 was filed on 27.11.2006 declaring total income of Rs. 45,56,76,918/-. Against the said return of income, the assessment was completed by the DCIT- 1(1), Range-1, Ernakulam (hereinafter called "the AO") vide order dated 19.12.2008 passed u/s. 143(3) of the Act at a total income of Rs. 66,15,44,477/- after making several disallowances. The disallowances, inter alia, includes addition on account of loss on account of foreign exchange fluctuations on investments in foreign subsidiary companies of Rs. 5,09,01,000/- with which, we are concerned. 3. The factual background of the addition is that during the previous year relevant to assessment year under consideration the appellant had entered into foreign ....

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....29.05.2013, while confirming the finding of the lower authorities had lifted the corporate veil by returning the following findings: - "9. We have also carefully gone through the provisions of section 201(1A) which reads as follows: "(1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,- (i) At one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) (ii) At....

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....ce on record and without any such finding recorded by the assessing officer. 3. Whether on the facts and in the circumstances of the case the very basis adopted by the Tribunal for confirming the disallowance namely that the acquisition of the business of Dunlop by the subsidiary of the appellant is in fact acquisition of capital asset by the appellant itself runs contrary to the separate legal entity principle endorsed by the Hon'ble Supreme Court in Azadi Bachao Andolan [263 ITR 706 (SC)] and Vodafone International Holdings [344 ITR 1 (SC)". 6. While expressing disagreement with the findings of the Tribunal that lifting of corporate veil is not warranted having regard to the facts of the case, however, the matter was restored to ....

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....e lower authorities submits that no interference is called for. 10. We have heard the rival contentions and perused the material available on record. The issue that arises for our determination is whether the loss incurred by the appellant company on account of cancellation of forward contract entered into by the appellant with the Citi Bank NA in order to guard against foreign exchange fluctuations in respect of money to be advanced to the foreign subsidiary company AMPHL is allowable as deduction or not. The undisputed facts of the case are that the appellant company intended to advance money to its wholly owned AMPHL, which in turn, was to promote another company Apollo (South Africa) Holdings Pvt. Ltd. with the object of acquisition of....