TaxTMI 
TaxTMI 
2026 (4) TMI 38
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....nce of contribution to approved Employees Group Gratuity Trust Fund for all the three assessment years and deduction of education cess as an expenditure. 3. We first take up the common issue raised by the assessee for A.Y. 2012-13, 2013-14 and 2014-15 regarding disallowance of foreign exchange fluctuation loss. For sake of convenience Ground No.5 raised by the assessee for A.Y. 2012-13 reads as under : "5. The learned CIT(A)-1 and the learned AO erred in law and on facts in sustaining the addition made on account of unrealized foreign exchange loss amounting to Rs. 96,33,520/- on loan taken for purchase of shares in Bitwise Inc. USA on the analogy that the said loss was capital in nature since it is for purchase of shares." 4. As regards the common issue regarding disallowance of foreign exchange loss on repayment of foreign loan is concerned, ld. Counsel for the assessee referring to the decision of Coordinate Bench in assessee's own case for the years under consideration as well as for A.Y. 2011-12 submitted that this Tribunal has already allowed the assessee's claim of interest paid u/s.36(1)(iii) of the Act on the foreign currency loan obtained by the assessee fo....
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....ing the assessment proceedings. The AO disallowed the interest. Relevant part of the assessment order is as under: "In support of revenue's case reliance is placed on the judgment of Jurisdictional High Court in the case of CIT v. Amritaben R. Shah [1998] 238 ITR 777 1 (Bom.) and of Gujarat High Court in the case of Sarabhai Sons (P.) Ltd. v. CIT [1993] 201 ITR 464 in which it has been held that interest on loan taken for purchasing shares for acquiring controlling interest in the company cannot be held to be expenditure incurred wholly and exclusively for earning income from dividend and deduction under section 57(iii) is not allowable. Though, the judgment has been rendered in context of section 57, the basic premise of case is same. In this case interest on loan taken for purchasing shares for acquiring controlling interest in the company cannot be held to be expenditure incurred wholly and exclusively for business. In the case of CIT vs Phil Corporation Ltd. (supra) it was never contended that investment in shares is not a business activity of the company. Hence, facts of both cases are not similar, as in this case it is clearly established that investment in shares is....
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....on of LI visa was available for appellant company. LI visa is specifically for transfer/travelling of employees belonging to the same group i.e. holding-subsidiary companies. Detailed comparison of H1B and LI visa is placed on record vide Page no. 184 to 189 of Paper book no. 2 of AY 2.011-12. c) Commercial Value / Conso reporting benefits - New arrangement offers more strength to commence activity at other locations. Appellant company has large asset base in India. To expand the same, appellant company requires support of bank loan. New arrangement helps in getting bank finance for Indian Activity, as earnings of subsidiary gets considered in granting loans. d) Employee retention - In software activity, retention of key employees is a crucial aspect. To create confidence and peace in the minds of senior employees, holding - subsidiary relationship grants far more comfort in the minds of employees. Lien on employment could be easily retained in case, employees of respective companies are to be transferred to other jurisdictions. Bitwise group is able to retain more than 800 employee head count as on date. Employees increased comfort of a consolidated entity was an....
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.... 7. We have heard both the parties, perused the material available on record and have gone through the orders of the Lower Authorities carefully. It is observed that the Hon'ble Bombay High Court in the decision of PCIT vs. Concentrix Services (I)(P.) Ltd. [2019] 111 taxmann.com 269 (Bombay) held as under: (f) We note that it is undisputed that the business of the Respondent-assessee is of running of BPO and Call Centres. Nor is it disputed that M/s.Minacs Canada is also in the business of Information Technology enabled Services i.e. BPO and Call Centre. It was the business decision of the Respondent to enhance/expand its activities and presence in the world market for that purpose had acquired controlling interest in the business of M/s.Minacs Canada which was in the same line of business as the Appellant. To make the above investment for the purpose of its business the loan was taken. Therefore the interest expenditure incurred on loans taken for investment in acquiring controlled interest in a Company which was in the same line of business as that of the Respondent would be allowable expenditure under section 36(1)(iii) of the Act. In Srishti Securities (P.) Ltd, (su....
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....sdictional High Court, the interest expenditure of Rs. 69,51,455/- is allowed as revenue expenditure. Accordingly, the Ground No.1, 2, 3 and 4 raised by the assessee are allowed." 7. On going through the above decision, we find that this Tribunal has held that the interest expenditure incurred on foreign currency loan taken by the assessee for acquisition of shares of subsidiary company has been allowed as business expenditure. Subsequently, the assessee on repayment of such foreign currency loan has incurred foreign exchange loss and has claimed the same as an business expenditure. We find that since the interest on the foreign loan has been allowed as business expenditure, then the very same basis also needs to be adopted for the foreign exchange loss. We therefore hold that assessee is eligible for claiming the foreign exchange loss incurred on repayment of foreign currency loan as a business expenditure u/s.37 of the Act. Finding of ld.CIT(A) is reversed and common issue raised by the assessee vide Grounds of appeal No.5 for A.Yrs. 2012-13, 2013-14 and 2014-15 is allowed. 8. Next common raised for all the three years is against disallowance of approved contribution to Emp....
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....opy of Employee Group Gratuity Trust. As such, the company is submitting copies of all the acknowledgments of applications of each unit submitted before your goodself on various dates. Your goodself's attention is invited to the fact that, the company has already submitted all these applications long back but for easy reference of all these at one place, the company is submitting all those copies again along with this letter. Also, for quick glance, the company has submitted approval applications for following branch offices / units over all these years - 1. Unit 1 - Bitwise World, off International Convention center, S B Road, Pune 411 016 2. Unit 2 - Amar Arma Genesis, IV Floor, Baner, Pune 411 045 3. Unit 3 - Globus, Survey No 2, Hissa No: 1, Baner, Pune 411 045 4. Unit 4 - Amar Apex, Unit No: 701 & 702, Baner, Pune 411 045 5. Unit 5 - Nextgen Avenue, 4th to 7ª Floor, Plot No: 5, Bahiratwadi, S.B.Road, Pune 411 016 The company humbly requests your goodself to kindly acknowledge the receipt of all the acknowledgments / applications made till date and grant approval to all the above gratuity trusts from the da....