INCOME TAX ACT, 1961

Section 37(1)

Business expenditure - Allowability - Foreign exchange fluctuation loss -

Assessee claimed that the foreign exchange fluctuation loss as notional loss includes both realized and unrealized loss and the accounting treatment for the same was in line with the Accounting Standard 11 as mandated by Schedule VI of the Companies Act and therefore, the claim of Forex loss should be allowed. Held: 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. (2009) 312 ITR 254 (SC) : 2009 TaxPub(DT) 1628 (SC) had been fulfilled or not was not emanating from the appellate order since the assessee had heavily relied on the decision in the case of Oil & Natural Gas Corporation Ltd. [(2010) 322 ITR 180 (SC) : 2010 TaxPub(DT) 1672 (SC)]. Moreover, the assessee had not filed any detailed explanation in support of material evidence. In view of the above, matter was remitted to the file of AO to examine the facts of the case in line with the decision held in the case of Oil & Natural Gas Corporation Ltd. v. CIT [(2010) 322 ITR 180 (SC) : 2010 TaxPub(DT) 1672 (SC)] as well as CIT v. Woodward Governor India (P) Ltd. (2009) 312 ITR 254 (SC) : 2009 TaxPub(DT) 1628 (SC) and decide the issue afresh.

Followed:Oil & Natural Gas Corporation Ltd. v. CIT [(2010) 322 ITR 180 (SC) : 2010 TaxPub(DT) 1672 (SC)] and CIT v. Woodward Governor India (P) Ltd. [(2009) 312 ITR 254 (SC) : 2009 TaxPub(DT) 1628 (SC)].

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2011-12

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