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| The Tax Publishers2021 TaxPub(DT) 0469 (Chen-Trib) INCOME TAX ACT, 1961
Section 28
Where there was no dispute on the details furnished by assessee and losses with regard to foreign exchange valuation were booked by assessee in compliance of mandatory accounting standard AS-11 from assessment year 2011-12 onwards and it admitted the corresponding profits as income in the respective year, therefore, addition was unsustainable and accordingly, AO was directed to delete the same.
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Business loss - Allowability - Loss on account of FC revaluation -
Assessee was engaged in the business of tobacco trading and exports, incurred losses on Foreign Currency (FC) utilization, FC cancellation and FC revaluation. AO allowed all the losses except the loss on account of FC revaluation which was a marked to market (MTM) loss, holding that such loss was a notional loss and contingent in nature. Therefore, he disallowed assessee's claim and completed the assessment. Held: In this case, the pending forward contracts were restated on the basis of foreign exchange rate as on 31-3-2013. There was no dispute on the details furnished by assessee. The losses were booked by assessee in compliance of mandatory Accounting Standard AS-11 from assessment year 2011-12 onwards and it admitted the corresponding profits as income in the respective year. Therefore, addition was unsustainable and accordingly, AO was directed to delete the same.
Followed :Emmsons International Ltd. v. ACIT in ITA No.4603/Del/2019 dt.14-10-2019 TaxPub(DT) 6950 (Del-Trib).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2013-14
IN THE ITAT, CHENNAI BENCH
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