Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (6) TMI 1432 - ITAT AHMEDABADAddition on account of provision of exchange difference - section 43A applicability - HELD THAT:- Assessee created the provision in respect of the revenue transactions. This fact can be verified from the annual accounts of the assessee which is available on pages 31-69 of the paper book. There was no long-term loan liability, and the fixed assets were of negligible value. Therefore, the provisions of section 43A of the Act cannot be applied in the present facts and circumstances as it deals with the capital account transaction. Accordingly, we hold that the AO erred in applying the provisions of section 43A. Whether the impugned transaction is representing the unascertained liabilities ? - The assessee created such provision in respect of the current liabilities represented in foreign currency at the end of the financial, i.e. 31st March 2013 based on the rate of currency prevailing at the relevant time. Therefore, we are of the considered opinion that such liabilities cannot be treated as unascertained liabilities. Referring to case M/S WOODWARD GOVERNOR INDIA P. LTD. & M/S HONDA SIEL POWER PRODUCTS LTD. [2009 (4) TMI 4 - SUPREME COURT] it is clear that the trading liability arising on account of currency fluctuation is ascertained liability, and therefore, it is eligible for deduction. Assessee has been adjusting the books of accounts consistently on account of currency fluctuation, which has been accepted by the Revenue in the earlier years. Therefore, we are of the view that the assessee is also entitled to the deduction of such provision as per the principles of consistency. - Decided against revenue
|