2011 (3) TMI 1795 - AT - Income Tax

Summary

Issues Involved:
The appeal filed by the Revenue against the order of the CIT(A)-IV, Kolkata for A.Yr. 2007-08.

Additions on Account of Interest, Bank Charges, Foreign Exchange Fluctuation Loss, and Profit on Conversion of Foreign Currency:
The AO disallowed various amounts including interest, bank charges, foreign exchange fluctuation loss, and profit on conversion of foreign currency. The AO's rationale was based on the nature of the business, details of transactions, and the belief that certain expenses were not related to the business activities. The CIT(A) deleted these additions after considering submissions and finding no evidence of non-business purposes for the expenses. The CIT(A) noted that bank charges were incurred for the company's export business, and interest payments were justified by the income earned. The CIT(A) also disagreed with the AO's view on foreign exchange losses, considering them as allowable deductions. The Tribunal upheld the CIT(A)'s decision, citing the Hon'ble Apex Court's ruling on exchange differences as allowable expenditures under section 37(1). Consequently, the appeal by the Revenue was dismissed.