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TMI Blog2008 (4) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee for its business purposes that is of money-lending and bill discounting. Due to fluctuation in the rate of foreign exchange the assessee suffered a loss and claim deduction. The Assessing officer as well as Commissioner (Appeals) held that since the amount borrowed on capital account the loss would not be treated as revenue loss. Tribunal reversed the order. Held that- though the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank, UK. The total amount borrowed was about US $ 7 million. It appears that a part of the loan amount was utilized for purchase of capital equipment and that was included in capital work-in-progress. The remaining amount of US $ 3.67 million was utilized by the assessee for its business purposes that is of money-lending and bill discounting. 2. On March 31, 1998, the assessee showed utilizati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in CIT v. V. S. Dempo and Co. P. Ltd. [1994] 206 ITR 291. In that decision, the Bombay High Court set out tests for determining whether a loss on account of devaluation of the Indian rupee would be allowable as a business loss. The position was summed up by the Bombay High Court and that summing up was accepted by a Division Bench of this court in CIT v. Woodward Governor India P. Ltd. [2007] 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquisition of the loan is of no consequence but what is of consequence is the utilization of the amount at the time when the devaluation took place. In so far as the present case is concerned, the amount was utilized by the assessee for its business of money-lending and bill discounting and this was also intimated by the assessee to the Reserve Bank of India as on March 31, 1998. While it is tru ..... X X X X Extracts X X X X X X X X Extracts X X X X
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