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TMI Blog2015 (6) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... led on or before the first working day after the summer vacation. Disallowance of depreciation on capitalization of foreign gain/loss - Tribunal deleted the addition - Held that:- As appear from the submissions advanced by the assessee himself that the claim could not have come within the four corner of Section 43A. Therefore, the claim for depreciation was altogether bad and illegal. The assessee did not incur any loss arising out of fluctuations in the exchange price. The assessee, on the contrary, claims to have incurred the expenditure of a sum of ₹ 49,62,133/- because it had got to get rid of the forward contracts which it had entered into for the purpose of protecting itself from the fluctuations of the foreign exchange.There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Appellate Tribunal pertaining to the assessment year 2002-2003. The Revenue has come up in appeal. The following questions were formulated at the time of admission of the appeal:- 1. Whether on the facts and in the circumstances of the case the learned Tribunal has erred by allowing deduction under Section 80IA to the extent of ₹ 44,71,14,992/- when the fundamental requirements to quality for claim of deduction under Section 80IA is deficient in this case as the power generation unit is only the extension of existing business of the assessee and there was no business activity on the part of the undertaking (power generation) because the product (power) being generated by the plant was transferred to its own industrial units an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same ever been offered for taxation in earlier years meaning thereby these advances are not part of taxable income ? The facts and circumstances pertaining to the question no.2 appearing from the submissions advanced before the CIT (Appeals) on behalf of the assessee are as follows:- There have been no provisions made for forex fluctuations. The entire amount of forex fluctuation of ₹ 49,62,133/- was on account of actual expenditure on account of cancellation/booking of foreign exchange covers, during the year. Extract of the assessment submission enclosed Annexure 32, File No.1, Page Nos.307. This was certified by the auditors in the Tax Audit Report. Therefore, there is absolutely no income tax issue since this has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... negative and against the revenue. In so far as the question no.4 is concerned, reference may be made to the views expressed by the CIT (Appeal) which include, inter alia, as follows:- The appellant company during the course of appellate proceedings has contended that the claim is off revenue nature and was allowable u/s.28/37 (1) of the Income Tax Act 1961. The appellant has strongly relied upon the decision of the Hon'ble I.T.A.T. for the assessment year 1991-92 in the appellant's own case wherein the Ld. ITAT relying upon the judgement of the Hon'ble Supreme Court in the case of CIT vs. Mysore Sugar Co. Ltd. (46 ITR 649) held that the write off of trade advances were allowable deduction u/s.28 of the Income Tax Act 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id down by the Privy Council in Commissioner of Income-tax v. Chitnavis, and has been accepted by this court. In other words, section 10(2) does not deal exhaustively with the deductions, which must be made to arrive at the true profits and gains. To find out whether an expenditure is on the capital account or on revenue, one must consider the expenditure in relation to the business. Since all payments reduce capital in the ultimate analysis, one is apt to consider a loss as amounting to a loss of capital. But this is not true of all losses, because losses in the running of the business cannot be said to be of capital. The questions to consider in this connection are: for what was the money laid out? Was it to acquire an asset of an endu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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