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TMI Blog2014 (1) TMI 1736X X X X Extracts X X X X X X X X Extracts X X X X ..... our of assessee. - I.T.A. No.6600/Mum/2012 - - - Dated:- 2-1-2014 - SHRI B.R. MITTAL, JM AND SHRI N.K. BILLAIYA, AM For the Appellant by: Shri M.L. Perumal O R D E R PER N.K. BILLAIYA, AM: This appeal by the Revenue is preferred against the order of the Ld. CIT(A)-27, Mumbai dt.24.08.2012 pertaining to A.Y. 2009-10. 2. The sole grievance of the Revenue is that the Ld. CIT(A) erred in holding that Mark-to-Market loss of ₹ 38,09,880/- arising on valuation of forward exchange contracts on the closing date of accounting year is not a national loss and therefore allowable. 3. The assessee has moved an application for adjournment. However, when it was pointed out to the Ld. Departmental Representative that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no special provision or treatment for Mark-to-Market method of accounting. The AO further observed that reporting of such notional losses to adhere to the accounting guidelines does not by itself make it deductible for income tax purposes. The provisions of Income Tax Act 1961 does not allow deduction of any such notional loss for which liability has not crystallized. Hence, MTM losses on account of revaluation of forward exchange contracts are only notional losses and therefore, these losses are not allowable. 5. Aggrieved by this, the assessee carried the matter before the Ld. CIT(A). 6. We have carefully perused the order of the Ld. CIT(A). The Ld. CIT(A) after considering the facts of the case has discussed following decisions: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely it becomes due and before it is actually received; (ii) whether the same system is followed by the assessee from the very beginning and if there was a change in the system, whether the change was bona fide; (iii ) whether the assessee has given the same treatment to losses claimed to have accrued and to the gains that may accrue to it; (iv) whether the assessee has been consistent and definite in making entries in the account books in respect of losses and gains; (v) whether the method adopted by the assessee for making entries in the books both in respect of losses and gains is as per nationally accepted accounting standards; (vi) whether the system adopted by the assessee is fair and reasonable or is adopted only with a view to reduci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts on mercantile system of accounting and there was no finding by the Assessing Officer on the correctness or completeness of the account and that the assessee had complied with the accounting standards, laid down by the Central Government, can the loss suffered by it on account of fluctuation in the rate of foreign exchange as on the date of balance-sheet be allowed as expenditure under section 37(1) of the Act notwithstanding the fact that the liability had not been actually discharged in the year in which the fluctuation in the rate of foreign exchange had occurred and finally decided that the loss incurred on account of restatement of the liabilities in foreign exchange is allowable and answered the question in favour of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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