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TMI Blog2017 (5) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... clear finding by the learned Commissioner of Income-tax (Appeals) that the loans were taken in foreign exchange for construction of plant and the foreign exchange gain was the result of revaluation of loan liability for capital expenditure which is a realised gain. He further recorded that no plant and machinery were acquired by the assessee during the year under consideration as such the learned Commissioner of Income-tax (Appeals) relied upon the decision reported in CIT v. Jagatjit Industries Limited (2009 (9) TMI 62 - DELHI HIGH COURT). In this decision, it is clearly held that the entire gain due to the fluctuation in foreign exchange when the source of funds was for capital expenditure, is a capital receipt. This judgment is applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Ltd. [1993] 201 ITR 770 (AP), CIT v. Electron India [2000] 241 ITR 166 (Mad), CIT v. Sarabhai Sons P. Ltd. [1973] 90 ITR 318 (Guj), and CIT v. Saurashtra Cement and Chemical Industries Ltd. [1973] 91 ITR 170 (Guj) held that such an expenditure of ₹ 70,25,636 was not allowable. In respect of the gain on foreign exchange fluctuation amounting to ₹ 53,95,253 the Assessing Officer placed reliance on the decision reported in CIT v. Woodward Governor India P. Ltd. [2009] 312 ITR 254 (SC) and added back the same to the income. 3. 3.1 Challenging these two additions the assessee carried the matter in appeal and the learned Commissioner of Income-tax (Appeals), after considering the material before him, held that in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition has to be deleted treating it as capital receipt. 4. Challenging these findings of the learned Commissioner of Income-tax (Appeals) the Revenue is before us in this appeal. 5. It is the argument of the learned Departmental representative that the learned Commissioner of Income-tax (Appeals) erred in deleting ₹ 21,09,962 which expenses were admittedly relating to the period in which the business of the assessee was not commenced as such those were not admissible for deduction, whereas the learned authorised representative submitted that these expenses were very much necessary for retaining the corporate status of the company. For this purpose he placed reliance on CIT v. Rampur Timber and Turnery Co. Ltd. [1981] 129 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenditures. Only ground of disallowance of these expenses is on the ground that they relate to the period prior to the commencement of the business by the assessee. On this aspect the decisions relied upon by the assessee and enumerated (supra) are applicable on all fours. The sum and substance of these decisions is that the company had to file various statements and returns and has to perform various functions to retain its status as a company and had to incur certain expenditure, and such expenditure is allowable as deduction. While respectfully following the ratio of the above decisions, we find that the order of the learned Commissioner of Income- tax (Appeals) is in conformity with the settled position of law as such does not warra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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