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TMI Blog2018 (2) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in favour of assessee - ITA Nos.2164 And 2165/Mds/2017 - - - Dated:- 8-2-2018 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER For The Appellant : Smt. J. Sree Vidya, Advocate For The Respondent : Smt. Ruby George, CIT ORDER PER N.R.S. GANESAN, JUDICIAL MEMBER: Both the appeals of the assessee are directed against the common order passed by the Commissioner of Income Tax (Appeals), Puducherry, dated 19.06.2017 and pertain to assessment years 2013-14 and 2009-10. Since common issue arises for consideration in these appeals, we heard both the appeals together and disposing of the same by this common order. 2. The only issue arises for consideration is disallowance of loss o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal Representative. The assessee in order to expand business of generation of electricity purchased new windmills by borrowing loan in Indian currency. Subsequently, in order to reduce the interest liability, the assessee converted the Indian currency loan into foreign currency. Wherever there was a loss, the assessee claimed the same as revenue loss and wherever there was profit, the assessee offered the same as income for taxation. For the year under consideration, the assessee has suffered a loss. The CIT(Appeals) found that the loan was borrowed for the purpose of acquisition of capital asset. Therefore, the interest payable by the assessee has to be capitalized. Similarly, the fluctuation in foreign exchange also needs to be capitaliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It indicates the double standards adopted by the Department. 8. The Apex Court finally found that the expression expenditure used in Section 37 of the Act in the circumstances of particular case, cover an amount which is really a loss even though the said amount has not gone out of the assessee. In fact, the Apex Court observed as follows at para 13 of its order:- 13. As stated above, one of the main arguments advanced by the learned Additional Solicitor General on behalf of the Department before us was that the word expenditure in section 37(1) connotes what is paid out and that which has gone irretrievably. In this connection, heavy reliance was placed on the judgment of this court in the case of Indian Molasses C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s incurred as well as allowances and depreciation have also been used. For example, depreciation and allowances are dealt with in section 32. Therefore, Parliament has used the expression any expenditure in section 37 to cover both. Therefore, the expression expenditure as used in section 37 may, in the circumstances of a particular case, cover an amount which is really a loss even though the said amount has not gone out from the pocket of the assessee. 9. This judgment of Apex Court was subsequently followed by this Tribunal in Hyundai Motor India Ltd. (supra). In the case on our hand, the assessee admittedly borrowed loan in Indian currency for the purpose of acquiring new windmill in order to expand its business. Subse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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