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TMI Blog2022 (4) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... ee never disputed fact that foreign exchange loss debited into profit loss account also includes loss pertain to loans borrowed for acquiring capital asset. The only plea raised before us is that the Assessing Officer has considered very same issue for subsequent assessment year 2016-17 and has made proportionate disallowance towards for foreign exchange loss u/s. 43A of the Act, in respect of loss pertaining to loans borrowed for acquiring capital asset. Therefore, considering arguments of the learned A.R for the assessee that the Assessing Officer has considered a similar issue and made proportionate disallowance, we are of the considered view that the issue needs to go back to the file of the Assessing Officer to re-consider the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2. The learned CIT(A) failed to appreciate the fact that the purpose of loan was to reduce interest cost which is a revenue expenditure and therefore the foreign currency fluctuation loss on such loan is also revenue in nature. 1.3. The learned CIT(A) failed to appreciate the fact that the Appellant has been consistently following the accounting policy of treating foreign exchange fluctuation difference as revenue in nature. Therefore, when foreign exchange fluctuation profit has been offered to tax by the Appellant as revenue income, foreign exchange fluctuation loss ought to have been considered as revenue expenditure. 1.4. The learned CIT(A) failed to appreciate the fact that the treatment of foreign exchange fluctuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he total income. The assessee carried the matter in appeal before first appellate authority, but could not succeed. The learned CIT(A) for the reasons stated in his appellate order dated 19.12.2018 rejected arguments of the assessee and sustained additions made by the Assessing Officer. Aggrieved by the learned CIT(A) order, the assessee is in appeal before us. 3. The learned A.R for the assessee submitted that the learned CIT(A) erred in upholding disallowance of foreign exchange fluctuation loss considered it as capital in nature, without appreciating fact that exchange fluctuation loss was incurred on loan taken for purchase of capital asset in India and therefore, provisions of section 43A of the Act, are not applicable. He further s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed total loss incurred on account of exchange fluctuation by holding that it is in the nature of capital loss. It was the argument of the assessee before us, that the assessee has borrowed foreign currency loans for the purpose of acquiring capital asset as well as for general business purpose and thus, if at all, disallowance is required to be made, then proportionate disallowance is required to be made in respect of exchange loss pertains to loans borrowed for acquiring capital asset. He further submitted that the Assessing Officer had considered very same issue and accepted arguments of the assessee for subsequent assessment year 2016-17 and has made proportionate disallowance towards foreign exchange loss pertains to loans borrowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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