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TMI Blog2022 (6) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... im as per method of accounting followed and the provisions of section 43AA read with Income Computation Disclosure Standard (ICDS)-VI has been countered by the assessee stating that assessee has been following AS-11 which states that unrealised foreign exchange gain / loss should be booked at the year end. Though the principle of res judicata does not apply to taxing statute, principle of consistency does apply wherein the income from gain in forex fluctuation of the impugned loan in earlier year was considered by the Revenue and as such the method of accounting as per section 145 followed by the assessee was also not disputed earlier, by placing reliance on the decision of Hon ble Apex Court CIT vs M/s Woodward Governor India P. Ltd ( 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny and assessment order under section 143(3) of I.T. Act was passed on 22/12./2019 wherein total income determined was Rs.7,19,050/- under normal provisions and Rs.80,92,013/- as book profit under section 115JB of the Act by making an addition of Rs.2,69,59,466/- on account of foreign exchange loss. The assessee was in appeal before Ld.CIT(A) as against the order under section 143(3) of the Act who then confirmed the addition made by the Assessing Officer. 4. Aggrieved by the said order, the assessee is in appeal before us. During the appellate proceedings, the Ld.AR had contended that the assessee has offered income from gain in forex fluctuation of loan in earlier year which was accepted whereas the foreign exchange loss in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that it was capital expenditure and not revenue expenditure and the same was not allowable under section 37(1) of the Act as the same was not business expenditure. It was also noted that the assessee was receiving interest @14% on the said loan. On the other hand, the assessee had raised a contention that since the assessee was required to set up special purpose vehicle (SPVs) as subsidiary or joint venture company for real estate projects for which the assessee had to provide necessary seed funding by way of loans to its subsidiaries / group companies for business expediency and such expenditure related to business should be allowed as deduction under section 37(1). It was also submitted that even if such expenditure does not have anyth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellate proceedings. 8. Considering the facts of the case, we infer that the assessee has extended loans / advances facility to its subsidiaries only for the purpose of business, as the nature of assessee s business relates to constructions and development of real estate properties. The contention of the Revenue that the impugned loss was only notional loss does not hold good. The reasoning that since there was no settlement of loan as on 31/03/2017 will not entitle the assessee to claim as per method of accounting followed and the provisions of section 43AA of the I.T. Act, 1961 read with Income Computation Disclosure Standard (ICDS)-VI has been countered by the assessee stating that assessee has been following AS-11 which states ..... X X X X Extracts X X X X X X X X Extracts X X X X
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