Income Tax Act, 1961: s.37 – Disallowance – Loan borrowed by assessee in foreign currency for expanding its primary business of leasing and hire purchase of capital equipment to existing Indian enterprise – While repaying the loan, due to the difference of rate of foreign exchange, the assessee had to pay higher amount, resulting in loss to the appellant –Claim for deduction on account of loss of income owing to exchange fluctuation – Held: Transaction of loan was in nature of borrowing money which was necessary for carrying on its business of financing – It was the activity concerning the business of the assesseeand not for creation or acquisition of asset by appellant for its primary business – Hence, assessee was entitled to claim deduction of entire expenditure or loss suffered in connection with such a transaction in terms of s.37 of the 1961 Act – With respect to the fresh claim set up by assessee before ITAT that revenue expenditure of certain amount was erroneously capitalized in returns – As no objection was taken by department before ITAT, hence, cannot be contradicted at this stage.
India Cements Ltd. v. Commissioner of Income Tax, Madras AIR 1966 SC 1053 : [1966] 2 SCR 944; Empire Jute Co. Ltd. v. Commissioner of Income Tax (1980) 4 SCC 25 : [1980] 3 SCR 1370 – relied on.
National Thermal Power Co. Ltd. v. Commissioner of Income Tax (1997) 7 SCC 489; Goetze (India) Ltd. v. Commissioner of Income Tax [2006] 284 ITR 323;
Assistant Commissioner of Income Tax, Vadodara v. Elecon Engineering Company Limited (2010) 4 SCC
482 : [2010] 3 SCR 108 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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