Contitech India Pvt. Ltd. vs Deputy/Assistant Commissioner of Income Tax

Parties Involved

Facts Summary

The assessee company, Contitech India Pvt. Ltd., is engaged in the business of manufacturing, trading, and selling power transmission belts and rubber goods for the automotive/industrial sector. During the year, the assessee filed its return of income on 30.11.2017, declaring a total income of Rs.37,75,81,260/-. The assessee had shown a loss incurred on foreign exchange fluctuation amounting to Rs.1,30,84,296/-. The assessee submitted that the exchange loss related to purchase only, due to variation in the value of currency at the time of booking the purchase invoice and at the time of payment made by the assessee company. The AO noted that the assessee had not provided an explanation on the nature of the purchase, and thus, could not establish whether the loss incurred was capital in nature or revenue. The AO disallowed the foreign exchange loss of Rs.1,30,84,296/-. The assessee appealed before the Ld. CIT(A), who dismissed the appeal by observing that the assessee had not substantiated the claim of allowability of foreign exchange losses. The assessee then appealed before the ITAT, Delhi Bench.…

Legal Issues

• 1. Whether the foreign exchange loss amounting to Rs.1,30,84,296/- debited in the profit & loss account relates to revenue items or to any capital assets.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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