Losses sustained due to re-export of goods allowability

Facts:

Assessee imported a raw material which on testing by customs authorities was found to be hazardous. Accordingly the goods were detained and subsequently with a compounding fee and penalty the said goods were permitted to be re-exported. The prices of the raw material dropped with the exchange rate also impacting the assessee into a loss eventually. Assessee while filing the return of income disallowed the compounding fee and the penalty paid but claimed the loss on re-export sale vis a vis the imported value which was disallowed by the lower authorities. On higher appeal -

Held in favour of the assessee on facts that the inventory loss which arose out of the reexport of the detained shipment was an allowable expenditure under section 37(1).

Case: Indian Synthetic Rubber (P) Ltd. v. ACIT 2023 TaxPub(DT) 2551 (Del-Trib)