INCOME TAX ACT, 1961

Section 37(1)

Capital or revenue loss - Loss on account of restatement of ECB loan obtained for purchase of assets in India - Section 43A not applicable -

Assessee acquired phosphatic business as a going concern on slump sale basis under section 50B vide business transfer agreement from M/s. Southern Petrochemical Industries Corporation Ltd. For this purpose, assessee obtained ECB loan in foreign currency amounting to USD 15 million (INR 74.53 crores) vide agreement dated 14-10-2011 from AM International Holding Pte. Ltd., Singapore. Assessee restated its liability towards ECB loan as on 31-3-2012 and loss on restatement of liability was debited to profit & loss account amounting to Rs. 2,19,97,490 as revenue in nature and claimed as deduction under section 37(1). AO held forex loss on account of restatement of ECB loan as on 31-3-2012 as of capital in nature and thus disallowed assesse's claim. Held: In the absence of applicability of section 43A, loss claimed by assessee on account of restatement of ECB loan obtained for purchase of assets in India could not be treated as of capital in nature and thus could not be disallowed under section 37(1).

Followed:Cooper Corporation Pvt. Ltd. v. Dy. CIT (2016) 159 ITD 165 (Pune-Trib) : 2016 TaxPub(DT) 2460 (Pune-Trib), CIT v. Tata Iron & Steel Co. Ltd., (1998) 231 ITR 285 (SC) : 1998 TaxPub(DT) 1068 (SC), M/s. Hyundai Motor Company Ltd. v. DCIT (2017) 81 taxmann.com 5 (Chen) : 2017 TaxPub(DT) 1133 (Chen-Trib), CIT v. Tata Iron & Steel Co. Ltd. (supra) and CIT v. Woodward Governor India (P) Ltd. (2009) 312 ITR 254 (SC) : 2009 TaxPub(DT) 1628 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13 & 2013-14

INCOME TAX ACT, 1961

Section 250(6)

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