The assessee had borrowed various foreign currency loans for the purpose of purchase of certain plant and machinery from outside India. For safeguarding its interest from foreign exchange fluctuations, the assesee had entered into forward contracts with authorized dealers for receiving foreign currency at the rates specified in contract, at future stipulated dates to enable repayment of instalments of foreign currency loans. The assessee added loss on cancellation of forward contract to the written down value and claimed depreciation on written down value . AO rejected the claim . CIT (A) deleted addition. Tribunal affirmed the order of CIT (A). Followed ACIT v. Elecon Engg. Co. Ltd. [2010] 3 taxmann.com 2/189 Taxman 83 (SC). ( AY. 2006 -07)
ACIT v. JSW Steel Ltd. (2020) 180 ITD 505 (Mum) (Trib.)
S. 43A : Rate of exchange – Foreign currency – Depreciation – Forward foreign exchange contracts were taken for acquiring capital assets, profits/loss arising on settlement of such contracts had to be adjusted against cost of concerned capital asset in terms of S. 43A, and depreciation was to be allowed on such adjusted value of capital assets. [ S.32 ]