The Assessee had taken an ECB loan for acquiring capital assets. During the year, the Assessee had incurred loss on account of foreign exchange fluctuation on the said loan. The AO held that the same was capital in nature in view of the provisions of section 43A of the Act. The DRP directed the AO to delete the addition by holding that the same is allowable in view of the judgement of the Hon’ble Supreme Court of India in the case of CIT v. Woodward Governor India Private Ltd (2009) 312 ITR 254 (SC). On appeal, the Tribunal observed that the condition for applicability of section 43A of the Act is that the capital asset is acquired from a country outside India whereas the Asessee had purchased the asset in India and not from country outside India. Accordingly, it upheld the order of the DRP in treating the same to be revenue in nature. (AY 2011-12) (ITA Nos. 6775, 6783/Del/2015 dt.26-03-2019)
DCIT v. Terex India Pvt. Ltd. (2019) 71 ITR 259 (Delhi)(Trib.)
S. 43A : Rate of exchange-Foreign currency-Provisions are applicable for loss arising on foreign exchange fluctuations only where the capital assets are acquired from outside India-Assets were purchased in India-Loss on foreign exchange is allowable as deduction. [S. 37(1)]