The assessee Company had availed foreign currency loan in the nature of external commercial borrowings towards capital expenditure.  As per Accounting Standard (AS) 11, the assessee claimed foreign exchange losses owing to change in exchange rate between the Indian Rupee and foreign currency.  The assessee broke up such loss amount in proportion of value of capital goods  imported into India and value of capital goods acquired within India.  The proportionated amount of loss on the value of capital goods imported into India was capitalized as the cost of assets, while the proportionated amount of loss on the value of capital goods acquired within India claimed as revenue expenditure u/s 37(1) of the Act.  The AO while applying the amended provisions of Section 43A, disallowed the entire loss treating it as capital.  The CIT (Appeals) upheld  the order of the AO with the extended view that foreign currency loss would be treated as revenue expenditure only if foreign exchange loan utilized for trading activity.  On further appeal, the Tribunal held that Section 43A could have no relevance and deleted the disallowance made by the AO and confirm the order of CIT (Appeals).  On further appeal, the Hon’ble Court observed that it was important for the Tribunal to examine whether, on its own merit, such expenditure would qualify as revenue expenditure for purposes of Section 37(1) and towards that end, whether it can be stated conclusively that such expenditure cannot be regarded as capital expenditure and since such analysis is missing, the order of the Tribunal is set aside and remanded back to the Tribunal for an effective adjudication.(AY. 2009-10)