WIPRO Finance Limited Vs CIT(Supreme Court of India)
Date-12th April,2022

Sub-Whether foreign exchange fluctuation of Rs 1.10 crore incurred for the purpose of borrowing in the business of financing and leasing is a revenue expenditure allowable u/s 37 and also whether the ITAT has power to entertain a new claim of Rs. 2.46 crores for the first time- decision in the case of NTPC and Goetze(India) limited explained.

The Hon’ble three judges bench of Supreme Court in this case was considering assessee’s appeal against the order of the High court which had reversed the findings of ITAT that the expenditure of Rs 1.10 crore towards foreign exchange fluctuation loss was a revenue expenditure. The Hon’ble Court based on the famous decision in the case of India Cement as well as Empire Jute held that as no new asset was created ,the expenditure was fully allowable.
Also the Court upheld the power of ITAT to allow a fresh claim for the first time before it by explaining the limitation to entertain a fresh claim in view of the decision in the case of Goetze India Ltd would apply only as far as claim before AO is concerned and ITAT having been vested with plenary powers no such limitations can be read into the provisions. Thus, the appeal was allowed.

Two important issues regarding claim of forex difference and power to entertain all- together new claim before ITAT receive the stamp of approval by the highest court of the country

Ramesh Patodia
17-04-2022