Law:

Section:

Section 28(i) of the Income-tax Act, 1961 - Business Loss/deduction - Allowable as Where assessee had imported materials from abroad and there were transactions towards import of materials for which assessee had claimed loss in respect of unpaid bills on account of fluctuation in Foreign Exchange Rate (FER), in view of rule 115 assessee was justified in claiming deduction [Assessment year 1996-97] [In favour of assessee] CIT v. Tata Lucent Technologies Ltd. [2009] 318 ITR 110 (Kar.) Where the assessee had imported materials from abroad and there were transactions towards import of materials for which the assessee had claimed loss in respect of unpaid bills on account of fluctuation in the Foreign Exchange Rate (FER) and though the Assessing Officer allowed the claim, the Commissioner, acting under section 263, disallowed it holding that the loss disclosed was in respect of incomplete transactions and as the assessee had not paid the outstanding bills it was not entitled to deduction towards loss on account of fluctuation in FER : Held that the assessee had imported the materials for its business. A part of the value of the materials remained unpaid. Rule 115 of Income-tax Rules permits notional assessment of loss or gain incurred on account of the foreign exchange rate fluctuation as on the specified date, i.e., 31st of March of every year. The assessee, according to rule 115, had disclosed notional loss and gain on account of foreign exchange rate fluctuation as on 31-3-1996, which was perfectly in accordance with law. Therefore, the assessee's claim was to be allowed. CIT v. Tata Lucent Technologies Ltd. [2009] 318 ITR 110 (Kar.) Where the assessee had sought deduction of maintenance expenditure of guest house it was to be held that the income-tax law did not permit deduction towards the maintenance of guest house expenditure for the assessment year in question i.e. 1996-97 [Assessment year 1996-97] [In favour of revenue]. M.V. Seshachala for the Appellant. S. Parthasarathi for the Respondent. JUDGMENT K. Sreedhar Rao, J. - The respondent (assessee) filed return for the assessment year 1996-97. The assessee had imported the materials from abroad. There was…

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