Law:

Section:

Section 28(i) of the Income-tax Act, 1961 - Business income - Chargeable as - Whether where profit or loss arises on account of appreciation or depreciation in value of foreign currency held by an assessee on conversion into another currency, such profit or loss would ordinarily be trading profit or loss, if foreign currency is held by assessee on revenue account or as a trading asset or as a part of circulating capital embarked in business - Held, yes - Whether where income which is already received by assessee is held as a capital asset and while converting same into foreign currency, there is profit or loss, same would be treated as capital in nature and there is no question of considering same towards trading profit or loss - Held, yes Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessee, a non-resident corporation entered into a technical service agreement with an Indian company - Contract provided for calculation of payment of fee in US currency, yet payment was stipulated to be made to assessee in Indian rupees - Assessee incurred loss in getting rupees converted into dollars for purpose of their remittance and claimed deduction - Whether after income was received, it became capital and for transferring same on account of fluctuation in exchange rate, loss occasioned could not be treated as business expenditure - Held, yes FACTS The assessee, a non-resident company having its headquarters in the Republic of Panama, entered into a technical service agreement with an Indian company (Oil Refinery). As per the agreement, the assessee was entitled to fees in Indian rupees equivalent to 2.6 US cents per barrel of crude oil produced by the Indian company. It, purportedly, incurred a loss of certain amount in getting the rupees converted into dollars for the purpose of remittance and claimed the same as exchange loss by way of business expenditure. However, the Income-tax Officer denied the claim. On appeal, the AAC deleted the addition made by the ITO. On further appeal, the Tribunal also confirmed the order of the AAC. On reference : HELD The assessee received the amount from Cochin Refineries Ltd., in rupees equivalent…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492