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16.8. Referring to the decision in the case of CIT V. American Power Conversion (India) Pvt. Ltd., (T.C.A.No.1373 of 2007, dated 04.04.2014), it is contended that loss arising out of fluctuation in foreign exchange for restatement of liabilities as at the end of the financial year is not contingent liability.

16.9. Reliance was placed on the decision of the High Court of Bombay in the case of CIT V. Echjay Forgings (P) Limited, (2001) 251 ITR 0015 http://www.judis.nic.in (Bom.), for the contention that the provision for increased liability on account of fluctuation in foreign exchange rates, which was debited to the profit and loss account prepared under the Companies Act were not to be added back to net profit as shown in the profit and loss account as per Explanation to Section 115J (1A).

30. In Echjay Forgings (P) Limited (supra), the substantial question of law, which fell for consideration before the High Court of Bombay was whether the Tribunal erred in law in holding that the provisions made for foreign exchange difference, doubtful debts etc. could not be added to the net profit shown in the P & L account within the meaning of Explanation to Section 115J(1A) while working out the book profit under Section 115J of the Act. With regard to the fluctuation in the foreign exchange rates, it was held that the Assessing Officer has to go by the computation of book profit as permitted under the Companies Act and for the purposes of Section 115J, book profit will be the net profit as shown in the P & L account prepared in accordance with Schedule VI to the Companies Act, 1956 http://www.judis.nic.in subject to certain adjustment and upheld the order passed by the Tribunal which on facts held that the said amount has been debited to the P & L account under the Companies Act, 1956 and therefore, faulted the Department in adding the said amount to net profits.