Acit Spl. Range-7, New Delhi vs Prudent-Agri Commodities India ... on 9 July, 2025
7. We have heard both the parties and perused the records. We find
ourselves in agreement with the Ld. CIT(A)'s finding that the losses ensuing on
account of foreign currency fluctuations are a distinct accounting entry and
there is a plausible likelihood of gains and losses on such fluctuations. Such
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expenses don't fall in scope of section 14A related expenses. The accounting
treatment of losses/gains on account of forex fluctuations does not render the
possible expense as directly relatable to the exempt income as same is incurred
on funds repatriated and such funds were in any case received as advance for
export of cotton. We further note that AO has also not disputed the contention
that such advance was not taken for the purposes of investing in mutual funds.
In our view, the Ld. CIT(A) has correctly held that foreign currency loss of
Rs. 2,62,19,098/- was revenue expenditure and was allowable under section 28.
The case laws referred by the Ld. CIT(A) are germane and support the decision
of Ld. CIT(A). We further find considerable cogency in the contention of the
Ld. AR that the instant issue is squarely covered by the decision of the Delhi
Tribunal in the case of ACIT, Circle 16(1), New Delhi vs. Theolia Wind Power
(P) Ltd. [2019] 109 Taxmann.com 3 (Delhi - Trib.) dated 29.07.2019 wherein,
following have been observed:-