M/S. EGGER PUMPS INDIA PVT. LTD.,COIMBATORE vs. ITO, CORP. WARD-1,, COIMBATORE

आदेश / O R D E R PER MANU KUMAR GIRI, JM:

This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)/Addl./JCIT(A)-1, (hereinafter referred to as “the Ld.CIT(A)”), Nashik, dated 11.02.2026 for the Assessment Year (hereinafter referred to as "AY”) 2010-11. 2. Brief facts of the case are that the assessee, M/s. Egger Pumps India Pvt. Ltd., filed its return of income for the relevant assessment

ITA No 1251/Chny/2026 (AY 2010-11) M/s Egger Pumps India Pvt Ltd Vs ITO C W-1 :: 2 :: year. During the course of assessment proceedings, the Assessing Officer observed that the assessee had availed an External Commercial Borrowing (ECB) from its Swiss parent company, which was subsequently converted into equity shares. On account of year- end restatement of the outstanding ECB liability at the prevailing exchange rate, the assessee had debited a foreign exchange fluctuation loss of Rs.18,23,420/- to its Profit & Loss Account and claimed the same as a deduction.The Assessing Officer held that since the ECB was utilized for capital purposes and was ultimately converted into share capital, the foreign exchange fluctuation loss arising on restatement of such liability was capital in nature and, therefore, not allowable as a revenue expenditure. Accordingly, the AO disallowed the claim of Rs.18,23,420/- and added the same to the total income. However, after set-off of brought forward losses, the assessed income remained at Nil, while book profit under section 115JB was determined at Rs.57,06,863/-. 3. On appeal, the ld.CIT(A), after considering the assessment order, the grounds of appeal and the written submissions of the assessee, upheld the action of the Assessing Officer. The ld.CIT(A) held that the foreign exchange fluctuation loss of Rs.18,23,420/- arising on restatement of the External Commercial Borrowings was capital in nature, as the borrowing was connected with the capital structure of the company and was subsequently converted into equity shares. Accordingly, the loss could not be allowed as a revenue deduction.The ld.CIT(A) further observed that the disallowance made by the Assessing Officer was in accordance with the facts of the case, the applicable legal provisions and the judicial precedents governing the issue. Consequently, the addition made by the

ITA No 1251/Chny/2026 (AY 2010-11) M/s Egger Pumps India Pvt Ltd Vs ITO C W-1 :: 3 :: Assessing Officer was confirmed and all the grounds raised by the assessee were dismissed. 4. The issue for consideration is whether the foreign exchange fluctuation loss of Rs.18,23,420/- arising on year-end restatement of an External Commercial Borrowing obtained from the parent company, which was subsequently converted into equity shares, is allowable as a revenue deduction or is to be treated as a capital loss not allowable under the Act. 5. We have heard the rival submissions and perused the material available on record. The solitary issue involved in the present appeal is whether the foreign exchange fluctuation loss arising on restatement of an External Commercial Borrowing obtained from the parent company, which was utilized for capital purposes and subsequently converted into equity shares, is allowable as a revenue expenditure. 6. We find that an identical issue has been considered by the co- ordinate Bench of the Tribunal in the assessee's own case in M/s. Egger Pumps India Pvt. Ltd. vs. ITO, ITA No.3104/Chny/2024, order dated 18.06.2025 for A.Y. 2011-12. The Tribunal, while following its earlier order in the assessee's own case for A.Y. 2012-13 [ITA No.477/Mds/2017 dated 01.09.2017], held as under: "In the present case, it is noted that the loan has been given by the parent company for the purpose of acquisition of capital asset and correspondingly the loan is in the capital field and the loss arising on account of restatement of the liability, which is in the capital field to be considered as capital nature and it is a capital loss cannot be considered as deduction while computing the income of assessee as a business expenditure." The Tribunal further observed that, in the absence of any change in facts or law, there was no infirmity in the order of the CIT(A) and accordingly dismissed the appeal of the assessee.

ITA No 1251/Chny/2026 (AY 2010-11) M/s Egger Pumps India Pvt Ltd Vs ITO C W-1 :: 4 :: 7. In the present case also, the assessee has not brought on record any material to demonstrate that the facts are distinguishable from those considered by the co-ordinate Bench in the assessee's own case. No change in the factual matrix or in the applicable legal position has been pointed out before us.Therefore, respectfully following the decision of the co-ordinate Bench in the assessee's own case for A.Y. 2011-12 in ITA No.3104/Chny/2024 dated 18.06.2025, we uphold the order of the ld. CIT(A) sustaining the disallowance of the foreign exchange fluctuation loss of Rs.18,23,420/-.Accordingly, the grounds raised by the assessee are dismissed. 8. In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on the 20th day of July 2026 in Chennai.

Sd/- Sd/- (प�ावती एस) (मनु कुमार िग�र) (PADMAVATHY S) (MANU KUMAR GIRI) लेखा सद)या/ACCOUNTANT MEMBER �या�यक सद)य/JUDICIAL MEMBER चे�नई/Chennai, SANDEE Digitally signed by *दनांक/Dated: 20th July, 2026. SANDEEP KUMAR SNDP, Sr. PS P KUMAR Date: 2026.07.22 आदेश क ��त+ल,प अ-े,षत/Copy to: 13:50:39 +05'30' 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF