M/S. AVAYA INDIA PVT. LTD.,GURGAON vs. ADDL. CIT, NEW DELHI

ITA 1958/DEL/2017Status: DisposedITAT Delhi16 July 2026AY 2012-1315 pages
AI SummaryAllowed

What were the facts?

The assessee capitalized an exchange loss to the cost of certain assets under Section 43A of the Income-tax Act. The Assessing Officer (AO) disallowed depreciation on this capitalized amount, treating the exchange loss as notional and unsubstantiated. The Dispute Resolution Panel (DRP) directed the AO to re-compute the disallowance after correcting the depreciation rate.

What did the Tribunal hold?

The Tribunal held that the assessee had correctly capitalized the exchange loss as per Section 43A and had not claimed it separately as revenue loss. Therefore, disallowing depreciation on the capitalized amount was not proper.

What were the issues?

Whether depreciation is allowable on an exchange loss capitalized to the cost of assets under Section 43A when the loss is realized and substantiated.

Which sections of the Income-tax Act were involved?

Section 43A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘I’: NEW DELHI

For Appellant: Dr. Shashwat Bajpai, Advocate, Shri Mayank Chaturvedi, Advocate
For Respondent: Ms. Shaveta Nakra Datta, CIT DR
Hearing: 14.05.2026Pronounced: 16.07.2026

PER S.RIFAURRAHMAN,AM:

1.

The assessee filed misc. Application in ITA No.1958/Del/2017 passed vide order dated 17.01.2020 and the coordinate bench vide order dated 30.07.2025 in MA No.80/Del/2021 recalled the order to the limited extent of adjudicating ground no.5 raised by the assessee pertaining to the disallowance of depreciation of Rs.2,42,421/- on the issue of exchange loss capitalised to the cost of assets under section 43A of the Income-tax

2 Act, 1961 (for short ‘the Act’). Accordingly, the present appeal is listed to the limited extent of deciding ground no.5 which is reproduced below:- “That on the facts and circumstances of the case and in law, the ld. AO and Hon’b

The order continues below.

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