COMMISSIONER OF INCOME TAX, DELHI vs. M/S WOODWARD GOVERNOR INDIA P. LTD

C.A. No.-002206-002206 - 2009Supreme Court08 April 200926 pages
For Petitioner: B. V. BALARAM DASFor Respondent: BHARGAVA V. DESAI
AI SummaryDismissed

What did the Supreme Court hold?

The Supreme Court held that unrealized losses due to foreign exchange fluctuations on revenue account are deductible under Section 37(1) when following the mercantile system of accounting. For capital assets, adjustments to actual cost due to exchange rate fluctuations were permissible even before actual payment under the unamended Section 43A.

What were the facts?

The appeals concerned whether exchange differences on foreign currency loans for revenue purposes are deductible in the year of fluctuation or repayment, and whether the actual cost of imported assets should be adjusted for exchange fluctuations pending payment. The assessee claimed unrealized foreign exchange loss as a deduction.

What were the issues?

The key issues were the deductibility of unrealized foreign exchange losses on revenue items and the adjustment of actual cost of fixed assets for exchange rate fluctuations.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 28,Section 29,Section 145,Section 43(1),Section 43A

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Cases cited in this judgment(6)Show list

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1 IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURI ICTION CIVIL APPEAL No. 2206 OF 2009 (arising out of S.L.P.(C) No. 593 of 2008)

Commissioner of Income Tax, Delhi … Appellant (s) versus M/s Woodward Governor India P. Ltd. … Respondent(s) with CIVIL APPEAL No. 2214 OF 2009 (arising out of S.L.P.(C) No. 7632 of 2008)

Commissioner of Income Tax, Delhi … Appellant (s) versus M/s Honda Siel Power Products Ltd. … Respondent(s) with Civil Appeal No. 2212 /09 @ SLP (C) No. 4708/08 Civil Appeal No. 2207/09 @ SLP (C) No. 18967/08 Civil Appeal No. 2213/09 @ SLP (C) No. 6911/08 Civil Appeal No. 2226 /09 @ SLP (C) No. 6321/09 Civil Appeal No. 2215/09 @ SLP (C) No. 24601/08 Civil Appeal No. 2210/09 @ SLP (C) No. 2159/09 Civil Appeal No. 2235/09 @ SLP (C) No. 25893/08 Civil Appeal No. 2208/09 @ SLP (C) No. 1300/09 Civil Appeal No. 2209/09 @ SLP (C) No. 1297/09 Civil Appeal No. 2211/09 @ SLP (C) No. 850/09 Civil Appeal No. 2216/09 @ SLP (C) No. 4752/09 Civil Appeal No. 2217/09 @ SLP (C) No. 8924/08 Civil Appeal No. 2218/09 @ SLP (C) No. 9819/08 Civil Appeal No. 2219/09 @ SLP (C) No. 14194/08 Civil Appe

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