GRANULES INDIA LIMITED,HYDERABAD vs. DCIT, CIRCLE-2(1), HYDERABAD

ITA 1289/HYD/2025Status: DisposedITAT Hyderabad13 March 2026AY 2010-11Bench: SHRI VIJAY PAL RAO, HON’BLE (Vice President), SHRI MANJUNATHA G. HON'BLE (Accountant Member)1 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that gains arising from foreign exchange fluctuations on ECB loans used for acquiring capital assets are capital in nature and cannot be claimed as revenue or allowed as a deduction under Section 10B. Similar reasoning applied to income from sale of scrap and insurance claims.

What were the facts?

The assessee claimed deduction under Section 10B for foreign exchange gains on an ECB loan used for plant and machinery. The Assessing Officer reopened the assessment and disallowed the deduction, treating the gain as capital in nature. The CIT(A) upheld this disallowance.

What were the issues?

Whether foreign exchange gains on ECB loans used for capital assets are eligible for deduction under Section 10B, and if the reopening of assessment was valid.

Which sections of the Income-tax Act were involved?

Section 10B,Section 147,Section 143(3),Section 271(1)(c)

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Income Tax Appellate Tribunal, HYDERABAD “B” BENCH, HYDERABAD

Before: SHRI VIJAY PAL RAO, HON’BLE & SHRI MANJUNATHA G. HON’BLE

For Appellant: Dr. Narendra Kumar Naik, CIT(DR)

PER MANJUNATHA G., A.M: This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals)-12, Hyderaba

The order continues below.

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