CIT v. Woodward Governor India Pvt. Ltd.

312 ITR 254Supreme Court of India2009#45 most cited

What is CIT v. Woodward Governor India Pvt. Ltd. authority for?

Foreign exchange fluctuations, whether gains or losses, are inextricably linked to the underlying business transaction and must be accounted for under the mercantile system. The Supreme Court also affirmed the standard accounting principle of valuing stock at cost or net realisable value, whichever is lower.

968

judgments rely on this decision, according to BharatTax’s citation analysis of 372,010 Indian tax judgments — from 2008 to 2026.

Also referred to as

CIT v. Woodward Governor · 312 ITR 254 · Section 37(1) · Section 43A · Section 145(3) · foreign exchange fluctuation · mercantile system of accounting · stock valuation · closing stock · revenue expenditure

Also reported as

21 DTR 106

Sections most often in play

Section 37(1)Section 143(3)Section 14ASection 115JBSection 147Section 142(1)Section 43(5)Section 40(a)(ia)
Read the full judgment

Issues it is cited on

section 43asection 40(a)(i)mercantile system of accountingbook profitssection 37(1)section 115jrevenue expendituresection 43capital expendituresection 40(a)section 115jbsection 32

Judgments citing CIT v. Woodward Governor India Pvt. Ltd.

Samsung India Electronics Pvt. Ltd., Gurgaon vs. Addl. CIT, New Delhi

ITA 1567/DEL/2014[2009-10]Status: DisposedITAT Delhi04 Oct 2019AY 2009-10

Bench: Shri Amit Shukla & Shri Prashant Maharishi

For Appellant: S/Shri Himanshu Sinha, ShriFor Respondent: Shri H.K. Choudhary, CIT-D.R

…accounting consistently followed by it with respect to the effects of changes in foreign exchange rates. The Ld. Counsel stated that this issue is now well settled in view of the Hon’ble Supreme Court decisions of CIT v. Woodward Governor India Private Ltd. 312 ITR 254 (SC) and Bharat Earth Movers v CIT: [2000] 245 ITR 428(SC). He further submitted that in the assessee’s own case in ITA no. 6508/Del/2012 this Tribunal has examined this issue and given a finding that such MTM losses are allowable u/s 37 of the Act. 142. We have heard both the sides and examined the orders of the lower authorities. We observe th…

Samsung India Electronics Pvt. Ltd., Gurgaon vs. Addl. CIT, New Delhi

ITA 52/DEL/2013[2008-09]Status: DisposedITAT Delhi04 Oct 2019AY 2008-09

Bench: Shri Amit Shukla & Shri Prashant Maharishi

For Appellant: S/Shri Himanshu Sinha, ShriFor Respondent: Shri H.K. Choudhary, CIT-D.R

…accounting consistently followed by it with respect to the effects of changes in foreign exchange rates. The Ld. Counsel stated that this issue is now well settled in view of the Hon’ble Supreme Court decisions of CIT v. Woodward Governor India Private Ltd. 312 ITR 254 (SC) and Bharat Earth Movers v CIT: [2000] 245 ITR 428(SC). He further submitted that in the assessee’s own case in ITA no. 6508/Del/2012 this Tribunal has examined this issue and given a finding that such MTM losses are allowable u/s 37 of the Act. 142. We have heard both the sides and examined the orders of the lower authorities. We observe th…

Sansung India Electronics Pvt. Ltd., Gurgaon vs. Addl. CIT, Special Range- 8, New Delhi

ITA 2511/DEL/2018[2011-12]Status: DisposedITAT Delhi04 Oct 2019AY 2011-12

Bench: Shri Amit Shukla & Shri Prashant Maharishi

For Appellant: S/Shri Himanshu Sinha, ShriFor Respondent: Shri H.K. Choudhary, CIT-D.R

…accounting consistently followed by it with respect to the effects of changes in foreign exchange rates. The Ld. Counsel stated that this issue is now well settled in view of the Hon’ble Supreme Court decisions of CIT v. Woodward Governor India Private Ltd. 312 ITR 254 (SC) and Bharat Earth Movers v CIT: [2000] 245 ITR 428(SC). He further submitted that in the assessee’s own case in ITA no. 6508/Del/2012 this Tribunal has examined this issue and given a finding that such MTM losses are allowable u/s 37 of the Act. 142. We have heard both the sides and examined the orders of the lower authorities. We observe th…

Samsung India Electronics Pvt. Ltd., Gurgaon vs. JCIT, New Delhi

ITA 868/DEL/2016[2011-12]Status: DisposedITAT Delhi04 Oct 2019AY 2011-12

Bench: Shri Amit Shukla & Shri Prashant Maharishi

For Appellant: S/Shri Himanshu Sinha, ShriFor Respondent: Shri H.K. Choudhary, CIT-D.R

…accounting consistently followed by it with respect to the effects of changes in foreign exchange rates. The Ld. Counsel stated that this issue is now well settled in view of the Hon’ble Supreme Court decisions of CIT v. Woodward Governor India Private Ltd. 312 ITR 254 (SC) and Bharat Earth Movers v CIT: [2000] 245 ITR 428(SC). He further submitted that in the assessee’s own case in ITA no. 6508/Del/2012 this Tribunal has examined this issue and given a finding that such MTM losses are allowable u/s 37 of the Act. 142. We have heard both the sides and examined the orders of the lower authorities. We observe th…

Samsung India Electronics Pvt. Ltd., Gurgaon vs. ACIT, New Delhi

ITA 6741/DEL/2014[2010-11]Status: DisposedITAT Delhi04 Oct 2019AY 2010-11

Bench: Shri Amit Shukla & Shri Prashant Maharishi

For Appellant: S/Shri Himanshu Sinha, ShriFor Respondent: Shri H.K. Choudhary, CIT-D.R

…accounting consistently followed by it with respect to the effects of changes in foreign exchange rates. The Ld. Counsel stated that this issue is now well settled in view of the Hon’ble Supreme Court decisions of CIT v. Woodward Governor India Private Ltd. 312 ITR 254 (SC) and Bharat Earth Movers v CIT: [2000] 245 ITR 428(SC). He further submitted that in the assessee’s own case in ITA no. 6508/Del/2012 this Tribunal has examined this issue and given a finding that such MTM losses are allowable u/s 37 of the Act. 142. We have heard both the sides and examined the orders of the lower authorities. We observe th…

ACIT, New Delhi vs. M/S Samsung India Electronics Ltd., Gurgaon

ITA 3410/DEL/2012[2005-06]Status: DisposedITAT Delhi04 Oct 2019AY 2005-06

Bench: Shri Amit Shukla & Shri Prashant Maharishi

For Appellant: S/Shri Himanshu Sinha, ShriFor Respondent: Shri H.K. Choudhary, CIT-D.R

…accounting consistently followed by it with respect to the effects of changes in foreign exchange rates. The Ld. Counsel stated that this issue is now well settled in view of the Hon’ble Supreme Court decisions of CIT v. Woodward Governor India Private Ltd. 312 ITR 254 (SC) and Bharat Earth Movers v CIT: [2000] 245 ITR 428(SC). He further submitted that in the assessee’s own case in ITA no. 6508/Del/2012 this Tribunal has examined this issue and given a finding that such MTM losses are allowable u/s 37 of the Act. 142. We have heard both the sides and examined the orders of the lower authorities. We observe th…

Samsung India Electronics Pvt. Ltd., Gurgaon vs. Addl. CIT, New Delhi

ITA 3248/DEL/2012[2005-06]Status: DisposedITAT Delhi04 Oct 2019AY 2005-06

Bench: Shri Amit Shukla & Shri Prashant Maharishi

For Appellant: S/Shri Himanshu Sinha, ShriFor Respondent: Shri H.K. Choudhary, CIT-D.R

…accounting consistently followed by it with respect to the effects of changes in foreign exchange rates. The Ld. Counsel stated that this issue is now well settled in view of the Hon’ble Supreme Court decisions of CIT v. Woodward Governor India Private Ltd. 312 ITR 254 (SC) and Bharat Earth Movers v CIT: [2000] 245 ITR 428(SC). He further submitted that in the assessee’s own case in ITA no. 6508/Del/2012 this Tribunal has examined this issue and given a finding that such MTM losses are allowable u/s 37 of the Act. 142. We have heard both the sides and examined the orders of the lower authorities. We observe th…

Samsung India Electronics Pvt. Ltd., Gurgaon vs. Addl. CIT, New Delhi

ITA 5315/DEL/2011[2007-08]Status: DisposedITAT Delhi04 Oct 2019AY 2007-08

Bench: Shri Amit Shukla & Shri Prashant Maharishi

For Appellant: S/Shri Himanshu Sinha, ShriFor Respondent: Shri H.K. Choudhary, CIT-D.R

…accounting consistently followed by it with respect to the effects of changes in foreign exchange rates. The Ld. Counsel stated that this issue is now well settled in view of the Hon’ble Supreme Court decisions of CIT v. Woodward Governor India Private Ltd. 312 ITR 254 (SC) and Bharat Earth Movers v CIT: [2000] 245 ITR 428(SC). He further submitted that in the assessee’s own case in ITA no. 6508/Del/2012 this Tribunal has examined this issue and given a finding that such MTM losses are allowable u/s 37 of the Act. 142. We have heard both the sides and examined the orders of the lower authorities. We observe th…

Tekla India P.Ltd, Navi Mumbai vs. ITO 10(3)(4), Mumbai

In the result, appeal of the assessee for assessment year 2009-10 is allowed as above

ITA 7031/MUM/2014[2010-11]Status: DisposedITAT Mumbai06 Sept 2019AY 2010-11

Bench: Shri G.S. Pannu, Vice- & Shri Sandeep Gosain

For Appellant: Shri Divesh ChawlaFor Respondent: Shri M.V. Rajguru
Section 143(3)Section 195(2)Section 30Section 40Section 9(1)(vi)

…of Rs 6,936,000 towards foreign exchange loss on account of restatement of trade receivables/ payables on the balance sheet date; 7. erred in holding that the judgment of the Honorable Supreme Court in case of CIT vs. Woodward Governor India Private Limited (312 ITR 254) decided on loss in fluctuation of foreign exchange on capital account and not on revenue transactions; 8. erred in treating foreign exchange loss as contingent loss and hence not an allowable expenditure as per Section 30 to 37 of the Act;” 4. The first substantive dispute is with regard to the addition of Rs.7,03,09,000/- made to the returned…

Tekla India P.Ltd, Navi Mumbai vs. ITO 10(3)(4), Mumbai

In the result, appeal of the assessee for assessment year 2009-10 is allowed as above

ITA 3079/MUM/2013[2009-10]Status: DisposedITAT Mumbai06 Sept 2019AY 2009-10

Bench: Shri G.S. Pannu, Vice- & Shri Sandeep Gosain

For Appellant: Shri Divesh ChawlaFor Respondent: Shri M.V. Rajguru
Section 143(3)Section 195(2)Section 30Section 40Section 9(1)(vi)

…of Rs 6,936,000 towards foreign exchange loss on account of restatement of trade receivables/ payables on the balance sheet date; 7. erred in holding that the judgment of the Honorable Supreme Court in case of CIT vs. Woodward Governor India Private Limited (312 ITR 254) decided on loss in fluctuation of foreign exchange on capital account and not on revenue transactions; 8. erred in treating foreign exchange loss as contingent loss and hence not an allowable expenditure as per Section 30 to 37 of the Act;” 4. The first substantive dispute is with regard to the addition of Rs.7,03,09,000/- made to the returned…

Ranbaxy Laboratories Ltd., Delhi vs. DCIT, New Delhi

In the result, the appeal of the assessee in IT(TP) A No

ITA 781/DEL/2015[2010-11]Status: DisposedITAT Ahmedabad05 Sept 2019AY 2010-11

Bench: Justice P.P. Bhatt & Shri Waseem Ahmed1. आयकर अपील सं./It(Tp)A No. 1782/Del/2014 2. आयकर अपील सं./It(Tp)A No. 781/Del/2015 ("नधा"रण वष"/Assessment Years : 2009-10 & 2010-11) Ranbaxy Laboratories Ltd. The Dcit बनाम/ 12Th Floor, Devika Tower Circle-21(1), New Vs. 6, Nehru Place, New Delhi Delhi/ 110 019 Addl.Cit Range-15 New Delhi "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaacr0127N .. (अपीलाथ"/Appellant) (""यथ" / Respondent) अपीलाथ" ओर से/ Appellant By : Shri S.N.Soparkar, Shri Vartik Chokshi, Ms.Urvashi Shodhan & Shri P.Shah, Ars ""यथ" क" ओर से/Respondent By: Shri Mahesh Shah, Cit-Dr

For Appellant: Shri S.N.Soparkar, Shri Vartik ChokshiFor Respondent: Shri Mahesh Shah, CIT-DR
Section 143(3)Section 144CSection 92D

…he special bench of tribunal in case of Biocon Ltd. (supra) as under :— "9.2.8 Though discount on premium is nothing but an expenditure u/s 37(1), it is worth noting that the Hon'ble Supreme Court in the case of CIT v. Woodward Governor India (P.) Ltd. [2009] 312 ITR 254/179 Taxman 326 has gone to the extent of covering "loss" in certain circumstances within the purview of "expenditure" as used in section in 37(1). In that case, the assessee incurred additional liability due to exchange rate fluctuation on a revenue account. The Assessing Officer did not allow deduction u/s 37. When the matter finally reached the…

M/S. Ranbaxy Laboratories Limited, New Delhi vs. Addl. CIT, New Delhi

In the result, the appeal of the assessee in IT(TP) A No

ITA 1782/DEL/2014[2009-10]Status: DisposedITAT Ahmedabad05 Sept 2019AY 2009-10

Bench: Justice P.P. Bhatt & Shri Waseem Ahmed1. आयकर अपील सं./It(Tp)A No. 1782/Del/2014 2. आयकर अपील सं./It(Tp)A No. 781/Del/2015 ("नधा"रण वष"/Assessment Years : 2009-10 & 2010-11) Ranbaxy Laboratories Ltd. The Dcit बनाम/ 12Th Floor, Devika Tower Circle-21(1), New Vs. 6, Nehru Place, New Delhi Delhi/ 110 019 Addl.Cit Range-15 New Delhi "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaacr0127N .. (अपीलाथ"/Appellant) (""यथ" / Respondent) अपीलाथ" ओर से/ Appellant By : Shri S.N.Soparkar, Shri Vartik Chokshi, Ms.Urvashi Shodhan & Shri P.Shah, Ars ""यथ" क" ओर से/Respondent By: Shri Mahesh Shah, Cit-Dr

For Appellant: Shri S.N.Soparkar, Shri Vartik ChokshiFor Respondent: Shri Mahesh Shah, CIT-DR
Section 143(3)Section 144CSection 92D

…he special bench of tribunal in case of Biocon Ltd. (supra) as under :— "9.2.8 Though discount on premium is nothing but an expenditure u/s 37(1), it is worth noting that the Hon'ble Supreme Court in the case of CIT v. Woodward Governor India (P.) Ltd. [2009] 312 ITR 254/179 Taxman 326 has gone to the extent of covering "loss" in certain circumstances within the purview of "expenditure" as used in section in 37(1). In that case, the assessee incurred additional liability due to exchange rate fluctuation on a revenue account. The Assessing Officer did not allow deduction u/s 37. When the matter finally reached the…

M/S Ginni Filaments Ltd., Mathura vs. A.C.I.T., Range-3, Mathura

In the result, the appeal of the assessee is partly allowed

ITA 173/AGR/2013[2008-09]Status: DisposedITAT Agra02 Sept 2019AY 2008-09

Bench: : Shri Laliet Kumar & Dr. Mitha Lal Meena

Section 234BSection 44A

…cer. 12. Books of Accounts maintained in regular course of business cannot be rejected unless there are strong and sufficient reasons to indicate that they are unreliable. Hon’ble Supreme Court in the case of Woodward Governor India Private Limited [(2009) 312 ITR 254 SC] = [TS-40-SC-2009-O] held that “...Accounts regularly maintained in the course of business are to be taken as correct unless there are strong and sufficient reasons to indicate that they are unreliable...” 12.1 The primary condition for rejecting the book results as laid down under section 145 of the Income-tax Act, 1961 is that the ld. AO…

Pharmabase India P.Ltd, Mumbai vs. DCIT 13(1)(2), Mumbai

In the result, appeal of the assessee is allowed

ITA 7374/MUM/2016[2012-13]Status: DisposedITAT Mumbai07 Aug 2019AY 2012-13

Bench: Shri M.Balaganesh, Am & Shri Amarjit Singh, Jm M/S. Pharmabase India P. Ltd. Vs. Dy. Commissioner Of C/O. Hiten & Jiten Cas. Income Tax 10, Vasant Vihar Chsl Dcit-13(1)(2) 2Nd Floor, Plot No.17, Mumbai New Nagardsas Cross Road Andheri East Mumbai – 400 069 Pan/Gir No.Aaacp8321N (Appellant) .. (Respondent)

Section 143(3)Section 211Section 37(1)Section 43A

…there is no change in facts when compared 5 M/s. Pharmabase India Pvt. Ltd., to earlier years. Even otherwise, we find that this issue is also squarely covered by the decision of Hon’ble Supreme Court in the case of Woodward Governor India Ltd., reported in 312 ITR 254 wherein, among other aspects, it was also held that compliance to AS-11 of ICAI is mandatory for all companies registered in India. 3.2. We also find that the ECB has been utilized for purchase of capital assets in India by the assessee company. Thereafter, any change in the ECB value due to exchange fluctuation would not alter the cost of fixed…

ACIT, New Delhi vs. M/S Theolia Wind Power Pvt. Ltd., New Delhi

ITA 503/DEL/2012[2008-09]Status: DisposedITAT Delhi29 Jul 2019AY 2008-09

Bench: Shri R.K. Panda & Shri Kuldip Singh

For Appellant: Shri Anil Kumar Chopra, FCAFor Respondent: Smt. Naina Soin Kapil, Senior DR
Section 14A

…2) 25 taxmann.com 141 9 ITA No.503/Del./2012 ITA No.134/Del./2014 (Mum.), DCIT vs. Af-Taab Investment Co. Ltd. ITA No.6573/Mum/2014 dated 16.11.2017, Navin Bharat Industries Ltd. vs. DCIT (2004) 90 ITD 1 (Mum.)(TM) and Woodward Governor India P. Ltd. vs. CIT 312 ITR 254 (SC). Ld. AR for the assessee further contended that exchange fluctuation loss is allowable as business loss and relied upon the cases of Oil & Natural Gas Corporation Ltd vs. CIT 322 ITR 180 (SC), CIT vs. Woodward Governor India P. Ltd. 312 ITR 254 (SC), Taiko Chander Nagar Chemicals P. Ltd. 311 ITR 475, Diamonds ‘R’ US vs. DCIT (2011) 9 taxma…

M/S. Theolia Wind Power Pvt. Ltd., New Delhi vs. ACIT, New Delhi

ITA 134/DEL/2014[2009-10]Status: DisposedITAT Delhi29 Jul 2019AY 2009-10

Bench: Shri R.K. Panda & Shri Kuldip Singh

For Appellant: Shri Anil Kumar Chopra, FCAFor Respondent: Smt. Naina Soin Kapil, Senior DR
Section 14A

…2) 25 taxmann.com 141 9 ITA No.503/Del./2012 ITA No.134/Del./2014 (Mum.), DCIT vs. Af-Taab Investment Co. Ltd. ITA No.6573/Mum/2014 dated 16.11.2017, Navin Bharat Industries Ltd. vs. DCIT (2004) 90 ITD 1 (Mum.)(TM) and Woodward Governor India P. Ltd. vs. CIT 312 ITR 254 (SC). Ld. AR for the assessee further contended that exchange fluctuation loss is allowable as business loss and relied upon the cases of Oil & Natural Gas Corporation Ltd vs. CIT 322 ITR 180 (SC), CIT vs. Woodward Governor India P. Ltd. 312 ITR 254 (SC), Taiko Chander Nagar Chemicals P. Ltd. 311 ITR 475, Diamonds ‘R’ US vs. DCIT (2011) 9 taxma…

Icici Securities Ltd ( Earlier Known As Icici Brokerage Services Ltd), Mumbai vs. Addl CIT RG 4(1), Mumbai

Appeal of the assessee is allowed and that of department is dismissed, as above

ITA 5789/MUM/2010[2006-07]Status: DisposedITAT Mumbai26 Jul 2019AY 2006-07

Bench: Shri G.S. Pannu & Shri Ram Lal Negi: A.Y : 2006-07

For Appellant: Ms. Aarti VissanjiFor Respondent: Shri Neil Philip
Section 10(34)Section 143(3)Section 14ASection 234BSection 40A(2)(b)

…Ld. CIT(A) erred in deleting the addition of Rs. 65,660/- made in respect of mark to market losses of open interest in derivative transactions at the end of the year relying upon the Supreme Court of India in the case of CIT vs Woodward Governor India P. Ltd. 312 ITR 254 (SC). 5. On the facts and in the circumstances of the case, the impugned order of the Ld. CIT(A) is contrary to law to be set aside and that of the Assessing Officer be restored.” 31. The first Ground raised by the Revenue in its appeal pertains to deletion of addition of Depreciation of Rs. 1,23,00,800/- allowed in earlier years on BSE Card un…

DCIT, Circle- 62(1), New Delhi vs. L&T Sucg Jv CC27, New Delhi

In the result, appeal of the Department is dismissed

ITA 4457/DEL/2018[2014-15]Status: DisposedITAT Delhi10 Jul 2019AY 2014-15

Bench: Shri Bhavnesh Saini & Shri O.P. Kant

For Appellant: Shri Saurabh Goel, C.As And Shri Nirbhay MehtaFor Respondent: Shri J.K. Mishra, CIT-DR

…anding liability. In such a scenario, the fluctuation gain cannot be brought to tax in the hands of assessee being on account of capital transaction. He has also relied upon Judgment of Hon’ble Supreme Court in the case of CIT vs. Woodword Governor Pvt. Ltd., 312 ITR 254 (SC). 33. On the other hand Ld. D.R. relied upon the Orders of the authorities below and submitted that after Amendment of Section 43A w.e.f. 01.04.2003 provisions of 78 ITA.No.4351 & 4457/Del./2018 L & T SUCG JV CC 27, New Delhi. Section 43A are attracted only at the time of actual payment and do not apply to year end adjustment for exchange ra…

L&T Sucg Jv CC27, New Delhi vs. Addl.CIT, Range-62, New Delhi

In the result, appeal of the Department is dismissed

ITA 4351/DEL/2018[2014-15]Status: DisposedITAT Delhi10 Jul 2019AY 2014-15

Bench: Shri Bhavnesh Saini & Shri O.P. Kant

For Appellant: Shri Saurabh Goel, C.As And Shri Nirbhay MehtaFor Respondent: Shri J.K. Mishra, CIT-DR

…anding liability. In such a scenario, the fluctuation gain cannot be brought to tax in the hands of assessee being on account of capital transaction. He has also relied upon Judgment of Hon’ble Supreme Court in the case of CIT vs. Woodword Governor Pvt. Ltd., 312 ITR 254 (SC). 33. On the other hand Ld. D.R. relied upon the Orders of the authorities below and submitted that after Amendment of Section 43A w.e.f. 01.04.2003 provisions of 78 ITA.No.4351 & 4457/Del./2018 L & T SUCG JV CC 27, New Delhi. Section 43A are attracted only at the time of actual payment and do not apply to year end adjustment for exchange ra…

DCIT, Alappuzha vs. M/S Aceelerated Freeze Drying Co, Ltd, Alappuzha

In the result, the appeal of the Revenue is allowed and the appeal of the

ITA 714/COCH/2008[2002-03]Status: DisposedITAT Cochin28 Jun 2019AY 2002-03

Bench: S/Shri Chandra Poojari, Am & George George K., Jm

Section 143(3)Section 2Section 2(14)Section 42Section 50BSection 50B(1)

…ord to establish that the foreign currency transactions were undertaken on capital items. The Assessing Officer also had failed to undertake this exercise. The Hon'ble Supreme Court in the case of CIT Vs. Woodward Governor India Pvt. Ltd. reported in [2009] 312 ITR 254 (SC) had clearly held that the actual payment was not a condition precedent for making adjustment in respect of foreign currency transactions as the end of the closing year. We are therefore, unable to concur or agree with the view of the CIT(A), that liability could arise only when the contract would have matured, as such a stand is totally d…