I-T dept moves SC against Turner International India

The Income-Tax Department has moved the Supreme Court against the decision of Turner International India Ltd to claim deduction against tax liability on account of losses due to foreign exchange rate fluctuations. Raising the issue in a petition filed against Turner International India Ltd, the Department submitted that the matter had wider ramifications as it would result in a loss of revenue to the state exchequer. A bench headed by Justice S H Kapadia has kept the matter with a similar petition pending before it. According to the Department, it had asked Turner to explain as to whether losses were on the revenue or the capital account after it found that the company had claimed deduction against exchange rate fluctuation hits (on foreign loans) of more than Rs 1.68 crore in February 2004. However, the tax department had disallowed the deduction claim, turning down Turner's plea that such losses were allowed as deduction as they were incurred in the ordinary course of business and were incidental to it. Terming the assessee's plea as misleading, the I-T authorities held the company had made additions to fixed assets worth Rs 14.37 crore, which were largely from loans taken from foreign parties. – www.economictimes.indiatimes.com