Section 43A — the law in short
What the courts have decided on section 43A, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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CIT v Woodward Governor India P Ltd
Supreme CourtHelps taxpayerValidity unconfirmed
I restated my foreign currency creditors at the closing rate and debited an unrealised loss. Can the AO throw it out as a contingent liability?
No. Under the mercantile system, the loss on restating foreign currency monetary items at the balance sheet date is an item of expenditure under s.37(1), and the word 'expenditure' is wide enough to cover a loss that has not gone out of the assessee's pocket. Section 43A is a separate regime that applies only to an asset acquired from a country outside India, and after its substitution by the Finance Act 2002 it operates only at the time of actual payment.
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Honda Siel Power Products Ltd v CIT
Supreme CourtHelps taxpayer
The Tribunal decided against me without dealing with a coordinate bench decision I had actually filed in the paper book. Can it recall that order under section 254(2), or is that a review it cannot do?
It can. The Supreme Court held that where a coordinate bench decision was placed before the Tribunal and the Tribunal overlooked it, the resulting order carries a manifest error and section 254(2) permits the Tribunal to set it right. The purpose of the sub-section is that no party, assessee or Department, should suffer because of a mistake by the Tribunal. That is atonement for the Tribunal's own error, not the exercise of an inherent power of review, and the High Court was wrong to strike the rectification down as a disguised review.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.