ITAT Ahmedabad Remands Depreciation Claim on Capitalized Forex Loss for Fresh Evidentiary Verification
In a recent judicial determination, the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, addressed a critical issue concerning the capitalization of foreign exchange fluctuation losses and the subsequent claim for depreciation. The case, Amneal Pharmaceuticals Pvt. Ltd. Vs DCIT, highlights the indispensable requirement of robust documentary evidence when an assessee seeks to adjust the actual cost of assets based on currency fluctuations.
The Tribunal's order, dated 12/10/2026, pertaining to Assessment Year (AY) 2018-19, serves as a vital reminder that reliance on judicial precedents cannot substitute the fundamental need for factual proof linking foreign currency borrowings to specific asset acquisitions.
Background of the Dispute
The core of the litigation revolved around a substantial claim made by the assessee for additional depreciation. The assessee sought a deduction amounting to Rs. 1,34,07,372. This claim was directly consequential to the proposed capitalization of a realized foreign exchange fluctuation loss quantified at Rs. 5,63,84,469.
According to the submissions made by the assessee, this significant foreign exchange loss was realized during the Financial Year (FY) 2017-18. However, the assessee contended that the loss pertained to a period prior to 1 April 2016 and was specifically related to domestic assets.
A critical procedural aspect of this case was that the assessee had not incorporated this depreciation claim in their original return of income. Instead, the claim was introduced later during the assessment proceedings via a written submission dated 05-03-2021. The Assessing Officer (AO) finalized the assessment based on the originally returned income, effectively ignoring the newly raised claim, which prompted the assessee to escalate the matter to the Commissioner of Income Tax (Appeals) [CIT(A)].