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2019 (12) TMI 974 - ITAT KOLKATATP Adjustment - ALP adjustment in respect of assessee’s corporate guarantee provided to its overseas associate enterprise (AE) - HELD THAT:- CIT(A) has followed his detailed discussion in assessment years 2007-08, 2009-10 and 2010-11 in assessee’s case itself deleting identical “ALP” adjustment on the ground that a corporate guarantee does not amount to an international transaction in view of various judicial precedents i.e. Bharti Airtel Ltd. Vs. Addl. CIT [2014 (3) TMI 495 - ITAT DELHI] , M/s Videocon Industries Ltd. vs. ACIT [2015 (2) TMI 631 - ITAT MUMBAI] have also taken note of corresponding amendment in sec. 92B by way of explanation vide Finance Act, 2012 w.r.e.f 01.04.2002. We thus affirm the CIT(A)’s findings going by the very analogy & reject the Revenue’s instant first substantive grievance. Addition u/s 14A r.w.s. 8D as well as consequential u/s 115JB computation - HELD THAT:- We notice herein as well hon'ble jurisdictional high court’s decision in CIT vs. Ashika Global Securities Ltd [2018 (7) TMI 1425 - CALCUTTA HIGH COURT] holds that the impugned disallowance does not apply in absence of any exempt income. The same takes care of both the foregoing limbs of the impugned disallowance since the latter aspect of MAT computation has no legs to stand. This tribunal’s decision in VIREET INVESTMENT (P.) LTD. [2017 (6) TMI 1124 - ITAT DELHI] has also settled the law that sec. 115JB MAT does not apply in case of sec. 14A disallowance. The Revenue fails in its second substantive grievance as well. Disallowance of foreign exchange loss - HELD THAT:- there is no dispute on facts so far as all the corresponding items of the impugned foreign exchange loss are concerned. The Revenue’s twin arguments, inter alia, are that Assessing Officer had rightly declined the impugned foreign exchange loss on the ground that neither there was any business exigency involved in cancellation of the assessee’s forward contracts involving net loss of ₹51,77,406/- nor the sum of ₹74,39,71,483/- on account of revaluation; PCFC and ECB i.e. pre-shipment in foreign currency and external commercial borrowings; respectively could be taken as revenue items u/s 37(1) being notional capital loss(es). We see no reason to accept either of Revenue’s twin arguments. Hon'ble apex court’s decision in S.A Builders Ltd. vs. Commissioner of Income Tax [2006 (12) TMI 82 - SUPREME COURT] has settled the law that the department cannot claim itself to be put in arm cheker of the businessman or the board of directors to decide as to in what manner a particular business is to be run. Taxpayer has also placed on record its bank advice regarding cancellation of forward contracts, accounting standards AS-11 prescribed by the ICAI stipulating that effect of exchange rate different in instances involving unsettled or unsecured transactions of foreign exchange during the relevant accounting period have to be recorded in the books. Case law i.e. DCIT vs. Bank of Bahrain and Kuwait [2010 (8) TMI 578 - ITAT, MUMBAI] holds that such losses are allowable u/s 37(1) of the Act. We hold in this factual backdrop that the CIT(A) has rightly deleted the impugned former loss figure disallowance. Repayment / revaluation of foreign currency “PCFC” loan - HELD THAT:- The assessee admittedly recognized its revaluation loss qua its “PCFC” loan which had been availed exclusively for export import business. The relevant bank records to this effect forming part of case file suggests that the same was meant for importing coking coal and export of metcok only. There is further no indication that the impugned loans from M/s Standard Chattered Bank and M/s Yes Bank PCFC accounts had been availed for acquiring any capital asset - foreign exchange loss on account of revaluation of business loans in foreign currency deserve to be treated as revenue items allowable u/s 37 of the Act since incurred wholly and exclusively for the purpose of the assessee’s business. - Decided against revenue.
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