TMI Blog2015 (2) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee Addition being mark to market losses treating it as only notional and contingent - Held that:- As relying on the decision of DCIT vs. Bank of Bahrain and Kuwait (2010 (8) TMI 578 - ITAT, MUMBAI) to hold that the liabilities for foreign exchange was incurred during the normal course of assessee’s business and in fact the gain earned on such revaluation having been accepted and brought to tax in the respective years, there is no reason to arrive at a different conclusion in this year merely because there is a loss. Thus directing the AO to delete the addition - Decided in favour of assessee - I.T.A. No. 7013/Mum/2012 - - - Dated:- 13-2-2015 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER SHRI AMIT SHUKLA, JUDICIAL MEMBER For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the unsecured interest free loan of ₹ 106.93 crores was also there in the balance sheet. In so far as interest expenses are concerned, it was explained that they have been paid in respect of packing credit, post shipment credit and the interest has not been paid for funding the payments made for the purchase of the premises. The explanation of the assessee did not find any favour with the AO, who proceeded by computing proportionate disallowance on advance given to Bharat Diamond Bourse. The disallowance was computed at ₹ 19,95,375/-. The assessee carried the matter before Ld. CIT(A) but without any success. 3. Before us Ld. Counsel for the assessee submitted a detailed chart explaining its own source of fund. It is the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case we set aside the findings of Ld. CIT(A) and direct the AO to delete the addition of ₹ 19,95,375/-. Ground No.1 is allowed. 6. Ground No.2 relates to the confirmation of the addition made at ₹ 2,59,623/- being mark to market losses treating it as only notional and contingent. 7. While scrutinizing the return of income, the AO noticed that there are 65 unmatured export forward contracts as on 31/3/2008, out of which only 17 contracts show gain on account of M to M computation. All other contracts show loss. The net result comes to ₹ 2,59,623/-. The assessee was asked to explain its stand. It was explained that following the Accounting Standard AS-11, the assessee has recognized net gain in respect to mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Special Bench decision in the case of Bank of Bahrain Kuwait 5 ITR (Trib.) 301. Ld. Counsel also relied upon number of decisions of the Tribunal which have followed the decision of the Hon ble Supreme Court and Special Bench of the Tribunal. 9. Per contra, Ld. DR strongly supported the findings of the Revenue Authorities. 10. We have carefully perused the order of Ld. CIT(A) and the decisions brought to our notice. In our considered opinion and the understanding of the facts we find that the Revenue Authorities have proceeded on a wrong assumption of facts. We find that the decision of the Tribunal s Special Bench in the case of Bank of Bahrain Kuwait (supra) squarely apply on the facts of the case and also by the various judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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