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2010 (2) TMI 914 - AT - Income TaxDisallowance of foreign exchange loss - claim of foreign exchange loss on revaluation of loan to subsidiary on the basis of the revised computation - Held that:- Advance was given by the assessee to subsidiary company for trading purpose. In such a case loss on account of foreign exchange fluctuation has to be dealt with in accordance with the decision of Woodword Governor (2007 (4) TMI 118 - HIGH COURT , DELHI) . As per the ratio emanating from this case, loss on account of foreign exchange fluctuation is not a notional loss and if the loss is on revenue a/c it has to be allowed as revenue loss - allowance as deduction under section 37 - no infirmity in the CIT(A)'s orders on this issue. Addition made by the AO by invoking provisions contained in section 92CA - assessee had given loans and advances to M/s PPML its wholly subsidiary without charging any interest - Held that:- Section 92CA which provides for reference to TPO postulates that when AO considered it necessary or expedient so to do, he may, with the previous approval of the Commissioner, refer the matter to the TPO hence the first plank of the assessee's argument and the CIT(A) reliance on the same that AO cannot compute the arms length price without referring the matter to the TPO is not sustainable - as decided in Kapurchand Shrimal (1981 (8) TMI 2 - SUPREME Court) the appellate authority has jurisdiction as well as the duty to correct the errors in the proceedings under appeal - issue remited to the files of the CIT(A) to consider the issue afresh after granting adequate opportunity to the assessee of being heard. Addition made on account of alleged understatement of sale of bullion - Held that:- AO on remand has himself accepted that the Delhi Bullion Association rates are wholesale rates and are not applicable to the case of the assessee. In any case, it is not the case of the AO that he has come across any material showing that the assessee is receiving something over and above that entered into the books of accounts maintained. All the requisite books and records are maintained and the same are duly audited and no specific defect in the same has been pointed out. Moreover, CIT(A) rightly observed that the lower rates of the Delhi Bullion Association are quite comparable with that shown by the assessee - therefore, unless AO on the basis of the material before him was able to come to the conclusion that the assessee has really made profits in the transactions it was not permissible for him to add back the assessee's return and fictional income. Disallowance of the business promotion expenses - Held that:- As AO has made specific reference to the vouchers wherein various hotels bills of dinning etc. including that through credit cards were mentioned. AO observed that some of the expenditure related to the other concerned, some were personal expenditure; ticket for Ms. Prachi Jindal; visa charges of Mrs. A. Jindal; ticket for Ms. Manju Aggarwal; payment to Ladies Club etc. AO has specifically pointed out that these expenditures were not related to the business of the assessee. Assessee did not rebut these findings by leading any cogent material to show that these expenses in fact related to the business of the assessee - no infirmity in the order o the ld. CIT(A) and accordingly upheld Disallowance stocks written off by the appellant company - silver bars are re-weighed and sometimes there is weight loss due to breakage of corners in bricks and during the concerned year total loss was 14.28 kg which was only 0.010% - explanation was not accepted by the AO - Held that:- AO has not made any verification as to whether in this type of trade a negligible amount of breakage is prevalent or not. He has just opined that this represents sale made by the assessee outside the books – Thus without any material of sales outside the books of accounts and without any finding as to whether in the line of business any miniscule percentage of breakage are allowed or not, the inference drawn by the revenue cannot be sustained. orders of the authorities set aside and issue decided in favour of the assessee
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