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2018 (8) TMI 2085 - AT - Income TaxBogus purchases - addition being 30% of purchases and allowing 70% of the purchase cost - HELD THAT:- As decided in own case a.y. 2008-09 wherein on the identical facts and circumstances the order passed by the learned CIT (Appeals) was upheld wherein the deletion of the disallowance to the extent of 70% and confirmation of the disallowance to the extent of 30% was upheld. The Co-ordinate Bench has considered the decision of the Hon’ble Bombay High Court also [2013 (1) TMI 88 - BOMBAY HIGH COURT] as pressed before us by the learned Departmental Representative and the decision of the Hon’ble Delhi High Court [2001 (3) TMI 68 - DELHI HIGH COURT] as pressed by the learned DR. In that year the purchases from this party was also involved. In view of this, we do not find any reason to interfere with the order of the learned CIT (Appeals). Accordingly ground No. 1 of the appeal of the assessee and ground No. 2 of the appeal of the Revenue are dismissed. Interest expenditure - assessee submitted that the funds were utilized out of the recoveries made by the assessee from its business and, therefore, the borrowed funds were not used - main contention of the assessee is that assessee has accruals before investment made in the land - HELD THAT:- The argument of the assessee is not accepted, because the profit accrues to the assessee at the end of the accounting year when the final accounts are made. It does not accrue on day-to-day basis. Further the assessee could not show the interest free funds available with him at the time of purchase of land and, therefore, we do not find any infirmity in the order of the learned CIT (Appeals) in confirming the addition of Rs.1,94,888/- on account of interest expenditure. Accordingly, ground No. 2 of the appeal of assessee is dismissed. Disallowance u/s14A read with Rule 8D(2)(3) - HELD THAT:- As for assessment year 2008-09 the Co-ordinate Bench has deleted the disallowance on account of interest, but there is no reference of the disallowance with respect to the expenditure. As there is no claim by the assessee that no such expenditure has been incurred by the assessee, we do not find any merit in the appeal of the assessee with respect to the disallowance confirmed by the learned CIT (Appeals) of Rs.7,500/-. The disallowance is in accordance with the provisions of section 14A of the Act. Accordingly ground No. 3 of the appeal of the assessee is dismissed. Loss due to foreign exchange fluctuation - claim of the AO is that such loss is on account of contingent liability and is not allowable under section 37(1) - HELD THAT:- As at the end of the year the assessee restated the advances received for foreign exchange for supply of goods from one party. The assessee maintains its books of account on mercantile basis. As on the last day of the account, such advances are required to be restated in terms of the accounting standard 11 issued by the ICAI and further compulsorily to be followed by the company, the assessee recorded the foreign exchange fluctuation, which resulted into loss. The loss was debited to the profit and loss account and claimed as deduction. The foreign exchange fluctuation is on account of advance received for supply of goods, which is revenue in nature and as it is a trade advance, therefore, according to us, no error can be found in the order of the learned CIT (Appeals) in allowing the claim of the assessee based on the decision of the Hon’ble Supreme Court [2009 (4) TMI 4 - SUPREME COURT]
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