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2021 (12) TMI 1400 - HC - Income TaxDeduction of marketed-to-market loss - unexpired/unmatured for forex derivative contracts - Whether instruction given by CBDT dated 23.03.2010 can have a retrospective effect thereby negativity the effect of the judgement? - AO held that fees receivable in foreign exchange have been duly hedged by way of taking forward contract and such loss claimed by the assessee is a notional loss and contingent in nature - mercantile system of accounting on regular basis and the loss was recognised in its books of accounts, which is deductible under Section 37[1] - HELD THAT:- As on perusal of the circular, we find that it is not a possible direction by the Board to the AO rather Board under law cannot issue any such possible direction as the settled legal principle. AO is an independent authority and none can dictate him as to how and in what manner he is to complete the assessment. Conscious of this legal position, the Board in the instruction dated 23.3.2010 had stated that the Assessing Officer may follow the guidelines given in the said instruction. This is one more indication to say that the Assessing Officer is not bound over the instruction given by the Board. Thus, the only contention of the revenue appears to be based upon instruction issued by the CBDT which cannot override a decision of the Hon’ble Supreme Court. Therefore, we are of the considered view that there is no error in the order passed by the Tribunal. That apart, it is rather doubtful as to whether such instruction given by CBDT dated 23.03.2010 can have a retrospective effect thereby negativity the effect of the judgement. Respondent pointed out that identical issue was considered in the case of Principal Commissioner of Income Tax vs. Suzlon Energy Ltd. [2018 (2) TMI 1789 - GUJARAT HIGH COURT] and the Court held that the decision of the Tribunal in so far as deleting the disallowance being notional loss on outstanding foreign derivative contracts was approved by holding that the decision is in-conformity with the decision of the Hon’ble Supreme Court in Woodward Governor India [P] Ltd. & Ors. [2009 (4) TMI 4 - SUPREME COURT]. The revenue had filed a Special Leave Petition in Special Leave which was dismissed by order [2020 (1) TMI 1505 - SC ORDER] dated 17.01.2020. In the case of the same assessee, namely Suzlon Energy Limited, the Hon’ble Supreme Court in Principal Commissioner of Income Tax vs. Suzlon Energy Ltd. [2020 (2) TMI 1559 - SC ORDER] approved the decision of the High Court upholding the order of the Tribunal allowing the assessee’s claim of foreign exchange fluctuation loss on mark to market basis. We find no grounds to interfere with the order passed by the Tribunal. Decided against the revenue.
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