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2017 (1) TMI 1202 - ITAT MUMBAIForeign Exchange Loss - AO rejected the explanation put forth by the assessee and applying the rate as on 31.03.2009 which was ₹ 50.64 per US $ disallowed the excess foreign exchange loss of ₹ 85,99,177/- claimed (i.e. ₹ 55,36,77,255/- less ₹ 54,50,78,068/-) - Held that:- Method of accounting, as admitted by the assessee is market price or cost whichever is lower. In this case, Assessing Officer has adopted rate of exchange of ₹ 50.64 being prevailing exchange rate as on 31.3.2009, hence his working in para 4 of the assessment order is tenable in the eye of law. Apparently, appellant has adopted wrong working formula and therefore has claimed excess foreign exchange loss of ₹ 85,99,187/-. Thus, the finding and calculation of foreign exchange loss by the Assessing Officer is sustained. If there is any factual mistake, as claimed by the appellant and for that rectification application u/s.154 has been filed on 10.01.2012, it is the duty of the Assessing Officer to reverify the facts and if the claim of the appellant is found correct, the quantum of disallowance has to be modified, accordingly. - Decided against assessee Disallowance under section 14A read with Rule 8D - Held that:- Perusal of the order of assessment shows that the AO, except for stating that assessee’s explanation is not acceptable for the reason proper values have not been taken, has not spelt out what examination of accounts of the assessee have been made by him and in respect of which portion/items of values in the assessee’s accounts he is not satisfied with. Nothing to this effect, as required under section 14A(2) & (3) of the Act, has been brought out by the AO in the order of assessment and in our considered view, the disallowance has been computed mechanically and without any application of mind of the legal position in this regard. In this factual and legal matrix of the case, we set aside the orders of the AO making the disallowance under section 14A read with Rule 8D at ₹ 53,81,133/- and restore this matter to the file of the AO for fresh consideration and adjudication in the manner prescribed under section 14A of the Act read with Rule 8 by way of a speaking order after affording the assessee adequate opportunity of being heard and to file details/submissions required. - Decided in favour of assessee for statistical purposes.
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