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2019 (1) TMI 936 - AT - Income TaxDisallowing assessee’s Employees’ Contribution to Provident Fund paid beyond due date prescribed in the respective statute - contribution deposited before the due date of filing of return u/s 139(1) - Held that:- DR fails to rebut the clinching findings in the CIT(A)’s order that assessee had paid the contribution in issue well before the due date of filing return u/s 139(1) of the Act. Hon'ble jurisdictional high court’s decision in ACIT vs. M/s Vijjay Shree Ltd [2011 (9) TMI 30 - CALCUTTA HIGH COURT] held that the impugned disallowance in case of employee’s contribution deposited before the due date of filing of return u/s 139(1) of the Act is not sustainable. The CIT(A) has already followed the same in his finding under challenge. We thus decline Revenue’s instant first substantive ground. Disallowance of foreign exchange loss treating the same as business loss allowable u/s 37 - Held that:- The assessee had converted it rupee term loan into FCNR loan in order to save the interest cost being linked to LIBOR. The impugned loan was part of circulating capital. The loss in issue therefore arises from foreign currency hedging only forming part of revenue head in profit and loss account which is not disputed at Revenue’s behest. Decision in Sutlej Cotton Mills Ltd vs. CIT (1978 (9) TMI 1 - SUPREME COURT) made it clear long back that such gain / loss falls under trading head of foreign currency in question held in revenue account or a trading asset or part of circulating capital. Their lordship latter decision in CIT vs. Woodward Governor India Pvt Ltd (2009 (4) TMI 4 - SUPREME COURT) also discarded Revenue’s inconsistent stands in adopting a different approach qua the very issue in preceding and succeeding assessment years. We take into account all these facts as well as settled legal position to conclude that the CIT(A) has rightly treated assessee’s foreign currency accordingly loss to be revenue expenditure is allowable sec. 37 of the Act. Seeking to revive sec. 14A r.w.s 8D disallowance pertaining to assessee’s exempt income from dividends - Held that:- AO had invoked Rule 8D(2)(ii) & (iii) for computing proportionate interest and administrative expenditure disallowance @ 0.5% of average value of investments involving sums of ₹24,16,66/- and ₹7,65,358/- as against taxpayer’s suo motu disallowance of ₹1,08,285/- resulting in net disallowance of ₹21,79,166/-. The CIT(A) has directed the Assessing Officer to recompute the impugned disallowance after including exempt income yielding investments only as per order in REI Agro Ltd. [2014 (4) TMI 713 - CALCUTTA HIGH COURT]. We therefore find no reason to disturb the CIT(A)’s direction to the Assessing Officer for re-computation of sec. 14A r.w.s 8D disallowance in issue. - Revenue’s appeal is dismissed accordingly.
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