Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2019 (3) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (3) TMI 398 - HC - Income TaxRevision u/s 263 - Gain on cancellation of forwarding contract - characterization of income - income from other sources or capital receipt - HELD THAT:- The Revenue may be correct in contending that, the Assessing Officer had not carried out detailed enquiries with respect to this claim of assessee. However, this by itself would not be sufficient to enable the Commissioner to exercise revisional power. In a given case, as in the present one, if the answer to the legal issue can be had on the basis of the material already on record, there would be no useful purpose in asking the Assessing Officer to carry out the same exercise and come to the same conclusion as the Tribunal in the present case has. In this context, we do not accept the contention of the Counsel for the Revenue that, answer in law had to come from the Assessing Officer and not the Tribunal. If the Tribunal has come to the correct conclusions in law and said conclusions are based on materials already on record, it would be futile to reinstate the order of the Commissioner, which in turn, would require the Assessing Officer to carry out the same exercise and axiomatically come to the same conclusion. This line, we are adopting, is within the fold of the requirement of the order of Assessing Officer being 'erroneous'. Undisputed facts are that the assessee was constituted as a special purpose vehicle to carry out the foundational tasks for setting up a coal based power plant, during the period relevant to Assessment Year in question, the business of the assessee had not yet commenced and the assessee had entered into contract for purchase of plant and machinery from abroad. In relation to such purchase, either on account of cancellation of contracts or on account of notional adjustment, due to favouable fluctuation of foreign exchange rate. The assessee had gained certain income. This being the position, as per settled law, the profits or gains arising out of the fluctuation of the foreign exchange rate, would undoubtedly on the capital account In case of CIT v/s. Bokaro Steel Ltd. [1998 (12) TMI 4 - SUPREME COURT] the facts were that, the assessee-company was set up to produce steel. During period relevant to Assessment Year in question, construction of the plant was not completed. The assessee earned interest on advance to the contractors and also by way of rent from quarters let out to employees of the contractors and such other related activities. The Court held that, the amounts were directly connected to and incidental to construction of plant by assessee and said amounts were, therefore, capital in nature and not income of the assessee from the other source. - Decided in favour of assessee.
|