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2017 (10) TMI 641 - HC - Income TaxEntitlement to adopt AS-31 issued by ICAI - institute revised its instructions and issued AS-31, making it mandatory only with effect from the financial year 2011-2012 and the assessee adopted AS-31 for the assessment year 2008-2009, which, according to the Assessing Officer, resulted in loss of revenue - Held that:- Despite our specific query as to whether there was any statutory prohibition preventing the assessee from adopting AS-31 for the assessment year 2008-2009, the revenue was unable to show us any such statutory bar. In other words, it is evident from the submissions made by the revenue itself that the assessee was legally entitled to adopt AS-31 for the assessment year 2008-2009. If that be so, the Assessing Officer could not have faulted the assessee for having adopted AS-31 for the assessment year 2008-2009 and maintained its account on that basis. The revenue has no case that if AS-31 was validly adopted by the assessee, the assessee could not have been allowed deduction towards loss under derivative contracts of ₹ 63,73,179. Therefore, the conclusion is irresistible that the assessee was legally entitled to adopt AS-31 for the assessment year 2008-2009 and on such adoption, the assessee was entitled to the deduction as well. If that be so, the Tribunal was fully justified in its conclusion that the Assessing Officer was not justified in making the impugned disallowance of ₹ 63,73,179. Therefore, we do not find any illegality in the order of the Tribunal.
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