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2019 (3) TMI 382 - AT - Income TaxSales Return disallowed stating bogus - unexplained income - evidence produced - CIT-A deleted the addition based on evidence- HELD THAT:- Assessee has duly proved before the CIT(A) that out of total quantity of the sale return during the year under assessment approximately 40.3% quantity of such stock was resold and approximately 22.4% of quantity was included in the closing stock being sellable goods in the subsequent years and remaining quantity of approximately 37.3% was claimed as expired / damaged stock which was not included while computing the value of the closing stock as on 31st March, 2005. So when sale returns has been duly proved with physical stock available with the assessee, CIT(A) has rightly decided the issue in favour of the assessee that the same cannot be added as unexplained income - decided against revenue. Addition on account of sale tax on sales return - allowable business loss - HELD THAT:- It is the case of the assessee that at the time of making the sale the assessee has debited the account of party with value of sales and sale tax, thus, the assessee has made payment of sales tax to the Government. However, when the goods were recovered by the assessee, the sales tax paid by the assessee was never recovered and the assessee has written of the amount of sales tax as bad debt. When the factum of sales return has been proved in favour of the assessee and payment of sale tax by the assessee on the said fictitious sales is not disputed, the CIT(A) has rightly allowed the sale tax paid on sales return as business loss - decided against revenue. Foreign exchange fluctuation loss disallowed - loss on exchange loss is only notional loss and is not a real loss - CIT(A) deleted the addition relying upon decision of CIT vs. Woodward Governor India Pvt. Ltd. [2009 (4) TMI 4 - SUPREME COURT] - HELD THAT:- When the factum of availing of the aforesaid loan is not disputed by the revenue then why the loss on account of exchange differences on revenue items arising on foreign currency transactions has to be treated as income / expenses during the year under consideration. So, Ld. CIT(A) has rightly deleted the addition on account of foreign exchange loss by following the decision rendered by Hon’ble Supreme Court in CIT vs. Woodward Governor India Pvt. Ltd. - decided against revenue.
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