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TMI Blog2011 (5) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... unted for in terms of Accounting Standard 11 issued by the Institute of Chartered Accountants of India. iv) The ld CIT(A) has erred in confirming the additions of Rs. 99,78,719/- based upon the decision in the case of Woodward Governor India Pvt Ltd as reported in 312 ITR 254 without correlating the facts of the case to the case of the appellant." 3. The grounds nos 1 and 2 relate to validity of reopening of the assessment. 3.1 Facts of the case, in brief, are that the original assessment was completed u/s 143(3) on 29.9.2006 determining the total loss at Rs. 4,95,28,863/-. Subsequently the assessment was reopened by issuing notice u/s 148 on 17.2.2009 on the ground that the assessee has reduced an amount of Rs. 1,00,38,101/- on account of foreign exchange fluctuation gain from the income and failed to add back the said amount in the total income which resulted into under assessment. In the reassessment, the Assessing Officer made an addition of Rs. 99,78,719/- towards foreign exchange gain. The assessee has challenged the reassessment as well as validity of reopening of the assessment before the CIT(A) which was dismissed vide the impugned order. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of reopening of the assessment on that issue. 5. We have considered the rival submissions made by both the parties and perused the relevant material on record. In the original assessment, the Assessing Officer made an enquiry regarding foreign exchange fluctuation loss, which was replied by the assessee his vide letter dated 14.9.2006, which was reproduced by the Assessing Officer at para 6 of the original assessment order as under:- "Term loan of Rs. 43.75 crores from ICICI bank was converted into USD loan in January 2004 to reduce the cost of borrowing. The difference of rate of conversion of loan and the rate prevailing on 31st March 2004 amounting to Rs. 1,00,38,100/- which was credited to Profit and loss account as foreign exchange fluctuation. This comprises of Rs. 1,06,01,410/- as notional gain of foreign exchange fluctuation and Rs. 5,63,310/- as actual loss on account of foreign exchange fluctuation on the payment to bank. Thus, resulting in the net gain of Rs. 1,00,38,100/-as shown in the groupings of profit and loss account. On further verification it was noticed that one of the instalment was due in the month of March 2006 on which the company has made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire exchange rate fluctuation working wherein the assessee has worked out the net notional gain at Rs. 1,00,38,101/-. Once the Assessing Officer considered and examined the issue of foreign exchange fluctuation as manifest from the original assessment order, the assessment completed u/s 143(3) cannot be reopened on the same issue by taking a different view. The Hon'ble Supreme Court in the case of Kelvinator India Ltd (supra) has held that concept of change of opinion has not been obliterator by virtue of amendment of sec 147 of the IT Act. Similarly, the jurisdictional High Court in the case of Aventis Pharma Ltd (supra) has observed as under:- "14. The view which we have taken of the provisions of s. 147 is consistent with the law laid down by the Supreme Court in CIT vs. Kelvinator of India Ltd. (2010) 228 CTR (SC) 488 : (2010) 34 DTR (SC) 49 : (2010) 320 ITR 561 (SC). The Supreme Court has held that:- " ...Therefore, post-1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words 'reason to believe' failing which we are afraid s. 147 would give arbitrary powers to the AO to reopen assessments on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had escaped assessment within the meaning of s. 147, we have come to the conclusion that there was no tangible material before the AO to hold so and that the reasons recorded for reopening the assessment constitute a mere change of opinion. In the circumstances, it is not necessary to decide upon the additional submissions which have been urged on behalf of the assessee as noted earlier." 6. In view of the above discussion and respectfully following the decisions of the Hon'ble Supreme Court as well as the jurisdictional High Court (supra) we hold that the reopening of the assessment is not sustainable being based on change of opinion. Accordingly, we hold that the reopening of the assessment is invalid. 7. Ground nos. 3 and 4 relate to the issue on merit. 8. The gain on foreign exchange fluctuation with respect to the term loan has also covered in favour of the assessee by the decision of the Hon'ble Supreme Court in the case of CIT v Woodward Governor India P Ltd reported in 312 ITR 254. Since there is no dispute in the case in hand that the alleged gain is only on term loan; therefore, the same cannot be treated as gain on revenue account in view of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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