9911796707
TMI Blog2012 (6) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... p; 2) The CIT erred in holding that the loss on fluctuation of foreign currency of Rs.61,54,496 is not allowable under section 42 of the Act as the said loss is not with respect to expenditure specified under section 42(1 )(a) of the Act. 3. Ground no.1 is regarding depreciation on loss due to fluctuation of foreign exchange and capitalization u/s 43A of the I T Act. 4. We have heard the ld AR of the assessee as well as the ld DR and considered the relevant material on record. At the outset, we note that an identical issue has been considered and adjudicated by the Tribunal in assessee's own case for the AY 2000-01 in ITA No.5569/Del/03 vie order dated 14.11.2008 in paras 3 to 5 as under: 3. We have heard the rival submissions in the light of the material placed before 'is and the precedents relied upon. The first item of disallowance is Rs.12.37 lakhs which was capitalized by the assessee on account of loss on fluctuation of foreign exchange towards repayment of loan acquired for purchasing sub-sea equipment in respect of which 100% depreciation was allowed to the assessee in the preceding year. The authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. There is no dispute about the fact that the assessee borrowed the money from Barclays Bank for the purchase of the equipment. Even though 100% depreciation was allowed in first year itself as per the relevant rules, liability towards repayment of the loan continued and is still continuing in the year in question. Albeit the assessee had claimed l00% depreciation on the amount yet the asset is continuing with the assessee and the Revenue has not denied that it was not utilized for the purpose of its business in the year in question. The provisions of section 43A are crystal clear in the sense that it is mandatory for the assessee to compute actual cost of the asset in the light of increase or decrease in the liability due to exchange rate fluctuation. It is not in the discretion of the assessee to follow or ignore the prescription of the section. Rather it is mandatory to act upon it. The assessee has not claimed the sum of Rs. 12.37 lakhs as revenue expenditure but included it in the cost of assets and then claimed 100% depreciation admissible as per rules on this amount. In our considered opinion no infirmity can be found in the assessee's action as is appeares from the bare re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of foreign currency in respect of development cost u/s 42 of the I T Act. 7. We have heard the ld AR of the assessee as well as the ld DR and considered the relevant material on record. The ld AR has pointed out that this issue was also considered in the AY 2000-01 (supra). The ld AR has further pointed out that the Assessing Officer has considered the claim of the assessee u/s 42(1)(a) whereas the claim falls under section 42(1)(b). The ld DR on the other hand, relied upon the orders of the authorities below. 8. After considering the rival contention and relevant material on record, we find that the Tribunal in assessee's own case for the AY 2000-01(supra) has considered and adjudicated an identical issue in para 6 & 7 as under: "6 The second aspect of this ground is about the upholding of disallowance of Rs. 77.07 lakhs towards deduction claimed by the assessee u/s.42(1)(b) towards foreign exchange fluctuation included in the Development cost. The Assessing Officer did not accept the assessee's claim on the ground that such liability was in relation to a capital expenditure. On the other hand the learned CIT(A) upheld the addition by forming th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t determined by the Assessing Officer. 11. At the time of hearing, the ld AR of the assessee has submitted that in view of the retrospective amendment of provisions of sec. 80IB(9), the assessee does not press the ground nos 1 & 2 and the same may be dismissed as not pressed. 11.1 The ld DR has no objection, if the ground nos 1 & 2 of the assessee's appeal are dismissed as requested. 11.2 Accordingly, ground nos 1 & 2 of the assessee's appeal are dismissed being not pressed. 12. Ground no.3 is regarding treating the interest income as income from other sources instead of business income claimed by the assessee for the purpose of deduction u/s 80IB(9). 13. We have heard the ld AR of the assessee as well as the ld DR and considered the relevant material on record. The ld AR of the assessee has submitted that this issue has been considered and decided by the Tribunal in assessee's own case for the AY 2003-04 in ITA No.4887/Mum/2008 vide order dated 23.3.2010. He has further submitted that the appeal filed by the revenue against the order has also dismissed by the Hon'ble jurisdictional High Court vide order dated 20.8.2011. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revenue for AY 2003-04 by observing as under: "2. Admittedly, similar interest earned by the Assessee for AY 1999-2000 to 2002-02003 have been assessed as "business income" and the said orders have attained finality. In this view of the matter, the order passed by the ITAT cannot be faulted. Accordingly, the appeal is dismissed with no other." 17. It is to be noted that at the time of deciding the appeal for the earlier year, the benefit of the decision of the Hon'ble Supreme Court in the case of Liberty India was not available before the Tribunal. Therefore, the principles of consistency cannot be applied for the year under consideration when the CIT(A) has disallowed the claim of the assessee. In the case of Pandian Chemicals Ltd vs CIT reported in 262 ITR 278(SC), the Hon'ble Supreme Court has observed as under: "The word "derived" has been construed as far back in 1948 by the Privy Council in CIT v. Raja Bahadur Kamakhaya Narayan Singh [1948] 16 ITR 325 when it said (page 328) : "The word 'derived' is not a term of art. Its use in the definition indeed demands an enquiry into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding eligibility of deduction/s 80IB on extraction of oil from oil field. 21.1 The dispute is on the point whether the extraction of oil from oil field is production of mineral oil as contemplated u/s 80IB(a) or not. 22. We have heard the ld DR as well as the ld AR and considered the relevant material on record. The ld AR has pointed out that in the case of the other partner in the consortium i.e. M/s Hindustan Oil Exploration Co Ltd in ITA No.179/Mum/2007 dated 28th Dec 2012 an identical issue was considered and decided by the Tribunal in favour of the assessee. The ld DR has not disputed the factual position that M/s Hindustan Oil Exploration Co Ltd is one of the parties of the consortium for extraction of oil from the same oil field. Therefore, in view of this fact, we find that an identical issue has been considered and adjudicated by the coordinate Bench of the Tribunal in the case of M/s Hindustan Oil Exploration Co Ltd (supra) and one of us - Judicial Member - is the party to the said order. The relevant part of the order of the Tribunal is reproduced as under: 8. We have considered the rival contention and carefully perused the relevant material on record. The Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32A. The view expressed by the High Court that the activity of extraction and processing of iron ore constitute production has been affirmed by the Hon'ble Supreme Court. It was held by the Hon'ble Supreme Court that the word 'production' has a wider connotation than the word 'manufacture. It was further observed that every manufacturer can be characterised as production, every production need not amount to manufacture. 23. Accordingly, by following the order of the Tribunal (supra) we decide this issue in favour of the assessee and against the revenue. The order of the CIT(A), qua this issue is upheld. 24. Next issue is regarding treating the provision of site restoration expenses as ascertain liability while computing the book profit u/s 115JB of the Act. 25. We have heard the ld DR as well as the ld DR and considered the relevant material on record. During the year, the assessee debited an amount of Rs. 2,20,96,256/- being site restoration fund to its P&L account. The Assessing Officer asked the assessee to show cause as to why the said debit should not treated as an unascertained liability to be added for the purpose of computing the profit u/s 115JB of the Act. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
