9911796707
TMI Blog2012 (11) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... 26.03.2012. 2. On perusal of the records of the case, the Commissioner of Income Tax found that the assessee has added a sum of Rs.2,66,80,649/- to its Foreign Exchange Fluctuation Reserve (FFR). The Commissioner of Income Tax referring to the judgement of the Hon'ble Supreme Court in the case of M/s.Woodward Governor India Private Limited Vs. CIT in 312 ITR 254 held that any addition made by way of foreign exchange fluctuation is to be treated as revenue receipt and should be shown in the Profit and Loss Account. The Commissioner of Income Tax found that this issue was not reflected in the assessment order and the assessing authority has not applied his mind on the issue and as such the assessment order passed by the assessing auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions to the Accounting Standard 11, dealing with recognition of exchange differences on foreign currency transactions, in the year 2003, which alone could be applied for periods commencing on or after 01.4.2004, the Learned Commissioner ought not to have come to the erroneous conclusion on the facts and circumstances of the Appellant's case. 5. Without prejudice to the above, the interpretation of the Learned Commissioner of Income Tax that the case decision cited by him and referred to supra supports his view is clearly contrary to the views of the Hon'ble judges in the case. Matter of factly, the case only affirmingly states the following propositions, amongst others, which are actually in favour of the Appellant: a. The provisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken by the Assessee continuously is supreme. 7. Without prejudice to the above, the Learned Commissioner of Income Tax has failed to take cognizance of the notification issued by the Ministry of Company Affairs dated 31.03.2009, which provided an option to enterprises in relation to foreign exchange difference in respect of long terms monetary items to accumulate the exchange differences in a foreign currency translation reserve account." 5. We heard shri S.Thyagarajan, learned Chartered Accountant appearing for the assessee and Dr. S.Moharana, ld. Commissioner of Income Tax(Appeals) appearing for the Revenue. 6. It is the case of assessee that the adjustment in the reserve has been made in view of Accounting Standard-11, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of an assessee as on the balance sheet date and necessitated as the assessee re-states of its assets of the foreign branch in terms of Indian rupee. 9. But, it is also necessary to examine the tax implications of this disclosure exercise. Assessee is basically an investment company. The assessee is investing in all sorts of portfolios. It is necessary, therefore to examine the components of the assets and holdings re-stated by the assessee in terms of Indian rupee so as to see whether any revenue item is re-stated and if so, whether the gains would be exigible to tax. The learned Chartered Accountant has stated that the decision relied on by the Commissioner of Income Tax is distinguishable as the facts of the assessee's case are differ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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