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ACIT, Circle-38 (1) , New Delhi Versus L And T Sucg Joint Venture

2015 (7) TMI 860 - ITAT DELHI

Loss under the head other income - CIT(A) allowed relief to assessee - Held that:- Held that:- Considering the finding, in the light of the submissions advanced where admittedly no verification on facts has been done by the Ld. CIT(A) accepting the arguments of the Ld. Sr. DR, we deem it appropriate to restore the issue back to the file of the AO with the direction to verify the claim of the assessee from the vendor balances and bank advances which has not been done by the CIT(A). The AO is dire .....

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e order dated 21.12.2012 of CIT(A)-VIII, New Delhi pertaining to 2009-10 assessment year on the following grounds:- 1. "In the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 1,52,29,559/- by merely accepting the submissions of the assessee without making any verification as to how the vendor balances and bank advances are on revenue account. 2. The appellant craves leave to add, amend or modify the ground of appeal before or duri .....

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on the following facts:- 3. "On perusal of the Profit & Loss account it was noticed that the assessee has claimed a loss under the head other income. The assessee was asked to furnish the details vide order sheet entry dated 28.11.2011. The assessee vide letter dated 02.12.2011 submitted as below:- "Details of other income Other income of Rs.(1,51,83,210/-) includes, interest on Bank deposits of ₹ 34,74,963/- and an exchange loss of ₹ 1,86m58,173/-, the details are enc .....

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ss on payment of Vendor 10. 3,53,63,444 - 3,53,63,444 Rectification of Receipts in Euro 11. - 40,99,041 (40,99,041) Reinstatement as on 31st March 2009 of Euro Bank Account 12. 56,01,303 - 56,01,303 Reinstatement as on 31st March 2009 of Euro Bank Account 13. 32,97,731 - 32,97,731 Reinstatement as on 31st March 2009 of Euro Bank Account 14. 1,04,29,566 - 1,04,29,566 Reinstatement as on 31st March 2009 of Vendor Balance 15. - 46,42,916 (46,42,916) Gain on sale of 500,000 Euro 16. - 55,74,167 (55, .....

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. 4. Aggrieved by which the Revenue is in appeal before the Tribunal. 5. The Ld. Sr. DR inviting attention to the assessment order and the impugned order submitted that the submissions of the assessee have been accepted without any verification as to how the vendor balances and bank advances are on the revenue account. Inviting attention to the ground raised it was submitted that his was the specific grievance of the Revenue. The Ld AR appearing on behalf of the assessee on a perusal of the mate .....

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red the submissions of the appellant, the findings of the AO and the facts on record. The appellant is regularly following the mercantile system of accounting. The treatment in the account of foreign exchange payable had been determined according to the AS-Il. As per the stated policy the revenue transactions in foreign currency are generally recorded at the exchange rate prevailing at the time of transaction and the foreign currency assets and liabilities other than covered by forward exchange .....

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note that foreign currency notes, balance in bank accounts denominated in a foreign currency, and receivables / payables and loans denominated in a foreign currency as well as sundry creditors are a monetary items which have to be valued at the closing rate under AS-II. Under para 5, a transaction in a foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. This is known as recording of transaction on initial recognition. .....

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nsactions have to be recognized as income or an expense in the period in which they arise, except as stated in para 10 and para 11 which deals with exchange differences arising on repayment of liabilities incurred for the purpose of acquiring fixed assets, which topic falls under section 43A. Para 9 of AS-II recognizes exchange differences as income or expense. In cases where, e.g. the rate of dollar rises vis-a-vis the Indian rupees, there is an expense during that period. The important point t .....

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eriod CIT Vs Woodward Governor India (Pvt.) Ltd. & Others (2007) 210 CTR (Del) 354 "affirmed. " The Hon'ble ITAT Spl. Bench (Delhi) in the case of ONGC Ltd. Vs DCIT 83 ITD 151 Delhi has observed as under: "Before concluding we would like to point out that the assessee's claim for loss arising as a result of fluctuation in foreign exchange rates on the closing day of the year has been disallowed by the AO, inter alia, on the ground that this liability was contingent lia .....

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