New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (3) TMI 731 - ITAT KOLKATA

2016 (3) TMI 731 - ITAT KOLKATA - TMI - Disallowance of foreign exchange fluctuation loss - restatement of foreign currency loan at the end of the year and at the time of actual repayment of loan in installments - Held that:- Since the revenue's appeal for the Asst Year 2004-05 is pending before the Hon'ble Calcutta High Court wherein the notional exchange gain has not been subjected to tax, we deem it fit and appropriate, in the interest of justice and fair play, to direct the Learned AO, to de .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in which the provision was made? - Held that:- CIT(A) had deleted this addition by observing that the appellant has been assessed as per its submissions u/s 115JB in the assessment year 2002-03, 2003-04 and 2004-05. Therefore, since the said amounts have been taxed in the year of creation of provisions, therefore, the same cannot be added back in the assessment year 2005-06 when the addition has been written back. Therefore, the addition is hereby deleted. We find that the factual findings given .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the case that the deposits and advances were given in the ordinary course of business and were lying in the books of the assessee company for quite a long time. The same were considered irrecoverable by the assessee and had written off the same in Asst Year 2005-06 and hence the same is to be considered as a trading loss u/s 28 of the Act. We hold that the Learned CIT(A) had rightly deleted the addition made in this regard. - Decided against revenue

Disallowance of excess depreciation .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

en, JCIT, ld.Sr.DR For the Respondents : Shri R N Bajoria, Sr. Adv. & Bikash Chanda, FCA, ld.ARs ORDER Per M. Balaganesh, AM These appeals of the assessee as well as the revenue arise out of the orders of the Learned CIT(A),VI Kolkata in Appeal No. 1254 /CIT(A)-VI/Cir-5/2009-10/Kol dated 15.2.2012 against the order passed by the Learned AO u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') and appeal of the revenue against the order of the Learned CIT(A), V .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uation loss incurred by the assessee by restatement of foreign currency loan at the end of the year amounting to ₹ 21,25,864/- and at the time of actual repayment of loan in installments amounting to ₹ 75,07,500/-, in the facts and circumstances of the case. 3.1. The brief facts of this issue is that the assessee availed foreign currency loan (FCNR Term Loan) of 105,00,000 USD in the fag end of the financial year ended 31.3.2003 in order to prepay 14% Debentures for ₹ 50 crores .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

completing the assessment for the Asst Year 2004-05 u/s 143(3)of the Act. The same was subjected to first appeal by the assessee who deleted the addition. On further appeal by the revenue before this tribunal, the tribunal had deleted the addition. However, this tribunal decision was rendered prior to the judgement rendered by the Hon'ble Supreme Court on the impugned issue in the case of Woodward Governor of India (P) Ltd reported in 312 ITR 254 (SC). At present, the tribunal order has bee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

balance outstanding after taking into account such repayment was subjected to restatement as on 31.3.2005 based on the exchange rate prevailing at the end of the year, which resulted in foreign exchange fluctuation loss of ₹ 21,25,864/-. The assessee claimed both the realized exchange fluctuation loss of ₹ 75,07,500/- and notional exchange loss of ₹ 21,25,864/- as deduction for the Asst Year 2005-06 which was disallowed by the Learned AO. On first appeal, the Learned CITA held .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n facts as well as in law by confirming the disallowance of ₹ 21,25,864/ - being the loss suffered by the Appellant due to fluctuation in foreign exchange rate, without appreciating that the said loss was ascertained with reference to the foreign exchange rate prevailing as on 31st March, 2005 and was allowable as per the principles laid down by the Apex Court. 2. That the Ld.CIT (A) erred in facts as well as in law by confirming the disallowance of ₹ 75,07,500/- as capital in nature .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing the Assessing Officer to allow depreciation on the capital asset, as presumably linked by the Assessing Officer to such realised foreign exchange loss. 4. That the appellant craves leave to add to and/or amend, alter, modify or rescind the grounds hereinabove before or at the hearing of the appeal. 3.2. The Learned AR fairly argued that the issue requires to be remanded back to the file of the Learned AO for redetermination as the lower authorities had not considered the decision of the Hon& .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s for the first time. Accordingly the same is construed as Additional Evidence and is admitted herein. We find that this issue requires to be set aside to the file of the Learned AO who will have to give clear cut finding on the following matters:- (a) Whether the foreign currency loan was utilized for working capital purposes by the assessee. If so, the resultant foreign exchange gain or loss would be revenue in nature and would become taxable or allowable as deduction as the case may be in the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rnatively, if the foreign currency loan was utilized for acquiring fixed assets, then the resultant foreign exchange gain or loss would go to reduce the value of fixed assets and treatment to be given in terms of section 43A of the Act. Similarly if the monies raised through issue of debentures were utilized by the assessee for capital purposes, then the resultant foreign exchange gain/loss should also be considered in the light of provisions of section 43A of the Act. (c) In respect of foreign .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eal for the Asst Year 2004-05 is pending before the Hon'ble Calcutta High Court wherein the notional exchange gain has not been subjected to tax, we deem it fit and appropriate, in the interest of justice and fair play, to direct the Learned AO, to decide the issue under appeal, in the light of the decision to be rendered by the Hon'ble Calcutta High Court and the directions contained in para (a) to (c) above. The assessee is at liberty to file fresh evidences and documents to substantia .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

evenue is admitted herein. 5. The only issue to be decided in the appeal of the revenue is as to whether while computing the book profits u/s 115JB of the Act, a sum of ₹ 18,86,02,604/- representing provision for contingencies is to be added back or not, as the same was offered to tax and assessed u/s 115JB of the Act in the years in which the provision was made. 6. The brief facts of this issue is that the assessee company had created provision for contingencies aggregating to ₹ 19, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

₹ 19,65,45,000/- which were created in earlier years, the assessee wrote back provision aggregating to ₹ 18,86,02,604/- during financial year 2004-05 relevant to assessment year under appeal which was credited to profit and loss account. Since the same was added back in the respective years at the time of making provision in section 115JB computation, the assessee chose to reduce the same from section 115JB computation in Asst year 2005-06 in the year of write back of said provision, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

04/- in the computation of the book profit for the A.Y 2005-06 u/s. 115JB without examining accounts and documents." 6.1. The Learned DR relied on the order of the Learned AO. In response to this, the Learned AR relied on the order of the Learned CIT(A). 6.2. We have heard the rival submissions and perused the materials available on record. We find that the Learned CIT(A) had deleted this addition by observing the following:- "The appellant has been assessed as per its submissions u/s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o convinced from the details filed in the paper book about the treatment of the provision for contingencies given by the assessee in various asst years and hence we do not find any infirmity in the order of the Learned CITA in this regard and hold that the assessee is entitled for reduction of provision for contingencies amounting to ₹ 18,86,02,604/- while computing book profits u/s 115JB in terms of clause (i) of Explanation 1 to section 115JB of the Act. Accordingly, the grounds raised b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ein. 8. The first issue to be decided in this appeal is as to whether the Learned CIT(A) is justified in deleting the disallowance of ₹ 37,087/- towards various advances and deposits written off in the facts and circumstances of the case. 8.1. The brief facts of this issue are that the assessee had made certain deposits with certain parties including government bodies in the earlier years and the same were lying outstanding for a very long time and had chosen to write off the same as irrec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

appeal, the assessee tried to explain that these amounts could not be realized and the obsolete material could not be used and further the cost of such recoveries would have been higher, the assessee as a prudent person and out of business exigency wrote off these amounts in its books and claimed as deduction. On going through the submissions of the assessee, the Learned CIT(A) held that the aforesaid advances/deposits were made in the ordinary course of business and thereafter written off as i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed DR vehemently supported the order of the Learned AO. The Learned AR vehemently supported the order of the Learned CIT(A) and further stated that this issue has already been decided in favour of the assessee by this tribunal in assessee's own case in ITA No. 308/Kol/2007 dated 23.11.2007 for Asst Year 2003-04. The Learned AR further stated that similar disallowance was deleted by the Learned CIT(A) for Asst Years 2006-07 and 2007-08 against which no further appeals were preferred by the re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ightly deleted the addition made in this regard. Accordingly, the ground no.1 raised by the revenue is dismissed. 9. The last ground to be decided in this appeal is as to whether the Learned CIT(A) is justified in disallowing the excess depreciation which was claimed by way of revised return in the earlier years having consequential impact, in the facts and circumstances of the case. 9.1. The brief facts of this issue are that the assessee while filing its original return of income for the Asst .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sing Officer to allow the claim available to the assessee which was rejected by the Learned AO. Since the petition for rectification was filed before the AO on 24.5.2001 requesting him to allow the claim of tax depreciation in Asst year 1999-2000, the assessee presumed that such depreciation would be allowed and had thereafter computed its tax depreciation on the reduced written down value in the following years including Asst Year 2003-04. Since the assessee had not been allowed the depreciatio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd also that the appellant had not preferred any appeal before the higher forum, it was obvious that the WDV of assets was confirmed. The said WDV was to be given effect to in subsequent years and accordingly the AO was directed to give effect to the rectification petitions. The AO again rejected the petitions on the ground that no claim was made by the assessee by way of revised return and by the principle of Supreme Court in Goetze India Ltd vs CIT reported in 284 ITR 323 (SC), the said petiti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

4-05 and therefore the contention of the revenue that the matter is being filed before High Court in all the years is incorrect. Accordingly, the assessee pleaded before the Learned CIT(A) to direct the AO to restate the depreciation based on the WDV of the preceding years. 9.2. The Learned CIT(A) observed that this issue is squarely covered by the decisions of this tribunal in favour of the assessee for earlier years in ITA No. 2302, 2303 and 2356/Kol/2007 dated 29.2.2008 for the Asst years 200 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version