TMI Blog2017 (1) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... e case under consideration the AO had taken one of the possible views and the view taken by him is not against the provisions of law. Therefore, his order would not fall under the category of an erroneous order. As far as contingent sales tax deposit are concerned, it is found that the AO had passed a rectification order and taxed the disputed amount. By that time the order of CIT was passed. Thus there was no justification for the CIT to direct the AO to initiate penalty proceedings. It is found that the CIT had further directed the AO to make further verification of consumption of containers. We find that assessee had filed all necessary details before the AO during assessment proceedings and he had passed the order after considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve considered a sum of ₹ 5, 47, 40, 081/- being foreign exchange loss while making disallowance u/s. 40(a)(i), that the impugned loss was part and parcel of acquiring trade mark/brand. He further found that the assessee had been collecting sales tax from its customers by raising debit notes that it was treating the debit notes as contingency deposits, that it had collected sales tax from its customers from the period from 1996-97 to 1999-2000, amounting to ₹ 58. 98 lakhs, that the amount in question was neither paid to the government not was refunded to the customers from whom it was collected. He observed that it had not offered the amount as income though same was taxable as revenue receipt . He referred to the order of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee at ₹ 1. 33 crores would have to be disallowed. With regard to sales tax collected from the customers the assessee argued that there was dispute on the issue with the Government authorities, that the matter was finally settled by the Hon'ble Supreme Court which affirmed the levy of tax on value of packing material ranging from 3% to 3. 5%, that after the matter was finally settled the amount lying as contingency deposit was to be utilised in payment of sales tax and the balance was to be refunded to the customers, that the company was unable to identify or locate the customers to refund the sales tax collected , that it had offered the disputed amount as income, that it had filed a rectification application before the AO stating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s during the course of assessment proceedings, that it could not be held that there was no application of mind by the AO, that the CIT had wrongly invoked the provisions of section 263 of the Act. He referred to the cases of Development Bank Ltd. (323ITR206) and Gabriel India Ltd. (203ITR108). With regard to disallowance of depreciation on foreign exchange loss u/s. 40A(a) (ia) of the Act, the AR argued that AO had disallowed the claim and had considered the issue of deprecia - tion on foreign exchange loss and other costs capitalised u/s. 43A of the Act, that the Tribunal had deleted the disallowance and had held that claim for depreciation was not in respect of expenditure incurred, that it was allowable on an asset which was eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee the AO had passed an order. Thus, there was no lack of enquiry on part of the AO and he had taken an informed decision. Therefore, it cannot be said that no proper enquiry was made. We find that the issue of disallowance of depreciation was discussed and delibera - ted upon by the Tribunal in assessee s own case for the year under consideration. Therefore, the consequential disallowance with respect to forex loss capitalised cannot be upheld. As per the settled principle of taxation once forex loss being capitalised , then no disallowance u/s. 40(a) (ia) can be made. In the case under consideration the AO had taken one of the possible views and the view taken by him is not against the provisions of law. Therefore, his order would not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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