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TMI Blog2017 (10) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of Rs. 534.58 lacs (net of gain) to its P&L A/c under the heading "Finance Costs". He also noted that loss on restatement of liability arising from exchange fluctuation was claimed as expenditure in the AYs 1998-99 to 2002-03 and such loss was allowed as revenue deduction by the ITAT in assessee's own case. The Special Bench of ITAT, Delhi in the case of ONGC Vs DCIT had similarly held that loss on account of restatement of foreign currency working loan was allowable in computing the business income. He further noted that the assessee had taken working capital loan in foreign currency and outstanding loan amounts were restated at the exchange rates prevailing on the balance sheet dates and any loss arising from restatement was claimed as expenditure and where the gain was made it was show as income. After noting these facts, the AO relying on the judgment of the Hon'ble Punjab & Haryana High Court in the case of Atlas Cycle Industries Limited Vs JCIT (270 ITR 108) and Hon'ble Gujarat High Court in the case of Mihir Textiles Limited Vs CIT (225 ITR 327) observed that the loss incurred was notional one or it was contingent in nature. Hence, the deduction was not permissible. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggrieved by the order of Ld. CIT(A), the revenue is in appeal before us. 2.2. We have heard rival submissions and gone through the facts and circumstances of the case. At the time of hearing, Ld. Counsel for the assessee submitted before us that the issue is squarely covered in favour of the assessee by the decision of Hon'ble Supreme Court in the case of Woodward Governor India Pvt. Ltd. 312 ITR 254 (SC) and also by the decision of ITAT in assessee's own case for AY 2005-06 in ITA No. 94/Kol/2012 dated 03.02.2016. He also submitted that since the Ld. CIT(A) has deleted the disallowance of exchange fluctuation loss of Rs. 534.58 lacs by relying on the decision of Hon'ble Supreme Court in the case of Woodward Governor India Pvt. Ltd., supra, the order of Ld. CIT(A) does not call for any interference. On the other hand, the Ld. DR relied on the order of AO. We find that the issue is squarely covered by the decision of Hon'ble Supreme Court in the case of Woodward Governor India Pvt. Ltd. and the decision of ITAT in assessee's own case for AY 2005-06 in ITA No. 94/Kol/2012 dated 03.02.2016. The Tribunal vide para 14 of its order dated 03.02.2016 has held as under: "14. We have hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch contention and taxed the deemed short term capital gain at the maximum marginal rate of 30%. Aggrieved, assessee preferred appeal before the Ld. CIT(A), who while allowing the assessee's ground of appeal has held as under: "I have carefully considered the A/R's submissions and perused the assessment order on this issue. As per records, the residential property at Golf Link, New Delhi was acquired by the appellant on 19/03/1956. In the circumstances it is not in dispute that on the date of transfer, the property in question was owned and held by the assessee for a period more than three years. It is also not disputed by the assessee that the residential property in question was forming part of the residential building block and in respect of which depreciation was being claimed under Section 32 at the rate of 5%. In the circumstances the residential building at Golf Link, New Delhi had availed benefit of depreciation in the past assessments and therefore the same was required to be dealt with in accordance with Section 43(6) and Section 50 of the Income Tax Act, 1961. It is admitted fact that the opening WDV of the building block for AY 2006-07 was only Rs. 30,76,885/- wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gain assessed u/s 50 were eligible for tax rate prescribed in Section 112 since the capital asset was long term in nature. While deciding the assessee's contention the ITAT held that deeming provisions of Section 50 were only for the purpose of section 48 & 49 relatable to computation of taxable gain and not for other purposes. Since the capital asset in question was held for a period exceeding three years, it was in the nature of long term capital asset and therefore gain realized on transfer of long term capital asset qualified for concessional tax rate provided in Section 112 of the Act. The same was expressed in the case of Poddar Brothers & Investment Pvt Ltd Vs DCIT (ITA No. 1114/Mum/2013). Factually, assessee's case is found to be pari materia with the facts involved in the decisions of the ITAT, Mumbai. I direct the AO to re-compute assessee's tax liability in respect of capital gain on sale of property at Golf Link, New Delhi by applying tax rate prescribed in Section 112 of the Act. In view of these findings, the assessee's alternative claim is infructuous and accordingly the same is not considered. Ground Nos. 2.3 & 2.4 are allowed." Aggrieved, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in 59 equal monthly instalments from the date of conversion commencing from December 2001. For the FY 2005-06 relevant to AY 2006-07, the prorata expenditure amounted to Rs. 406.78 lacs. The assessee claimed that the said fee was paid by the assessee for reducing the burden of interest cost every year and was an allowable revenue expenditure while computing total income. The AO however, rejected the claim of the assessee for deduction on the ground that the assessee has not charged the upfront fees as part of interest and debited into P&L Account, but the same was claimed in reserve account and claimed as deduction in computation of income, which is not in accordance to law. Hence, he denied the claim of the assessee. On appeal, the Ld. CIT(A) while allowing the assessee's ground of appeal vide para 5.3 has held as under: "5.5. I have carefully considered the submissions of the A/R. I have also examined the past accounts and the appellate order passed for AY 2005-06 wherein similar claim was allowed by the CIT(Appeals). From the facts placed before me, it was noted that the assessee had obtained an Indian currency loan from ICICI Bank which was allowed to be converted in foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO is directed to allow the deduction for Rs. 406.78 lacs in computing assessee's total income for AY 2006-07. Additional Ground of appeal is accordingly allowed." Aggrieved, revenue is in appeal before us. 4.2. We have heard rival submissions and gone through the facts and circumstances of the case. At the time of hearing, Ld. Counsel for the assessee submitted before us that the issue is squarely covered in favour of the assessee by the decision of ITAT in assessee's own case for AY 2005-06 in ITA No. 94/Kol/2012 dated 03.02.2016. He also submitted that the Ld. CIT(A) has deleted the disallowance by observing that in the past assessments also the assessee's claim for pro-rata deduction was consistently allowed and assessee's such claim was in conformity with the decision of Hon'ble Supreme Court in the case of Madras Industrial Investment Corporation Limited Vs CIT (225 ITR 802). Since the issue is identical with the issue raised in AY 2005-06, which is squarely covered in favour of the assessee and the Ld. DR could not controvert the aforesaid finding of the Tribunal by producing any material before us and there is no change in law or facts, we respectfully following the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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