TMI Blog2017 (11) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the assessee along with the details submitted, the assessing officer taken one of the possible views and accepted the contention of the assessee while passing the assessment order regarding Forex Loss. The Hon’ble Bombay High Court in case of Gabriel India Ltd (1993 (4) TMI 55 - BOMBAY High Court) has held that Commissioner cannot initiate proceeding with a view to starting fishing and roving enquiries in matters or orders which are already concluded. There must be material on record to show that tax which was lawfully exigible has not been imposed if claim was allowed by the Income tax officer. On being satisfied with the explanation of the assessee, such decision of the Income tax Officer cannot be held to be ‘erroneous’ simply because in his order he did not make an elaborate decision in that record. The Hon’ble High Court further held that when Commissioner himself, even after initiating proceeding for revision and hearing of the case, could not say that the disallowance of the claim of the assessee was erroneous and simply ask the assessing officer to re-examine the matter, which was not permissible. Exercising the power under section 263 the learned Commissioner sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Act 1961 by learned Commissioner of income tax dated 27 March 2017 is arbitrary, erroneous, invalid and bad in law. 2. On the facts and circumstances of the case and in law, the learned Commissioner of income tax erred in making adjustment of ₹ 3,19,30,000/-in respect of forex loss on ECB Loan, in computing book profit under section 115JBof the Act 3. The appellant craves leave to add, alter or amend the above grounds of appeal at or before the time of hearing. 2. Brief facts of the case are that Assessee Company is manufacturer of Diesel Generators filed its return of income for relevant assessment year on 20 September 2012. Subsequently, a revised return was filed on 20 March 2014 declaring total income of Rs. Nil under normal provision of and book profit of ₹ 94,66,55,426/-under section 115JB. The assessee revised the return of income for claiming exchange rate fluctuation loss on account of External Commercial Borrowing ( ECB ) loans. The assessment was completed on 15 January 2015 under section 143(3). The assessing officer while passing the assessment order allowed the forex loss of ₹ 3,19,30,000/- on account of ECB availed. Subsequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign exchange loss on ECB loan claimed in revised return of income. The assessee furnished all details related with the issue. The assessee further filed the details of exchange rate fluctuations entries as on 31 March 2012 along with the Note on foreign exchange fluctuation copies of which are placed on record. The assessing officer examined the reply and details furnished on question raised by assessing officer. The assessing officer allowed the forex loss of ₹ 3,19,30,000/- on account of ECB loan. The revenue has no right to go behind the assessment. The profit has been disclosed in accordance with the provisions of Companies Act, financial statement as well as Form 29 B are dully certified by CA. The assessing officer has limited power of making increases and reduces as provided for in Explanation to section 115. The assessing officer after considering the entire facts and the submissions which were substantiated along with documentary evidences, taken one of the possible view on the claim of the assessee. The order passed by assessing officer is not erroneous and prejudicial to the interest of revenue. The order passed by Commissioner under section 263 is liable to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this respect to the assessee; and ( 4) He has to make or cause to make such enquiry as he deems necessary; ( 5) He may pass such order thereon as the circumstances of the case justify including, (i) an order enhancing or, (ii) modifying the assessment or (iii) cancelling the assessment and directing a fresh assessment. Now in the light of above words, we are required to examine as to whether the order of the ld. CIT is a valid order in the light of the above stated points/provisions of section 263 of the Act. 6. We have seen that during the assessment proceedings the assessing officer required the statement of exchange rate fluctuations as on 31 March 2012 from the assessee. The assessee furnished the statement of Exchange rate as on 31 March 2012 and the Note on account of Foreign Exchange Fluctuation. In the said note the Auditor has explained that total of ₹ 5,89,26,400/- includes exchange rate fluctuation on account of fluctuation on the payments made in the normal course of business such as buyers credit, payment to foreign creditors, payment received from export realisation for ₹ 2,69,96,400/- and ₹ 3,19,30,000/-on account of E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard and directed the AO to recompute the income by disallowing such notional loss resulting from restatement of outstanding liability. Minimum Alternative Tax ( MAT) liability will also be recomputed accordingly. 7. The Hon ble jurisdictional High Court in Apollo Tyres Ltd supra while considering the question if the assessing officer while assessing a company for income tax under section 115 of income tax act can questions the correctness of the profit and loss account prepared by assessee company and certified by the statutory auditors of the company as having been prepared in accordance with the requirement of part II and III of schedule VI to the companies act. The Hon ble jurisdictional High Court held ; That sub-section (1A) of section115 does not empower the assessing officer to embark upon fresh inquiry with regard to the entries made in the books of account of the company. The said sub-section, as a matter of fact mandate the company to maintain its account in accordance with the requirement of the Companies Act which mandate, according to us is bodily lifted from the Companies Act into the Income tax Act for limited purpose of making the said accounts so mainta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with the accepted accounting principles as mandated under Accounting Standard (AS-11) as revised up to date (revised in 2003) and at such the book profit should be computed in accordance with the order dated final accounts and provisions of section 115JB of the Act. The perusal of Circular No. 3 issued by CBDT dated 23 March 2010 relied by learned CIT relates to Foreign Exchange Derivative transaction only. Further, we have seen that the assessing officer during the seeking explanation from the assessee along with the details submitted, the assessing officer taken one of the possible views and accepted the contention of the assessee while passing the assessment order regarding Forex Loss. 9. The Hon ble Bombay High Court in case of Gabriel India Ltd (supra ) has held that Commissioner cannot initiate proceeding with a view to starting fishing and roving enquiries in matters or orders which are already concluded. There must be material on record to show that tax which was lawfully exigible has not been imposed if claim was allowed by the Income tax officer. On being satisfied with the explanation of the assessee, such decision of the Income tax Officer cannot be held to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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