TMI Blog2018 (4) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowances made in the earlier year. In our considered onion, this issue needs to be examined by the A.O. with reference to the books of account. Hence, we remit this issue to the file of the Assessing Officer. The Assessing Officer is directed to examine this issue afresh after giving the assessee proper opportunity of being heard. - I.T.A. No. 1108/Mum/2016 - - - Dated:- 9-4-2018 - Shri Shamim Yahya, AM And Shri Ravish Sood, JM Appellant by : Shri B. Sriniwas Respondent by : Shri R. Murlidhar Shri K. A. Vaidyalingan ORDER Per Shamim Yahya, A. M. This appeal by the Revenue is directed against the order by the Commissioner of Income Tax (Appeals) dated 20.11.2015 and pertains to the assessment year 2010- 11. 2. The grounds of appeal read as under: l(a). On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the interest of ₹ 24,84,689/- disallowed u/s 36(l)(iii) of the Income Tax Act, 1961. l(b). On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the assessee had not established that the advance of ₹ 6,04,76,384/- given for purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned AR has submitted before the AO that the company is having share capital and reserves of ₹ 279.54 cr besides unsecured interest-free loans of ₹ 118.10 cr. on the last day of the year. The learned AR has also brought to my notice the provisions of section 36(1)(iii) which provides for not allowing actual interest paid on capital borrowed which has been used for acquisition of capital assets which are not put to use. Since no amount was borrowed for the purpose of acquisition of the assets under dispute, the learned AR has pleaded that the provisions of section 36(1)(iii) are not applicable in its case. The learned AR has also relied on several decisions including the decisions of the jurisdictional ITAT as per his written submissions. 5. Considering the above, the ld. Commissioner of Income Tax (Appeals) accepted the assessee s submissions that the investment was made on account of mixed funds from which it was emanating that the assessee has sufficient own funds. The ld. Commissioner of Income Tax (Appeals) also placed reliance upon the decision of the Hon'ble Bombay High Court in the case of ITO vs. Reliance Utilities Powers Ltd. (313 ITR 340). In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s undisputed that the investment has been done out of mixed source of funds. The assessee had sufficient own funds which covers more than the investment made. Moreover, the ld. Commissioner of Income Tax (Appeals) has also given a finding that the loan funds were for specific purpose and there has been no dilution of the same. Under these circumstances, reliance upon the case laws mentioned by the ld. Commissioner of Income Tax (Appeals) is germane and supports the case of the assessee. Accordingly, we do not find any infirmity in the same. Hence, we uphold the order of the ld. Commissioner of Income Tax (Appeals). Ground no.2 8. The brief facts of the case on this issue are that the assessee has claimed that a sum of ₹ 29,42,23,853/- should be allowed to be reduced from the income returned. These aspects has been culled out during the course of hearing. The Assessing Officer s order in this regard reads as under: Exchange Difference Gain During the year under consideration, assessee has earned exchange difference gain of ₹ 90,68,46,429/- in respect of sales. The assessee has reduced from purchase cost and finally net gain of ₹ 9,11,35,278/- from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (AS-11) accounted foreign exchange fluctuation losses/gains consistently in its books of account on mark- to-market (MTM) basis. The exchange fluctuation loss /gain of forward contracts(FCs) were also accounted by following the above method by adopting the exchange rate as on the end of the year for the accounting purpose. The details of loss and again declared or a period of time are as under- AY 2008-09 loss (Rs. 7,94,94,902) AY 2009-10 loss (Rs.29,42,23,853) AY 2010-11 gain ₹ 58,96.91,773 The AO treating that the loss accounted for earlier years is on speculation, has disallowed the losses of earlier years and accepted the gain disclosed for the present assessment year. However, even though the loss declared of ₹ 7,94,94,902 was disallowed for AY2008-09, having convinced with the argument of the appellant that the loss incurred on MTM is not a speculation loss but notional loss determined at the end of the year for accounting purposes, while concluding the assessment for AY 2009-10 the AO has reduced the losses of ₹ 7,94,94,902 for AY2008-09 from the losses of ₹ 29,42,23,853 reported for AY 2009-10 and only the balance of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant has not preferred any appeal before the CIT(A) for the earlier two years. Before the AO during the course of assessment proceedings of the present assessment year the appellant has requested for the adjustment of ₹ 29,42,23,853 pertaining to AY 2009-10 from the income disclosed during year. Even though the AO was well convinced with regard to adjustment of losses disclosed by the appellant as was evident from his order for the AY 2009-10, he did not yield to the request of the appellant for the only reason that it will go down the declared income of the appellant. 11. Thereafter, referring to certain case laws, the ld. Commissioner of Income Tax (Appeals) concluded as under: 5.2.2 It is evident from the above decisions that there is no bar to allow the genuine claim of the appellant even if that leads to assessing the income below the returned income and results in refund. The instant case is still a straight one. In this case the appellant has been showing the actual results of loss/gain from foreign exchange fluctuations year after year by following AS-11and it is only the AO who was disturbing it by taking a different view. However, after realizing that his ..... X X X X Extracts X X X X X X X X Extracts X X X X
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