TMI Blog2018 (5) TMI 1587X X X X Extracts X X X X X X X X Extracts X X X X ..... O was not prejudicial to the interest of the Revenue, as disallowance of deduction u/s. 80 IC to the extent of ₹ 9, 86, 657/-did not affect the tax calculation. Therefore, we decide this ground of appeal in favour of the assessee. - ITA/4020/Mum/2017 - - - Dated:- 23-5-2018 - Sh. Rajendra, Accountant Member And Pawan Singh, Judicial Member For The Revenue : Shri Manjunath Swamy (CIT-DR) For The Assessee : Shri B.V. Jhaveri-AR Order u / s . 254 ( 1 ) of the Income - tax Act, 1961 ( Act ) PER RAJENDRA, AM Challenging the order of the Commissioner of Income Tax (LTU), dated 29/03/2017, passed u/s. 263 of the Act, the assessee has filed the present appeal. Assessee-company, engaged in the business of manufacturing and sales of optical fibre, optical fibre cables and power connectors, filed its return of income on 24/11/201 declaring its income at Rs. NIL. Book profit was computed at ₹ 96. 09 crores, as per the provisions of section 115 JB of the Act. Later on, a revised return was filed on 29/03/2014 where total income under the normal provisions and the MAT provisions rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad increased the that liability by a sum of ₹ 10, 33, 11, 458/-, that the liability was debited to the profit and loss account, that liability in question was disallowed by the assessee itself as it had not paid the liability till 31/03/2012, that the CIT directed the AO to disallow the loss while computing the book profit on the ground that it was contingent in nature, that the loss was not contingent, that it was actual loss as per the prevailing foreign exchange rate on last day of the relevant financial year. He relied upon the cases of Bharat Serums And Vaccines Ltd. (ITA 3091 and 3375/ Mumbai/2012, dated 15/02/2017), Haldia Petrochemicals Ltd. (70 taxmann. com. 70)Vinergy International Private Ltd. (Income tax appeal number 376 of 2014, dated 11/08/2016 of honorable Bombay High Court)and D Chetan and Co. (390 ITR 36). The Departmental Representative (DR) supported the order of the CIT and stated that he had rightly applied the instruction number three of 2010. 5 . We have heard the rival submissions and persued the material before us. We find that the assessee had added back unrealised exchange loss on purchase of assets of ₹ 10. 3 crores to the income chargea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 . 2 . Before us, the AR relied upon the case of M / s . D . Chetan Co . ( Income tax Appeal No . 278 of 2014 dt . 1 / 10 / 2016 ) ; Woodward Governor India Pvt . Ltd . ( 312ITR254 ) ; Oil and Natural Gas Corporation Ltd . ( 322ITR18 ). The DR supported the order of the FAA . 4 . 3 . We have heard the rival submissions and considered the available material . We find that in the case of M / s . D . Chetan Co . the Hon'ble Bombay High Court had considered the following question of law : Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the addition of Mar to Market Loss of ₹ 78. 10, 000/- made by the Assessing Officer on account of disallowance of loss on foreign exchange forward contract loss and not appreciating the fact that the said loss was a notional loss and hence cannot be allowed? It was held by the Hon'ble Bombay High Court that question formulated by the department did not give rise to any substantial question of law . Considering the above, we decide second Ground of appeal in favour of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... according to the Revenue would govern the issue . 6 . In the present facts, we find that loss was not on account of derivatives but are in fact losses and gains in foreign exchange relating to purchase and sale transactions i . e . creditors and debtors outstanding as on 31 st of March, 2010 . Therefore, the Instruction No . 3 of 2010 issued by CBDT would have no application to the facts of the present case . In fact the issue arising year in would be covered by the principle laid down by the Apex Court in Woodward Governer India private Ltd . ( supra ) . Considering the above, we are of the opinion that order of the AO is neither erroneous not prejudicial to the interest of the revenue. We further hold that the loss is not of contingent nature and the direction of the CIT is contrary to the decision of the Hon'ble Supreme Court delivered in the case of in Woodward Governor India private Ltd. (supra). Accordingly, we allow second ground of appeal. 6 . Next ground of appeal is about disallowance of production u/s. 80 IC in respect of voluntary transfer pricing adjustment undertaken by the assessee, invoking the provisions of section 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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