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TMI Blog2019 (1) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... merits. 3. The Revenue's first substantive ground challenging correctness the CIT(A)'s appellate order reversing assessment findings disallowing assessee's Employees' Contribution to Provident Fund paid beyond due date prescribed in the respective statute. Learned Departmental Representative fails to rebut the clinching findings in the CIT(A)'s order that assessee had paid the contribution in issue well before the due date of filing return u/s 139(1) of the Act. Hon'ble jurisdictional high court's decision in ACIT vs. M/s Vijjay Shree Ltd ITA No.245 of 2011 held that the impugned disallowance in case of employee's contribution deposited before the due date of filing of return u/s 139(1) of the Act is not sustainable. The CIT(A) has already followed the same in his finding under challenge. We thus decline Revenue's instant first substantive ground. 4. The Revenue's second substantive ground pleads that the CIT(A) has erred in law as well as on facts in deleting the disallowance of foreign exchange loss of Rs.57,03,854/- thereby treating the same as business loss allowable u/s 37 of the Act. The assessee had debited the total sum of Rs.58,10,210/- in its profit and loss accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the foreign currency loan. Further, it was also submitted that the entire FCNR(B) loan was excluding of loss on restatement of receivables on debtors of Rs. 1,06,356/-, so incurred by the assessee are relatable to the principal amount of loan taken and therefore, are I the nature of capital expenditure and hence not an allowable deduction. To rebut the contention of the learned AO, it is humbly submitted that the term loan sanctioned by the SBI was for the purpose of meeting working capital requirements and not to purchase any capital asset. The same is evident from the sanction letter dated 15-09-2008, relevant page 43 of the Paper Book. The Rupee Term Loan was converted into FCNR(B) Loan to save on the interest cost since the interest is directly linked to LIBOR. Due to a fall in the value of the Indian Rupee vis-à-vis the US Dollar, it suffered foreign exchange losses on loans repayable in foreign currency. As such, the allegation of the Learned AO that the foreign exchange loss is capital in nature is baseless. The hedging loss is revenue in nature and hence deductible u/s. 37(1) of the Act. To buttress the contention of the appellant, reliance is placed on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax proceedings. Though, each assessment year being a unit, what was decided in one year might not apply in the following year; where a fundamental aspect permeating through the different assessment years has been found as a fact one way or a the other and parties have allowed that position to be sustained by not challenging the order, it would not be t all appropriate to allow the position to be changed in a subsequent year." In this regard, reliance in also placed on the judgment of the Apex Court in the case of CIT vs. Woodward Governor India Pvt Ltd (312 ITR 254) wherein it was held that, "There is no dispute that in the previous years whenever the dollar rate stood reduced, the Department had taxed the gains which accrued to the assessee on the basis of accrual and it is only in the year in question when the dollar rate stood increased, resulting in loss that the Department has disallowed the deduction/debit.tis fact is important. It indicates the double standards adopted by the Department." Further reliance is placed on the recent judgment in the case of Cooper Corporation Pvt Ltd vs. DCIT (TA No.866/PN/2014) wherein the Tribunal affirmed the taxpayer's argument that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n two assessment years. In this case Foreign Exchange Gain has been treated as revenue in nature in A.Yrs. 2010-11 and the foreign exchange loss has been treated Capital in nature in the impugned assessment year. This is not correct and the AO is required to follow uniform accounting policy. Sr No. Particulars Remarks 1 Sanctioned amount of Rupee Term Loan 22.50 cr 2 Schedule of Repayment The Term loan is repayable in 14 quarterly instalments commencing from the quarter ending December 2009 3 Converted amount of Rupee Term Loan into FCNR(B) Rs.15 crores for one year. 4 Purpose of conversion To save on interest cost for a period of one year on the term loan by availment of FCNR loan 5 Cost element of FCNR loan LIBOR plus hedging cost The entire FCNR loan was squared off during the year by way of adjustment in Rupee term loan. The assessee has also placed reliance on the decision of the Apex Court in the case of CIT vs. Woodward Governor India Pvt Ltd (312 ITR 254) wherein it was held that" There is no dispute that in the previous years whenever the dollar rate stood reduced, the Department had taxed the gains which accrued to the assessee on the basis of accrua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is allowable sec. 37 of the Act.
9. This leaves us with Revenue's third and last substantive ground seeking to revive sec. 14A r.w.s 8D disallowance of Rs.31,82,084/- pertaining to assessee's exempt income from dividends amounting to Rs.1,13,35,140/-. The Assessing Officer had invoked Rule 8D(2)(ii) & (iii) for computing proportionate interest and administrative expenditure disallowance @ .5% of average value of investments involving sums of Rs.24,16,66/- and Rs.7,65,358/- as against taxpayer's suo motu disallowance of Rs.1,08,285/- resulting in net disallowance of Rs.21,79,166/-. The CIT(A) has directed the Assessing Officer to recompute the impugned disallowance after including exempt income yielding investments only as per this tribunal's order in REI Agro Ltd. Vs. DCIT (2013) 35 taxman.com 404/144 TD 141 (Kol) as upheld in Hon'ble jurisdictional high court's decision in ITA No.220/2013 decided on09.04.2013. We therefore find no reason to disturb the CIT(A)'s direction hereinabove to the Assessing Officer for re-computation of sec. 14A r.w.s 8D disallowance in issue.
10. This Revenue's appeal is dismissed accordingly.
Order pronounced in open court on 30/11/2018 X X X X Extracts X X X X X X X X Extracts X X X X
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