TMI Blog2018 (4) TMI 1724X X X X Extracts X X X X X X X X Extracts X X X X ..... ESIC - amount as paid after due date of payment and was not allowable as per section 36(1)(va) r.w.s. 2 (24)(x) - HELD THAT:- CIT(A) in assessee s own case for AY 2010-11 had allowed the deduction of delay in payment of Employees contribution to ESIC and PF. The Revenue filed appeal before the ITAT against the said order of the Ld. CIT(A). The Tribunal upheld the order of the Ld. CIT(A), following the decision in CIT v. M/s Alom Etrusions Ltd. [ 2009 (11) TMI 27 - SUPREME COURT] and CIT v. M/s Hindustan Organics Chemicals Ltd [ 2014 (7) TMI 477 - BOMBAY HIGH COURT] - Facts being identical, we follow the said order of the Co-ordinate Bench in assessee s own case for the AY 2011-12 and uphold the order of the Ld. CIT(A). Unrealized foreign exchange loss disallowed being loss due to foreign exchange fluctuation - Treating provision for earlier termination of lease in the same ground along the line of unrealized Foreign Loss - HELD THAT:- As decided in own case [ 2016 (8) TMI 1443 - ITAT MUMBAI] entire amount has already been paid by the assessee to the Lessor and in this respect a compromise was entered into between the parties before the Indian Court and the entire decree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urier (express) services, tour and travels agency services. The Assessing Officer (AO) noticed during the course of assessment proceedings, that the assessee had written off stock of stores and spares amounting to ₹ 63,83,793/-. The same was mentioned in the Note to Accounts No. 15: Inventories of the Financial Statements . It was submitted before the AO that the assessee had grounded aircraft operations in the Financial Year (FY) 2007-08. However, the AO recorded that no explanation was furnished for carrying forward the inventory till the year under consideration. Further the assessee had accepted the valuation given by a third party for reducing the value of inventory in the books of account, but did not decide to dispose off the said inventory as per its claim that it was making efforts to dispose off the stock and had received the said quotation in response thereof. The AO thus concluded that on the basis of the third party quotation, the stock of ₹ 1,13,33,793/- is valued at Rs. Nil by the assessee over a period of two years and the whole stock had been written off during FY 2010-11 of ₹ 63,83,793/- and balance value of ₹ 49,50,000/- in FY 2011-12. Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in FY 2005-06 and it grounded the Air Craft Operation in the FY 2007-08. However, some spares remained unused and kept in the stock. The opening value of the stock as on 01.04.2010 was ₹ 1,13,33,793/- and during the year the assessee had made efforts to dispose off the stocks and in response received quotation from third party of USD 100,000 (₹ 49,50,000/-). Based on AS-2, the assessee has valued the stores on the basis of cost or net realisable value, whichever is lower. Therefore, the assessee has written down the value of stocks to ₹ 49,50,000/-. We find that the assessee has to value inventory as per AS-2 and on that basis it has valued the cost of spare parts which has become obsolete and non-moving. In view of the above facts, we uphold the order of the Ld. CIT(A) and dismiss the 1st ground of appeal. 7. The 2nd ground of appeal Whether on the facts and in law the CIT(A) was justified in deleting the addition of ₹ 67,97,382/- which was employee s contribution to PF and ESIC and it was paid after due date of payment and was not allowable as per section 36(1)(va) r.w.s. 2 (24)(x). 8. The AO made a disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier termination of lease in the same ground along the line of unrealized Foreign Loss. 16. The AO has disallowed the unrealized foreign exchange loss of ₹ 2,61,260/- being loss due to foreign exchange fluctuation on the last date of the accounting year on account of reinstating the amount payable/receivable as on 31.03.2012 in foreign currency and foreign exchange loss of ₹ 1,50,00,000/- on account of valuation of liability of compensation payable due to early termination of lease in foreign currency as on 31.03.2012. 17. In appeal, the Ld. CIT(A) held : Similar issue was also there in the case of the appellant in AY 2011-12 which was decided in favour of the appellant vide para 6.3 of my appellate order dated 10.06.2016. Therefore, following the reasoning given in the same and also keeping in view of the decision of Hon ble Supreme Court in the case of Woodward Governor 312 ITR 254 (SC) as well as decision of jurisdictional ITAT, Mumbai Special Bench judgment in the case of DCIT v. Bank of Bahrain and Kuwait (2010) 132 TTJ (Mumbai) (SB) 505, similar decision is being taken in this AY also. The AO is directed to delete the disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be gathered that the liability of the assessee was crystallized in view of the order dated 14-05-2010 of the High Court of Justice, UK which was ultimately satisfied by the assessee by making payment to the lessor. Therefore, once the liability for making payment was crystallized by the High Court Order, then question of contingent liability does not arise. Therefore, both the AO and the learned CIT (A) was wrong in treating the liability as contingent liability of the assessee. Our this stand is fortified by the following decisions:- (i) R. C. Gupta Vs CIT, Delhi-VIII, 298 ITR 161 (2008) wherein the Hon ble Delhi High Court in Para 9 of the order has held as under:- The liability in the instant case was capable on being estimated with reasonable certainty when a recovery suit was filed by Hindustan Steel Limited against the assessee on 18-8-1978. Merely because the liability was not a statutory one it could not be said that the liability that was not an ascertained one but a contingent one. In view of the settled law and in the facts of the present case, we are of the view that the claim of the assessee for deduction of RS.50,761 towards disputed liability s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was justified in deleting the addition of ₹ 29,67,993/- which was employees contribution to PF and ESIC and it was paid after due date of payment and was not allowable as per section 36(1)(va) r.w.s. 24(x). 21. The above ground of appeal is similar to the 2nd ground of appeal for the AY 2011-12. Facts being identical, our decision at para 11 hereinbefore applies equally to the above ground of appeal. Thus the 3rd ground of appeal is dismissed. 22. The 4th ground of appeal Whether on the fact and in law the CIT(A) was justified in deleting the adjustment made u/s 115JB to the tune of ₹ 3,74,59,683/-. 23. The AO completed the assessment u/s 143(3) on 08.02.2013 determining Nil income as per the normal provisions of the Act and book profit of ₹ 1,81,99,126/- u/s 115JB. The following adjustments were made by the AO while arriving at book profit u/s 115JB Particulars Amount (Rs.) Provision of earlier termination of leases 1,50,000,00 Disallowance u/s 14A 1875 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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