TMI Blog2019 (9) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... n be made. Respectfully following the precedents, we order to delete the disallowance under Rule 8D(2)(ii). Disallowance under Rule 8D(2)(iii) is concerned, it is seen that ordinarily the disallowance is made at 0.5% of the average value of investments, as has been done by the AO. AR contended that the assessee did not earn exempt income from certain investments and hence they should be excluded. Since the relevant facts for determining such an issue are not available on record, we set-aside the impugned order and remit the matter to the file of AO with a direction to decide it accordingly. Disallowance on account of Foreign Fluctuation Exchange loss and loss suffered in a separate contract in the next year - HELD THAT:- Neither the AO nor the ld. first appellate authority has disputed the fact that the first item of loss of ₹ 2.18 crore is on account of a transactions otherwise of revenue nature and this transaction resulted due to marking the liability to market rate as at the end of the year. The Special Bench of the Tribunal in DCIT Vs. Bank of Bahrain and Kuwait [ 2010 (8) TMI 578 - ITAT, MUMBAI] has held that such loss or profit is of revenue character. Afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement that facts and circumstances of such similar grounds are mutatis mutandis similar to the earlier years, except where separately argued. 3. Ground No.1 of the assessee s appeal and Ground No.1 of the Revenue s appeal are against the sustenance/ deletion of addition on account of revenue recognition in respect of Freight and contract activity. 4. Ground No.3 of the assessee s appeal is against the addition on account of liquidated damages. Ground no. 2 of the Revenue s appeal is also on the same issue. 5. Ground No.4 of the assessee s appeal is against the addition on account of claim of depreciation at 80% on certain plant and machinery. 6. The above issues have been determined by the Tribunal in earlier years in favour of the assessee. As such, the above grounds of the assessee are allowed and those of the Revenue are dismissed. 7. Ground No. 2 of the assessee s appeal is against the confirmation of addition in respect of Prior period expenses amounting to ₹ 12,93,616/-. Such ground has been dismissed by the Tribunal in earlier years. Following the same, we dismiss this ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made at 0.5% of the average value of investments, as has been done by the AO. However, in this regard, it is relevant to note that the Hon ble Delhi High Court in ACB India Ltd. vs. CIT (2015) 374 ITR 108 (Del) has held that the average value of investments, for the purposes of Rule 8D(2)(iii), should be confined to those securities in respect of which exempt income is earned and not the total investments. Similar view has been taken by the Special Bench of the Tribunal in the case of ACIT vs. Vireet Investments (P) Ltd. (2017) 165 ITD 27 (Del) (SB) holding that only those investments should be considered for computing average value of investments which yield exempt income during the year. 13. The ld. AR contended that the assessee did not earn exempt income from certain investments and hence they should be excluded. Since the relevant facts for determining such an issue are not available on record, we set-aside the impugned order and remit the matter to the file of AO with a direction to decide it accordingly. Needless to say, the assessee will be allowed a reasonable opportunity of hearing. 14. Ground No.8 of the assessee s a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a contingent loss as on the closing date and hence not deductible. The ld. CIT(A) echoed the assessment order on the point. 20. Having heard both the sides and gone through the relevant material on record, it is seen that neither the AO nor the ld. first appellate authority has disputed the fact that the first item of loss of ₹ 2.18 crore is on account of a transactions otherwise of revenue nature and this transaction resulted due to marking the liability to market rate as at the end of the year. The Special Bench of the Tribunal in DCIT Vs. Bank of Bahrain and Kuwait (2010) 132 TTJ 505 (SB)(MUM) has held that such loss or profit is of revenue character. After considering the adverse Instruction No.03/2010, the Hon ble Delhi High Court in Munjal Showa Vs. DCIT (2016) 67 taxmann.com 359 (Delhi) has held that such loss/profit to be of revenue character. It further held that the CBDT Instruction cannot override the judicially settled position. In view of the foregoing, we overturn the impugned order and direct to delete the addition of ₹ 2.18 crore. 21. As regards the loss of ₹ 8.88 crore, the ld. CIT(A) has held that the lo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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