TMI Blog2021 (3) TMI 1182X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in Commissioner of Income-tax vs. Bharti Hexacom Ltd., [ 2013 (12) TMI 1115 - DELHI HIGH COURT ] Exemption under section 10A - whether to be computed after excluding telecommunication expenses and foreign currency expenditure from the export turnover? - HELD THAT:- Issue covered by the judgement of the Supreme Court rendered in Commissioner of Income-tax, Central - III vs. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT ] Disallowance of unrealized foreign exchange loss on account of reinstatement of assets and liabilities - whether this is a notional loss and not allowable to be set off against the taxable income in view of the CBDT s instruction no. 3 of 2010 dated 23.03.2010? - HELD THAT:- the power invested in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and errored in holding that Section 14(A) can only be invoked if the Respondent has earned exempted income during the assessment year ignoring the fact that Section 14A doesn t lay down such requirement and the only precondition for invoking Section 14A is that there must be expenditure incurred in relation to such income which does not form part of the total income under this Act ? b) Whether in the facts and circumstances of the case and in law, ITAT errored in interpreting the Circular No. 5 of 2014 of the CBDT which clarifies the true scope and meaning of Section 14A of the Act? c) Whether in the facts and circumstances of the case and in law, ITAT failed to appreciate that the AO, having regard to the accounts of the Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Joint Investments (P.) Ltd. vs. Commissioner of Income-tax, [2015] 372 ITR 694 (Delhi). 4. As regards the fourth question of law, that is set out in clause (d) above, as suggested by the revenue, is concerned, once again, Mr. Singh submits that the same is covered by the judgement of the coordinate Bench of this Court in Commissioner of Income-tax vs. Bharti Hexacom Ltd., [2014] 221 Taxman 323 (Delhi). 5. We may also indicate that the Tribunal in its order has referred to the view taken in the assessee s case in respect of an earlier AY (i.e. AY 2007-2008). 5.1. The Tribunal rendered its order in respect of the said assessment year on 15.01.2015. This order was passed in ITA 4546/Del./ 2013.The order passed was in favou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee from the very beginning and if there was a change in the system, whether the change was bona fide; (iv) Whether the assessee has been consistent and definite in making entries in the account books in respect of losses and gains. 9. Mr. Ajay Vohra, learned senior counsel, who appears on advance notice on behalf of the assessee, emphatically states that all the conditions stipulated in Woodward Governor India (P.) Ltd. (supra) by the Supreme Court stand fulfilled. 9.1 In support of his contention, Mr. Vohra has drawn our attention to the relevant paragraphs of the order passed by the Commissioner of Income Tax (Appeals). In particular, he has drawn our attention to the contentions raised by the assessee before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7(1); (b) Profits and gains are required to be computed in accordance with commercial principles and accounting standards (AS-11); (c) Accounts and the accounting method followed by an assessee continuously for a given period of time needs to be presumed to be correct till the AO comes to the conclusion for reasons to be given that the system does not reflect true and correct profits; (d) The fact that the department taxed the gains on fluctuation on the basis of accrual in appellant's own case for AY 2009-10, while disallowing the loss is important shall amount to the double standards adopted by the Department; (e) U/s 43A (pre-amendment), the change in the rate of exchange subsequent to the acquisition of asset tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee for the year, as it is a computation on notional basis, it is made dependent on the manner of conduct of the assessee in respect of the earlier assessment period and particularly as to the assessee has been following this uniformly over a period of years and the test being when there was a notional gain as to whether it had been offered for tax etc. The Supreme Court took the view that such claim can be entertained subject to fulfillment of the following six conditions: (i) whether the system of accounting followed by the assessee is the mercantile system, which brings into debit the expenditure amount for which a legal liability has been incurred before it is actually disbursed and brings into credit what is due, immediately it b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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