TMI Blog2021 (5) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... o R D expenses Therefore, it is very clear in view of the detailed explanation filed by the appellant the AO had formed an opinion before passing the original assessment order and the appellant had discharged the evidences to the satisfaction of the assessing officer. Therefore in view of the above compliance the appellant was not in default within the proviso to section 147 with regard to R D expenses. Therefore the second limb of the reasons recorded under section 147 for reopening fails the test of the said section. The assessee has claimed its objections to the notice u/s. 148 were not disposed off by the AO even after the onus cast on the AY by the Apex Court in the case of CIT Vs. GKN Drive shafts.[ 2002 (11) TMI 7 - SUPREME COURT] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t debtors/creditors are reinstated based on exchange rate prevailing at the end of the year and to reflect the correct position as on date, this provision was created. From this, it is clear that this is nothing provision for diminution in value of rupee. As the actual transaction has not been completed, this needs to be treated as a provision for diminution in value of rupee i.e. unascertained liability. Hence, notional foreign exchange fluctuation loss of ₹ 4,54,05,100/- needs to be disallowed. (b) The assessee has also claimed R D expenses of ₹ 2,33,36,909/-. The assessee stated vide its explanation that R D was carried out to (a) develop new blends, (b) develop new brands in various segments (c) work closely with intern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are reinstated based on exchange rate prevailing at the end of the year and to reflect the correct position as on date, this provision was created. From this, it is clear that this is nothing provision for diminution in value of rupee. As the actual transaction has not been completed, this needs to be treated as a provision for diminution in value of rupee i.e. unascertained liability. Hence, notional foreign exchange fluctuation loss of ₹ 4,54,05,100/- is disallowed and added back to the income returned. 8. Assessee has claimed R D expenses of ₹ 2,33,36,909/-. The assessee stated vide its explanation that R D was carried out to (a) develop new blends, (b) develop new brands in various segments (c) work closely with intern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses are recurring and incurred by the appellant year after year as evident from certain agreements filed. 2. While passing the original order u/s. 143(3), the AO did not ask for any further evidences from the appellant and proceeded not to take any adverse view in the matter as discussed above pertaining to R D expenses Therefore, it is very clear in view of the detailed explanation filed by the appellant the AO had formed an opinion before passing the original assessment order and the appellant had discharged the evidences to the satisfaction of the assessing officer. Therefore in view of the above compliance the appellant was not in default within the proviso to section 147 with regard to R D expenses. Therefore the second limb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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