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TMI Blog2020 (2) TMI 1535X X X X Extracts X X X X X X X X Extracts X X X X ..... red in proposing and the DRP erred in confirming disallowance of deduction of Rs. 2,59,6507- being the actual expenditure incurred during the year on employee welfare. b) On the facts and in the circumstances of the case and in law the Appellant contends that the learned Addl. C.I.T. erred in proposing and the DRP erred in confirming disallowance u/s. 40A(9) of Rs. 12,00,000 representing amount paid to Mahindra Academy. The Appellant contends that the school run by Mahindra Academy was for the benefit appellant's employees and also of other local residents and therefore, provisions of section 40A(9) are not applicable to such payment. The claim of the Appellant be allowed." 4. Hon'ble Tribunal has disposed of the ground in the following words (Para 14-15, Page 13-14); "13.................. We note that in ITA No. 586/Mum/2013 for A. Y. 2008-09, ITAT has dealt with identical issue as under :- 4. In ground no.6, the assessee has challenged the disallowance under section 40A(9) of Rs. 27,47,447 representing the actual expenditure ofRs. 18 lakhs incurred on employees welfare being contribution to Mahindra Academy. 25. Before us, it has been admitted by both the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave accepted the contention that there is no requirement in the Law to capitalize the difference in exchange to the capital assets acquired by the Appellant as also the loss arising due to difference in exchange was not contingent in nature and therefore was allowable as revenue deduction while computing the taxable income of the Appellant. Without prejudice to the aforesaid contention that the difference in exchange was allowable as revenue deduction, the Learned Addl CIT/DRP ought to have allowed depreciation on such difference in exchange as capitalized in the books of accounts." 5. We find that the ITAT has adjudicated this issue in its order as under :- "Ground No.16: Disallowance of difference in exchange loss claimed as revenue expenditure Rs. 251,63,00,000/-. 35. Brief facts of the case are that during the year, the assessee claimed a deduction of Rs. 251.63 crores out of computation of income on account of difference in exchange arising out of repayment of foreign currency loans/ revaluation of foreign currency. The loans have not been repaid during the year. The loans are said to have been utilized towards purchase of fixed assets as well as for certain current ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loans taken for capital purposes and identified and correlated the respective capital assets and when such assets have been put to use. It has submitted that foreign exhange loss on zero coupon FCCB Rs. 195.07 crore, and on HSBC loan 51.81 crores are of both capital and revenue purposes. The capital purpose loss on FCCB loan is 164.96 crores loan is 49.04 crores and on HSBC loan is 49.04 Crores. 21.5. From the balance sheet of the assessee it is seen that the assessee has secured foreign currency loan from banks Rs. 378 crores (302 crores in preceding year) and unsecured foreign currency loans on FCCB and bank is Rs. 1587 crores (1293 crores in preceding year). The secured loan includes Rs. 253 crore short term loans. From the schedule of fixed assets in the balance sheet it is seen that the assessee has added fixed assets Rs. 1291 crore during the year. The capital WIP on 31st March is 646.73 crores whereas in the preceding year it was 546.45 crores. 21.6. The addition to the assets have been made under various heads including land, building, plant and machinery, furniture fittings and vehicles, development and software expenditure. The assessee pas not furnished details of forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ores made by the AO is upheld and the AO is further directed to tax the foreign exchange gain of Rs. 9.82 crore on ICD." 39. Against this order, assessee has filed an appeal before us. 40. The submission of the ld. Counsel of the assessee on this issue are summarised as under:- "There is no provision in the Income Tax Act, other than s. 43A, which deals with tax treatment of foreign exchange fluctuations. In this situation, the accounting principles laid down in Accounting Standards notified by the ICAI would govern. In Woodward Governor India P Ltd the SC has held (para 17) that Accounting Standard 11 is mandatory. The AS dealt with by the Court was the one ' revised in 1994 para 10 of which provided for adjustment of carrying amount of fixed assets for exchange differences; On the other hand, Para 13 of if AS 11 revised in 2003 provides that exchange differences arising on settlement or revaluation of monetary items should be treated as income or expense of the relevant period. Similarly, Income Computation and Disclosure Standards notified under s 145(2) we-f AY 2017-18 provide in Para 5(1) that expenses differences should be recognized as income or expense in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. From the perusal of CBDT Circular 10/2017 dated 23/03/2017, it is observed that ICDS shall be applicable with the transaction years held therein in relation to A.Y.2017-18 and subsequent assessment year. Admittedly, in the present assessment year the said ICDS is not applicable, hence, the exposition of Hon'ble Apex Court decision in the case of Sutlej Cotton Mills (supra) as above duly holds the field. In these circumstances, we find that the observations of the DRP in this regards are in accordance with the above said expeditions. In this view of the matter, we do not find any infirmity in the order of DRP, hence, we are upholding the same." 6. Now by way of miscellaneous application in this regard the assessee states as under :- 10.The mistake that is apparent from record is that the Honorable Tribunal has not considered the decision of Chennai Tribunal in the case of Hyundai Motor India Ltd (supra), which in turn followed the decision of the Pune Bench in the case of Cooper Corpn. (P.) Ltd. v. Dy. CIT [2016] 69 taxmann.com 244/159 ITD 165 (Pune - Trib.) where in Supreme Court decision in Sutlej Cotton Mills was considered and distinguished. 11. Further, the Honora ..... 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