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TMI Blog2020 (3) TMI 1486X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. We first take up the revenue appeals. The Grounds of appeal in ITA No. 113/Kol/2017, are as follows:- "1. That CIT (A) has erred both in facts and in law in deleting the disallowance of 50% additional depreciation in A. Y. 2009-10 ignoring the fact that 50% of additional depreciation was claimed and allowed in asst year 2008-09 and plant & machinery which was put to use for less than 180 days in the assessment year 2008-09 was no longer new and hence was not eligible for additional depreciation in assessment year 2009-10. 2. Ld. CIT(A) has erred in facts as well as on law in treating the compensation received for under performance of machine as capital receipts, ignoring the reasoned order of the A.O. & relying on the assessee's submission. 3) Ld. CIT(A) has erred in facts as well as on law in deleting the disallowance made for delay in deposit of employee's contribution towards provident fund and ESI and allowing relief under section 43B by failing to appreciate the fact that the provisions of employees contribution is governed by the provisions of Sec 36(I)(va) read with 2(24)(x). 4) The Ld. CIT(A) has erred in facts as well as on law in deleting the disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation. The ld. CIT(A) at page 3 of his order followed the judgment of the Delhi Bench of the ITAT in the case of DCIT vs. Cosmo Films Ltd. (2011) 30 CCH 0419 (Delhi Tribunal) and held that "if only half of additional depreciation is allowed in the first/initial year because of user of less than 180 days the balance half of the additional depreciation has to be allowed in the following year as unabsorbed depreciation.........amendment made by Finance Act, 2016 [ proviso to Section 32 (1)(ii) of the I.T. Act, 1961] is retrospective." 5.1. The ld. D/R could not bring to our notice any contrary decision/judgment in this regard and whereas, the ld. Counsel for the assessee relied on the following decisions in support of the order of the ld. CIT(A). * Birla Corporation Ltd. vs. DCIT (ITA No. 683/Kol/2011) * Century Enka Ltd. vs. DCIT (ITA No. 560/Kol/2010) 6. As the ld. CIT(A) has followed the propositions of law laid down by different benches of the ITAT on this issue, which are cited above, we find no infirmity in his order and hence this ground of the revenue in both the appeals. 7. Ground No. 2, is on the issue as to whether compensation received for under performance of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s relied upon in the submission and listed above. Following the said decisions the Ground No. 2 is allowed and the compensation towards the technical loss computed at Rs. 5,16,27,109/- is termed as capital receipt." 8. The Kolkata 'A' Bench of the Tribunal in the case of Xpro India Ltd. (supra), considering a similar issue at para 8 held as follows:- "8. We have heard both the sides and perused the materials available on record. Before us the ld. DR submitted that that the assessee is claiming double deduction by not reducing the compensation from the value of the machine which is not as per law and relied in the order of AO. On the other hand the learned AR submitted that compensation was received as the machine supplier failed to meet the predetermined performance parameters therefore it is a capital receipt. From the facts of the case of the finding that the assessee has purchased plant and machinery from a company based in UK which agreed for certain performance parameter but failed to achieve the desired level of performance. Accordingly the UK Company had to pay the compensation to the assessee in terms of the agreement. The AO has linked compensation with the cost of mach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion are valuable only as indicating the matters that have to be taken into account in reaching a conclusion. In Rai Bahadur Jairam Valji's case (supra), it was observed thus : "The question whether a receipt is capital or income has frequently come up for determination before the courts. Various rules have been enunciated as furnishing a key to the solution of the question, but as often observed by the highest authorities, it is not possible to lay down any single test as infallible or any single criterion as decisive in the determination of the question, which must ultimately depend on the facts of the particular case, and the authorities bearing on the question are valuable only as indicating the matters that have to be taken into account in reaching a decision. Vide Van Den Berghs Ltd. v. Clark [1935] 3 ITR (Eng. Cas.) 17. That, however, is not to say that the question is one of fact, for, as observed in Davies (H.M. Inspector of Taxes) v. Shell Company of China Ltd. [1952] 22 ITR (Suppl.) 1, "these questions between capital and income, trading profit or no trading profit, are questions which, though they may depend no doubt to a very great extent on the particular fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er had failed to supply the plant within time as stipulated in the agreement and clause No. 6 thereof came into play. The afore-stated amount received by the assessee towards compensation for sterilization of the profit-earning source, not in the ordinary course of their business, in our opinion, was a capital receipt in the hands of the assessee. We are, therefore, in agreement with the opinion recorded by the High Court on question Nos. (i) and (ii) extracted in Para 1 (supra) and hold that the amount of Rs. 8,50,000 received by the assessee from the suppliers of the plant was in the nature of a capital receipt." 9. As the ld. CIT(A) has applied the proposition of law laid down by the Hon'ble Supreme Court, on similar facts, we have to uphold the same and dismiss Ground No. 2 of the revenue in both the appeals. 10. Ground No. 3 is on the issue of disallowance made for delay in deposit of employees contribution towards ESI. 11. The ld. CIT(A) on facts held that the ESI payments in question were made in September, 2008 and hence made before the prescribed due date of filing of the return u/s 139 of the Act and hence allowable. This factual position could not be disputed by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of foreign exchange loss amounting to Rs.74,39,71,483/-. The CIT(A)'s detailed discussion qua this last issue reads as under:- "4. I have carefully considered the action of the Ld.AO as well as the various submissions and arguments made by the appellant company. I have also carefully examined the Paper Book bearing reference to the various issues placed for attention by the Ld. A.R for the appellant in his submissions. From the factual matrix, it emerges that the Ld. A.O. observed that the assessee-company had booked foreign exchange loss of Rs. 14,26,54,748/- on repayment of foreign currency loans and Rs. 60,13,16,734/- under the head exception items, aggregating to Rs. 74,39,71,483/-. When required to explain during the scrutiny proceedings, it was submitted by the appellant that the exceptional items were pertaining to unusual diminution in the value of rupee as against the US Dollar during the year, that the closing value of Packing Credit Facility (PCFC) and External Commercial Borrowings (ECB) had been restated at the rate prevailing as on the last of the A.Y. as per AS-11 and sec. 43A does not permit the capitalization of this loss and that the net loss of Rs. 51,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to notice in the succeeding year AY 2013-14, the Ld AO has allowed foreign exchange loss of Rs. 45,11,62,855/- being the actual foreign exchange loss incurred on account of import of cooking coal and export of metcoke to be allowable u/s. 37(1) of the Income Tax act, 1961. In the matter of the Revaluation / cancellation of contracts after examination of the details submitted by the appellant, I find that the Ld AO has disallowed the loss on specious grounds that there was no binding urgency on the assessee to cancel the contracts prematurely. The Ld. AO has said that the business expediency was not emanating from such cancellation. However, I find that the matter has been explained by the appellant that it has entered into a number of forward contracts in foreign currency in the normal course of its business of import and export of goods to hedge against fluctuation in exchange rates, and that however, due to insufficient funds to pay to the Bank for import of goods as on the date of maturity of the contact, it had to cancel ta few contracts during the year. It was explained that due to cancellation of these contracts, the Bank debited/credited the account of the assessee with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id liability at the closing rate, should be recognized in the P&L account for the reporting period". 5. It is also observed that as has been brought top notice and relied upon by the appellant company, the said matter is also covered in favor of the assessee by the order of the Hon'ble Jurisdictional ITAT-"C" - Bench in ITA No. 2133/Kol/2010 in the case of Neptune exports Ltd. In their order dated 29.03.2011, the Hon'ble ITAT, relying on the decision of the Hon'ble Apex court in CIT Vs Woodward Governor India Ltd. have observed as follows: "As regarding disallowance on account of foreign exchange fluctuation loss as well as profit on conversion of foreign currency keeping in view of the fact that the Hon'ble Apex Court cited supra has held that "loss suffered by the assessee in respect of the revenue liability on account of exchange difference as on the date of the balance sheet is an item of expenditure allowable u/s 37(1) in the year of accrual." Since the view taken by the Id. CIT(A) is in conformity with the decision of the Hon'ble Apex Court we find no infirmity in the orders of the Id. CIT(A) and we confirm the same and dismiss the appeal of the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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