ITAT Hyderabad Decisions: Partial Win for Department in 1998-99, Foreign Exchange Ruling in 2001-02

The Appellate Tribunal ITAT Hyderabad partly allowed the Department's appeal for assessment year 1998-99, upholding the exclusion of specific income and restoration of expenses. However, the appeal for assessment year 2001-02 was dismissed, affirming the deletion of an addition related to foreign exchange fluctuations based on the Supreme Court precedent.

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Issues involved:
The judgment by Appellate Tribunal ITAT Hyderabad involved two separate appeals by the Department against orders of the CIT(A) for assessment years 1998-99 and 2001-02.

Assessment year 1998-99 (ITA No. 1001/Hyd/04):
The Department contested the exclusion of income derived by an industrial undertaking from the business of power generation. The Assessing Officer determined the book profit under section 115JA due to a loss, and after considering other income, arrived at the eligible reduction under clause (iv) of the Explanation to section 115JA(2). The CIT(A) upheld the exclusion of interest income but allowed the reduction of a specific sum earned from deposits. The Tribunal upheld the CIT(A)'s decision based on the principle that only income included in profits can be excluded. The Department also challenged the deletion of an addition towards expenses on green belt written off, which was restored by the Tribunal.

Assessment year 2001-02 (ITA No. 1003/Hyd/04):
The Department disputed the deletion of an addition related to loss on foreign exchange fluctuations. The Assessing Officer added the loss to book profits under section 115JB, considering it reimbursable to the assessee. The CIT(A) deleted the addition based on the Supreme Court's decision in Apollo Tyres Ltd. v. CIT. The Tribunal agreed with the CIT(A), emphasizing that the liability existed on the Balance Sheet date and should be reflected accurately, regardless of future reimbursement agreements. Therefore, the Tribunal dismissed the Department's appeal in this regard.

In conclusion, the Department's appeal for assessment year 1998-99 was partly allowed, while the appeal for assessment year 2001-02 was dismissed.

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