Court dismisses appeal challenging ITAT order on foreign exchange losses for AY 2008-09. Lack of jurisdiction accepted.

The High Court dismissed the appeal challenging the Income Tax Appellate Tribunal's order regarding the deletion of notional loss on foreign exchange fluctuation derivatives for Assessment Year 2008-09. The Court found that the lack of jurisdiction for the Commissioner of Income Tax to exercise powers under Section 263 was accepted by the Revenue, rendering the issue academic and not raising any substantial question of law. Consequently, the appeal was dismissed without costs.

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Issues:
1. Challenge to the order of the Income Tax Appellate Tribunal regarding the deletion of notional loss on account of foreign exchange fluctuation on derivatives for Assessment Year 2008-09.
2. Jurisdictional requirement for the exercise of power under Section 263 of the Income Tax Act.
3. Merits of the claim for loss on account of foreign exchange fluctuation on derivatives.

Issue 1: Challenge to Tribunal's Order on Notional Loss Deletion

The High Court considered an appeal challenging the Income Tax Appellate Tribunal's order dated 20th November, 2013, relating to the Assessment Year 2008-09. The primary question raised by the Revenue was whether the Tribunal was justified in deleting the disallowance of notional loss on account of foreign exchange fluctuation on derivatives. The Tribunal's decision was based on an appeal by the Respondent-Assessee, contesting the Commissioner of Income Tax's order under Section 263 of the Act. The Tribunal allowed the appeal on two grounds: first, that the Assessing Officer's view was a possible one, indicating no error or prejudice to the Revenue, and second, on the merits of the claim for loss on account of foreign exchange fluctuation on derivatives.

Issue 2: Jurisdictional Requirement for Section 263 Power

The High Court noted that the Revenue had not challenged the Tribunal's decision regarding the lack of jurisdiction for the Commissioner of Income Tax to exercise powers under Section 263 of the Act in the present case. Consequently, the Revenue accepted the lack of jurisdiction in passing the order under Section 263. As a result, the question raised by the Revenue for consideration became academic due to the lack of jurisdiction for the Commissioner to delve into the merits under Section 263. Therefore, the High Court concluded that the issue of lack of jurisdiction was accepted by the Revenue, rendering the proposed question academic and not giving rise to any substantial question of law.

Issue 3: Merits of Claim for Loss on Derivatives

Given the lack of challenge by the Revenue regarding the jurisdictional aspect, the High Court dismissed the appeal, stating that the question raised by the Revenue was academic and did not warrant further consideration. Consequently, the appeal was dismissed, and no order as to costs was issued.

In conclusion, the High Court dismissed the appeal as the issue of lack of jurisdiction in the Commissioner of Income Tax to pass an order under Section 263 was accepted by the Revenue. The Court found that the proposed question was academic and did not give rise to any substantial question of law, leading to the dismissal of the appeal without costs.

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