Tribunal upholds CIT(A)'s decisions on various tax issues, including delay condonation and foreign exchange loss treatment.

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on all issues, including condoning the delay in filing the appeal, allowing the Employees' Contribution to Provident Fund, treating foreign exchange loss as a business loss, and directing the re-computation of disallowance under Section 14A read with Rule 8D. The order was pronounced on 30/11/2018.

---

---

Issues Involved:
1. Delay in filing the appeal.
2. Disallowance of Employees' Contribution to Provident Fund.
3. Disallowance of foreign exchange loss.
4. Disallowance under Section 14A read with Rule 8D.

Detailed Analysis:

1. Delay in Filing the Appeal:
The Revenue's appeal suffered from a 10-day delay in filing. The delay was attributed to the compilation of necessary papers. The assessee did not dispute this, and the delay was condoned.

2. Disallowance of Employees' Contribution to Provident Fund:
The Revenue challenged the CIT(A)'s order that reversed the assessment findings disallowing the assessee's Employees' Contribution to Provident Fund paid beyond the due date prescribed in the respective statute. The CIT(A) found that the contribution was paid before the due date of filing the return under Section 139(1) of the Income Tax Act. The Hon'ble jurisdictional high court's decision in ACIT vs. M/s Vijjay Shree Ltd supported this view, holding that disallowance is not sustainable if the contribution is deposited before the due date of filing the return. The Tribunal declined the Revenue's ground on this issue.

3. Disallowance of Foreign Exchange Loss:
The Revenue contended that the CIT(A) erred in deleting the disallowance of foreign exchange loss of Rs. 57,03,854, treating it as business loss allowable under Section 37 of the Act. The assessee argued that the loss was on account of hedging in the foreign currency non-resident loan (FCNR) and was related to meeting working capital requirements, not for purchasing any capital asset. The CIT(A) accepted the assessee's arguments, noting that the term loan was converted into FCNR to save on interest costs. The CIT(A) relied on the Apex Court's judgment in Sutlej Cotton Mills Ltd vs. CIT, which held that foreign exchange gain/loss on circulating capital is revenue in nature. The Tribunal upheld the CIT(A)'s decision, noting the consistency in treating foreign exchange gain/loss in the preceding year and the lack of any change in facts.

4. Disallowance Under Section 14A Read with Rule 8D:
The Revenue sought to revive the Section 14A disallowance of Rs. 31,82,084 related to exempt income from dividends. The Assessing Officer had computed disallowance under Rule 8D(2)(ii) & (iii), resulting in a net disallowance of Rs. 21,79,166. The CIT(A) directed the Assessing Officer to recompute the disallowance by including only exempt income-yielding investments, following the Tribunal's order in REI Agro Ltd. vs. DCIT and the jurisdictional high court's decision. The Tribunal found no reason to disturb the CIT(A)'s direction for recomputation.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on all issues. The order was pronounced in open court on 30/11/2018.

---