TaxTMI 
TaxTMI 
2010 (2) TMI 914
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..... It has ceased its operations in subsequent years. There is no reason or possibility of recovery of the loan from its subsidiary in future. In this particular case, the claim can only be allowed on actual basis. In the view of these facts, the claim of foreign exchange loss of Rs. 50,02,815/- is donated. The basis of computation of assessed income shall originate/emanate only from the return of income filed on 01.11.2004. the revised computation is ignored except the admitted inadvertent mistakes. No separate addition of Rs. 50,02,815/- is required to be made." 4. Upon asseessee's appeal ld. CIT(A) referred the decision of the Jurisdictional High Court in the case of CIT vs. Woodward Governor reported in 294 ITR 451. Ld. CIT(A) held that advances to the subsidiary was a revenue account and once the same was on revenue account any loss on account of fluctuation in the rate of foreign exchange on the last day of the financial year is not a notional loss and has to be allowed as deduction under section 37 of the Act. 5. Against the above order the revenue's is in appeal before us. 6. It has been urged on behalf of the revenue that the claim of exchange....
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....affirmed by the Hon'ble Apex Court. As per the ratio emanating from this case, loss on account of foreign exchange fluctuation is not a notional loss and if the loss is on revenue a/c it has to be allowed as revenue loss. In this view of the matter, we do not find any infirmity in the ld. CIT(A) orders on this issue. Accordingly, we uphold the same. 9. The next issue raised is that ld. CIT(A) erred in deleting the addition of Rs. 14,51,465/- made by the AO by invoking provisions contained in section 92CA of the Act. 10. On this issue the AO noted that assessee had given loans and advances to M/s PPML its wholly subsidiary without charging any interest. Assessee has also explained to the AO that the subsidiary company was regularly declaring dividend and the same has been offered for taxation in the year of receipt and advances made to the subsidiary company were free of interest. AO observed that assessee company has failed to explain why interest free loans was advanced to M/s PPML. He observed that even an advance payment were made for M/s PPML for purchase of bullion, the advances cannot be retained for very long period. In his opinion, the reasonable period may ....
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....fficer in all cases. Section 92CA which provides for reference to TPO postulates that when AO considered it necessary or expedient so to do, he may, with the previous approval of the Commissioner, refer the matter to the TPO hence the first plank of the assessee's argument and the ld. CIT(A) reliance on the same that AO cannot compute the arms length price without referring the matter to the TPO is not sustainable. 15. We find that Hon'ble Apex court in the case of Kapurchand Shrimal vs. CIT, 131 ITR 451, it was held that the appellate authority has jurisdiction as well as the duty to correct the errors in the proceedings under appeal. Accordingly, we remit the issue to the files of the CIT(A) to consider the issue afresh after granting adequate opportunity to the assessee of being heard. 16. The next issue raised is that the on the facts and in the circumstances of the case, the learned CIT(A) has erred in deleting addition of Rs. 1,19,07,201/- made on account of alleged understatement of sale of bullion completely ignoring the aspect that of non-identification of alleged purchase to whom the cash sales were made. 17. On this issue the AO observed that the ....
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....iable to be added to the income under section 69A of Income Tax Act, 1961." 18. Upon assessee's appeal ld. CIT(A) observed that it has been verified by the AO that he confirmed that Bullion Associations rates are in respect of retail transaction and not in respect of wholesale trade. In this view, he held that since Delhi Bullion Association rates are not applicable to the business of the assessee company, therefore, the same cannot be applied to compute understatement of sales. Hence, he held that addition of Rs. 1,19,07,201/- made on account of alleged understatement of sales by adopting Delhi Bullion Association rates was no in accordance with law. Even otherwise, the ld. CIT(A) found that assessee has submitted books of accounts which have been audited and have been duly accepted. He further referred to the fact that sales were declared by the assessee to the sales tax authorities and in support of which sales tax assessments returns were placed on record. On these facts the ld. CIT(A) observed that it was not justified by the AO to adopt the rates of Bullion Association. According to the CIT(A) AO ought to have brought some material on record to establish any considera....
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....tion has been made by adopting the average rates of DBA. In any case, what is relevant here is that there is no material which establishes that assessee has received sums or was entitled to receive sums in excess of declared consideration. In my opinion, in such circumstances, there was no statutory provision of the Act which enables the learned Assessing Officer to levy tax on a sum which has neither accrued to the assessee and, nor received by it. In the light of the above position, addition made of Rs.1,19,07,201/- is held to be made not in accordance with law and is therefore, deleted." 19. Against this order the revenue is in appeal before us. 20. We have heard both the counsels and perused the records. AO's basic reason is that there are cash sales which are not verifiable and the rates whereof is below the average rate of Delhi Bullion Association. As pointed out by the ld. CIT(A),AO on remand has himself accepted that the Delhi Bullion Association rates are wholesale rates and are not applicable to the case of the assessee. In any case, it is not the case of the AO that he has come across any material showing that the assessee is receiving something over and....
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....ecific findings recorded by the AO other than making the general statement and referring to past history. Ld. CIT(A) held that it is a settled law that principles of resjudicata are not applicable to the income tax proceedings. When AO had pointed out specific expenditure which he has held as nonbusiness expenditure, it was incumbent upon the assessee to lead material to rebut the finding of the AO. Since none of the findings were rebutted, ld. CIT(A) held that disallowed so made by was valid. 22.2 Against this order the assessee is in appeal before us. 23. We have heard both the counsels. We find that AO has made specific reference to the vouchers wherein various hotels bills of dinning etc. including that through credit cards were mentioned. AO observed that some of the expenditure related to the other concerned, some were personal expenditure of Shri SK Jindal etc.; ticket for Ms. Prachi Jindal; visa charges of Mrs. A. Jindal; ticket for Ms. Manju Aggarwal; payment to Ladies Club etc. AO has specifically pointed out that these expenditures were not related to the business of the assessee. Assessee did not rebut these findings by leading any cogent material to sho....