2015 (10) TMI 165

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....respectively. The Revenue has filed cross-appeals for the AYs under consideration in ITA Nos.427 & 428/Mds/2014. ITA Nos.218 & 219/Mds/2014 have been filed by Smt.Radha Daga, assailing the orders of Commissioner of Income Tax(Appeals)-I, Chennai dated 21-11-2013 for the AYs.2008-09 & 2009-10, respectively. The Revenue has filed cross-appeals for the AYs under consideration in ITA Nos.431 & 432/Mds/2014. 2. The facts as emanating from the records are as under: The assessees are exporter of garments. The Assessing Officer in case of both the assessees during the course of scrutiny assessment made addition/dis-allowance inter alia u/s.14A of the Income Tax Act, 1961 (herein after referred to as 'the Act') and u/s.40(a)(i) of the Act.....

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....s 60 SOT 75 (Chennai), judgment of the Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Hero Cycles Ltd., reported as 323 ITR 518 and the judgment of Hon'ble Madras High Court in the case of CIT Vs. Hotel Savera reported as 239 ITR 795. On the issue of dis-allowance of foreign exchange fluctuation loss, the ld.Counsel submitted that the forward contract was entered by the assessee for hedging foreign exchange fluctuation risk. The loss suffered by the assessee was not on account of any speculative transaction. 4. On the other hand, Shri Guru Bhashyam, appearing on behalf of the Revenue vehemently supported the findings of CIT(Appeals) on dis-allowance u/s.14A r.w.Rule 8D. However, the ld.DR assailed the findings of CIT(A....

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....assessees in all the four appeals have assailed the findings of CIT(Appeals) in upholding the dis-allowance made by Assessing Officer u/s.14A r.w.Rule 8D. A perusal of the assessment order in ITA No.216/Mds/2014 AY.2008-09 shows that the assessee has made dis-allowance of Rs. 12,032/-, whereas in other cases no dis-allowance has been made. 6.1 The assessee-company had investments to the tune of Rs. 2,58,99,556/- in the period relevant to AY.2008-09. The Assessing Officer in his order has categorically stated that he has reasons to believe that the company has incurred expenditure towards maintaining his investments and the dis-allowance made by the assessee is not adequate. As far as the other three appeals are concerned, as pointed earlie....

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....sing Officer shall re-compute dis-allowance u/s.14A after taking into consideration the entire facts of the case and the well settled law. 7. The assessee in appeal ITA No.219/2014 for AY.2009-10 has raised ground with regard to foreign exchange fluctuation loss. The argument of the assessee is that the forward contract was entered for the purpose of hedging risk of foreign exchange fluctuations. The Assessing Officer dis-allowed Rs. 4,41,410/- by holding it as speculation loss, that cannot be set off against business profits. The Assessing Officer while coming to such a conclusion placed reliance on the decision of Bangalore bench of the Tribunal in the case of ACIT Vs. K.Mohan & Co., (Exports) (supra). The Hon'ble Bombay High Court i....