TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 638
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....d it was duly processed under section 143(1). Thereafter, the case was selected for scrutiny and notices were issued under sections 143(2)/ 142(1) of the Act, and Assessing Officer framed the assessment U/s 143(3). 3. Since the appeal filed by the assessee and cross appeal filed by the Revenue relate to the same assessee and involve common issues, therefore, these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. First, we deal with the assessee's appeal in ITA No.455/Kol/2013, which contains three grounds of appeal. The appeal filed by the Revenue in appeal ITA No.578/Kol/2013 wherein the Revenue has raised one ground of appeal which is identical and similar to ground No. 3 of asessee`s appeal therefore, the same will be merged with assessee`s appeal and adjudicated together. The assessee is assailing the decision of the Ld.CIT(A) in confirming the following additions which were made by the Assessing Officer: (1). That in the facts and circumstances of the case the Learned Commissioner of Income Tax (Appeals)-VI/Kol was not justified in upholding that A.O's action in treating the mark to market loss on a....
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.... protect the risk of fluctuations in the interest rate and foreign exchange rates in respect of an underlying asset, and liability. In the instant case the company has entered into these forex derivative contracts to hedge the risk of interest in respect of Rupee Loan, therefore the underlying liability in the instant case is Rupee Loan. The Ld. AR for the revenue has relied on the decision of Hon`ble ITAT Kolkata Bench `B` in ITA No. 1241/Kol/2013 wherein the similar identical issues were adjudicated, vide para 25 and 26 of the said decision which are reproduced below: "25. Applying the above observations to the facts and circumstances of present case, we find that the claimed loss under consideration occurred to the assessee on account of five unexpired forex forward contracts i.e a loss incurred on account of revaluation on contract on last day of accounting period before date of maturity of forward contract. The Ld. CIT-A observed that the assessee has been following a consistent accounting policy for determining loss under AS-11 and AS-30 as required under Companies Act and it is to be noted that the accounting standards were issued by the ICAI which has received judicial r....
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....,94,8211- on account of Mark to Market of Unexpired Forex Derivatives Contracts is allowable and prayed that addition made on this account may be deleted. 6. On the other hand, the ld. Departmental Representative for the Revenue has primarily reiterated the stand taken by the Ld. AO and the Ld. CIT(A) and cited before us the CBDT Circular No.3/2010 dated 23rd March, 2010, wherein the CBDT has instructed to the department that mark to market losses which are in the nature of speculation should not be allowed as a business expenditure. Ld. DR stated that it is a notional loss which will be actually deductible from the income of the assessee on the maturity of the contract. The issue under consideration is in respect of unsettled contracts and moreover there is no any underlying assets and liability to hedge the risk. He further submitted that loss arising from mark to market position of financial instruments is different and cannot be considered allowable as deduction as such loss has not arisen so far in the normal course of business operation of the assessee. The exchange rates are still liable to fluctuate of the market in future, therefore, it is kind of a speculative transactio....
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....arate machine capable of independent and specific function and therefore, the expenditure incurred for replacement of the new machine would not come within the meaning of the works `current repairs`. He has also relied upon two decisions of the Hon`ble Supreme Court in the case of M/s Saravana Spinning Mills Pvt. Ltd. [2007] 293 ITR 201 and M/s Sri mangayarkarasi Mills (P) Ltd [2009] 315 ITR 114 (SC) which support the view of the Assessing Officer. The Assessing Officer also noted that on the similar set of facts, the Hon`ble ITAT has upheld the action of the assessing officer in treating the expenditure incurred by the assessee as a capital in the assessment year 2005- 06 in the assessee`s own case, and the CIT (A) has also upheld the action of the Assessing Officer in treating the expenditure incurred by the assessee as a capital in the assessment year 2006-07 in the assessee`s own case. Aggrieved form the order of the Assessing Officer, the assessee filed an appeal before Ld. CIT (A)-VI, Kolkata, who has confirmed the action of the Assessing Officer. Not being satisfied from the order of the CIT(A), the assessee is in further appeal before us. 10. Before us, the Ld. AR for the....
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....and in law,when the Ld. CIT (A) has upheld the applicability of computation of the disallowance U/s 14A to be worked out as per the prescribed procedure U/s 8D, however, the Ld. CIT(A) grossly erred in giving leeway while considering the balance of investment, income from which does not or shall not form part of the total income, as on the last day of the previous year, when there is no such provision or relaxation U/s 8D (ii) & (iii)." Assessing Officer disallowed Rs. 30,00,514/- under section 14A of the I.T. Act,read with Rule 8D. The Assessee has suo-moto disallowed U/s 14A of the Act at Rs. 1,80,880/- as STT paid on the investment. The assessee has earned dividend of Rs. 57500/- only.The assessee has opening balance of investment of Rs. 25,57,753/- and purchased share worth of Rs. 144,804,322/- on 26/03/2008. Aggrieved form the order of the Assessing Officer, the assessee filed an appeal before Ld. CIT (A)-VI, Kolkata, who has confirmed the action of the Assessing Officer. Not being satisfied from the order of the CIT(A), the assessee is in further appeal before us. 15. Before us, the Ld. AR for the assessee has submitted that Assessing officer has disallowed Rs. 30,00,514/-....