TaxTMI 
TaxTMI 
2017 (9) TMI 726
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....rces. It was further noted that in the original computation of income the disallowance under section 14A has been mentioned by the assessee as Rs. 73,81,010/- but in the revised computation this disallowance was withdrawn. The Auditors also in Annexure K corresponding to clause 17(1) in Form 3CD computed the disallowance under section 14A at Rs. 73,81,010/-. When asked for the assessee submitted that no disallowance is required to be made. The AO did not agree with the submission of the assessee but made disallowance as per para 7 of the order under section 14A r.w. Rule 8D amounting to Rs. 1,31,19,335/-. Assessee went in appeal before the CIT(A. The CIT(A) partly allowed the appeal of the assessee. 4. The learned A.R. before us referred to page 2 of the paper book which contains the computation of income and on that basis it was submitted that the assessee got the dividend from foreign subsidiary companies amounting to Rs. 15,47,12,858/- and the same has been shown as income from other sources. It is not the case that the dividend earned by the assessee has been claimed as exempt. It was also submitted that the assessee has not earned any dividend from the investments made in Ind....
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....n of Rs. 1,79,57,029/-. When the matter sent before the CIT(A), the CIT(A) upheld the action of the AO ion invoking section 145A of the Income Tax Act to compute closing stock but on the issue of correctness of the calculation of the AO he directed the AO to take into consideration the grievances of the assessee and verify the calculation as made at the time of assessment proceedings by strictly keeping in view the provisions of Section 145A alongwith the directions of the CIT(A) as given in A.Y. 2006-07. Thus allowed this ground statistically. 9. We heard the rival submissions and gone through the orders of the tax authorities below. We noted that provisions of Section 145A were effective from 01.04.1999 and applies from A.Y. 1999-200 onwards. The scope and effect of section 145A have been elaborated by the Departmental circular No. 772 dated 23rd December, 1998 as under: - "52.1 Method of accounting in certain cases:-52.1 The issue relating to whether the Value of the closing stock of the inputs, work-in-progress and finished goods must necessarily include the clement for which MODVAT credit is available, has been a matter of considerable litigation over the years. 52.2 Con....
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....nbsp; Purchases 150 10 1500 ED on Purchases 150 2 300 Closing Stock 40 Sales 130 15 1950 ED on Sales 130 5 650 Under the Exclusive Method: P & L Account Dr Particulars Rs. Cr. Particulars Rs. Opening Stock 200 Sales 1950 Purchases 1500 Closing Stock 400 Excise Duty 0 Gross Profit 650 Total 2350 2350 Under the Inclusive Method: P & L Account Dr Particulars Rs. Cr. Particulars Rs. Opening Stock 240 Sales 2600 Purchases 1800 Closing Stock 480 Excise Duty 650 Credit obtained on consumption 260 Gross Profit 650 Total 3340 3340 From the aforesaid illustration it is clear that the profit computed under the inclusive and the exclusive method of accounting are the same and there would not be any change even if the profit computed by the assessee is adjusted in accordance with the provisions contained u/s 145A of the I.T. Act because to the extent the closing stock will be increased. In respect of raw materials the cost of the purchase ....
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....ard the rival submissions and carefully considered the same along with the orders of the tax authorities below. We have gone through the provisions of Section 43(5) which defines speculative transaction. We noted that as per the definition given in sub-section (5) the transaction entered into cannot be treated to a speculative transaction. The definition of speculative transactions under section 43(5) is an exhaustive one and the term 'commodity' including shares and stocks but does not include currency. (a) The term 'commodity' is defined neither in the Income-tax Act nor in the General Clauses Act. (b) Dictionary meaning of the term 'commodity' is 'raw material or agricultural product that can be bought and sold - something useful or valuable'. (c) Another definition for the term 'commodity' is 'any product that can be used for commerce or an article of commerce which is traded on an authorised commodity exchange is known as commodity'. The article should be movable of value, something which is bought or sold and which is produced or used as the subject of barter or sale. (d) In short, commodity includes all kinds of goods. ....
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.... on account of disallowance of loss on foreign exchange forward contract loss and not appreciating the fact that the said loss was a notional loss and hence cannot be allowed." The Hon'ble High Court after discussing the submissions of both parties held as under: - "7. The impugned order of the Tribunal has, while upholding the finding of the CIT (Appeals), independently come to the conclusion that the transaction entered into by the Respondent assessee is not in the nature of speculative activities. Further the hedging transactions were entered into so as to cover variation in foreign exchange rate which would impact its business of import and export of diamonds. These concurrent finding of facts are not shown to be perverse in any manner. In fact, the Assessing Officer also in the Assessment Order does not find that the transaction entered into by the Respondent assessee was speculative in nature. It further holds that at no point of time did Revenue challenge the assertion of the Respondent assessee that the activity of entering into forward contract was in the regular course of its business only to safeguard against the loss on account of foreign exchange variation. Even....
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.... 1440 of 2014 in the case of CIT vs. M/s. Jaimin Jeweller Exports Pvt. Ltd. the Hon'ble High Court vide its order dated 17th February, 2017 decided the issue in favour of the assessee in view of the decision in the case CIT vs. M/s. D. Chetan & Co. and that ofCIT vs. M/s. Jaimin Jeweller Exports Pvt. Ltd. 15. The learned D.R. before us vehemently relied on the order of the CIT(A) but could not convince us that the facts involved in the case of the assessee are different to the decisions as has been given by the Hon'ble Bombay High Court in the above noted case law. 16. Respectfully following the decisions of the Hon'ble Bombay High Court we set aside the order of the CIT(A) on this issue and delete the disallowance of Rs. 1,40,84,283/-. 17. Ground No. 4 relates to the disallowance of repairs and maintenance of plant and machinery amounting to Rs. 4,42,922/-. The facts relating to this issue are that the AO noted that the assessee has claimed a sum of Rs. 97,15,541/- on repairs and maintenance of plant and machinery. The AO disallowed a sum of Rs. 4,42,922/- as the assessee failed to produce bills of the said amount to Topwin Equipment System. When the matter went bef....