TaxTMI 
TaxTMI 
2015 (11) TMI 1759
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....ard exchange contracts could be challenged in appeal against order u/s.143(3) r.w.s.263 of the Act. Subsequently the assessee was advised to file an appeal against the order of CIT u/s.263 as the amounts involved are material and considering the recurrence of similar issue in subsequent assessment years. Hence, delay of 314 days has occurred in filing the present appeal before the Tribunal, which may kindly be condoned. 3. We have gone through the application for condonation of delay and found that there is sufficient cause mentioned in the application for delay and considering the same, we condone the aforesaid delay and this appeal is heard on merits. 4. Rival contentions have been heard and record perused. Facts in brief are that asses....
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....ized gain in forward contract of Rs. 20,32,35,393/- was liable to tax. As per the ld. A.R., commercial production of power plant of assessee had not begun in the year under consideration, therefore, the company has capitalized all the expenses incurred in relation to setting up its plant and the gains on forward contracts were reduced from the expenses to be capitalized resulting in lesser capitalization to that extent. He further contended that during the process of installation of plant and machinery , the assessee has received amount which is inextricably linked with the plant and machinery, such receipts will goes to reduce the cost of assets. These receipts are capital in nature and cannot be taxed as income. For this proposition, he p....
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....re settled and what is the outcome, were not examined at all. 7. We have considered the rival contentions, carefully gone through the orders of authorities below and find from the record that the ld. CIT in his order u/s 263 observed that the assessee has earned Rs. 62,91,30,554/- on account of cancellation of forwarding contracts entered in foreign exchange. This 'income earned' has been reduced from the total financial charges debited in the accounts since the business of the assessee has not yet started. In the year under consideration & following the ratio of Challapally Sugar Ltd., the CIT was not justified in holding that these gains arising from cancellation of forward contract in foreign exchange is to be assessed as "income from o....
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.... of cancellation for forwarding contracts entered into in connection with the offshore equipment, byepass valve system etc. Since the commercial production had not begun during the year under consideration, the assessee company correctly capitalized all the expenses incurred in relation to setting up of plant and machinery and the gains reduced from the expenses to be capitalized resulting in lesser capitalization to that extent. Our view is further supported by the decision of Hon'ble Supreme Court in the case of Challapally Sugar Ltd. (supra). Accordingly, we do not find any infirmity in assessee's claim for setting of gains on such forward contracts from the cost of plant and machinery during precommencement stage. With regard to unrecog....