TaxTMI 
TaxTMI 
2019 (4) TMI 765
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....B. 2.0 That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and grossly erred in confirming the disallowance of leave encashment claimed on provision basis amounting to Rs. 4,66,803/- in computing total income under the provisions of the Act other than Sec. 115JB. 3.0 That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and grossly erred in confirming the addition of Foreign Exchange Fluctuation loss amounting to Rs. 30,88,634/- in computing Book Profit u/s 115JB. 4.0 That the appellant craves leave to add, to amend, modify, rescind, supplement or alter any of the Grounds stated here-in-above, either before or at the time of hearing of this appeal." ITA No. 5710/DEL/2014 "1. On the facts and circumstances of the case, the Ld.CIT(A) has erred in deleting the disallowances of Rs. 9,98,89,316/- made on account of deprecation claimed by the assessee at a higher rate by not appreciating that the facts of the case on which relied is different from the case of the assessee company. 2. On the facts and circumstances of the case, the appellant craves to be allo....
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.... Particulars Amount (in Rs.) Treatment in Computation of Total Income Order u/s 143(3) 1. Foreign Exchange fluctuation loss - on account of Interest received from RIDO 3,17,476 Claimed as revenue expenditure Allowed 2. Foreign Exchange fluctuation loss - on account repayment of Loan by RIDO 25,52,021 Claimed as revenue expenditure Disallowed 3. Foreign Exchange fluctuation loss Restatement of amount outstanding against Hongua International 5,36,613 Claimed as revenue expenditure Disallowed 4. Foreign Exchange fluctuation gain - on change in accounting method (15,62,104) Excluded while computing total income and reduced against WDV of Fixed Assets in Tax Audit Report. 5. Foreign Exchange fluctuation gain -on account of amount remitted (32,587) Offered to tax Total 18,11,419 7. The Ld. AR submitted that the assessee has earned interest @ 12% p.a. on such loan and interest so earned has been treated as income in the books, as evident from schedule 18 of the Audited Accounts. The assessee offered the interest earned on loan given to Russia Indian D....
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....was held that the nature of expenditure being capital or revenue does not depend on the purpose for which foreign currency loan was obtained or on nature of ultimate utilization of loan amount. Further, the Ld. AR relied upon the decision of the jurisdictional High Court in the case of CIT vs. L.G. Electronics India (P) Ltd. (2009) 309 ITR 265 (Delhi) wherein it was held that loss due to foreign exchange rate fluctuation in respect of imported machinery is allowable expenditure. The Ld. AR also relied upon the decision of Hon'ble Apex Court in case of ONGC vs. CIT (2010) 189 Taxmann 292 (SC) wherein it was held that when assessee maintained its accounts on mercantile system of accounting, there was no finding by Assessing Officer on correctness or completeness of account and assessee had complied with Accounting Standards laid down by Central Government, 'loss' suffered by assessee on account of fluctuation in rate of foreign exchange as on date of balance sheet could be allowed as an expenditure under section 37(1) notwithstanding fact that liability had not been actually discharged in year in which fluctuation in rate of forex had occurred. In absence of specific prov....
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....Accounts. The assessee offered the interest earned on loan given to RIDO to income tax. The entire loan was repaid by RIDO during the assessment year under consideration as can be seen from Schedule 9 of the Notes to Accounts. As per AS-11, treatment of foreign exchange loss arising out of foreign currency fluctuations in respect of fixed assets acquired through loan in foreign currency shall required to be given in profit and loss account and the same should be allowed as revenue expenditure. The Hon'ble Apex Court in Woodward Governor India (P) Ltd (supra) had followed treatment of exchange loss or gain as per AS-11 (1994). In view of revision made in AS-11 in 2003, exchange gain or loss on foreign currency fluctuations in respect of foreign currency loan acquired for acquisition of fixed asset should be allowed as revenue expenditure. In the present case, the CIT(A) as well as the Assessing Officer has not taken into account the decision of the Apex Court in case of Indian Cements Ltd. (supra) wherein it was held that the nature of expenditure being capital or revenue does not depend on the purpose for which foreign currency loan was obtained or on nature of ultimate utilizat....
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....has provisionally stayed the order of the Hon'ble Calcutta High Court in the case of Exide Industries (Supra), the Ld. AR submitted that the Hon'ble Apex Court vide its interim order in Civil No. 12060/2008 dated 08-09-2008, had granted stay to the said order of Exide Industries Ltd (supra), but not reversed the decision of Hon'ble High Court. However, vide subsequent order in Civil No. 22889/2008 dtd. 08-05-2009, the stay has been vacated. Hence, the lower authorities are bound by the decision of Hon'ble High Court. Since Hon'ble Apex Court has vacated the stay on the order of the Calcutta High Court, decision of the Calcutta High Court is still a binding precedent. 11. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). As regards Ground No. 2 of assessee's appeal, the Ld. DR submitted that the Assessing Officer has rightly disallowed claim of leave encashment on provision basis as the same is allowable on payment basis as per provision of Section 43B (F) and is not ascertain liability. 12. We have heard both the parties and perused all the relevant material available on record. Leave Encashment under no circumstance can be called as....
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....on 115JB is an overriding section, as it is specifically mentioned in that section that the other provisions of this act is not applicable while computing book profit u/s 115JB of the Act is correct as per the Income Tax Act, 1961. In the absence of any provision in Explanation 1 to Sec. 115JB to make addition on account of expenditure towards foreign exchange fluctuation loss, the addition made by the AO is erroneous. The reliance upon the decision of Apex Court in the case of Apollo Typres Ltd. vs. CIT (2002) 255 ITR 273 (SC) by the Ld. AR is apt as the Apex Court held that the Assessing Officer while computing the book profits of a company u/s 115J of the Income Tax Act, 1961, has only the power of examining whether the books of accounts are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. Sub-section (1A) of section 115J does not empower the Assessing Officer to embark upon a fresh enquiry in regard to the entries made in the books of accounts of the company. Ground No. 3 of the assessee's appeal is allowed. 16. As regards Revenue's appeal, the Assessing Officer allowed depreciation at 15% on Oilers....
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.... 2723/20121 and hence the decision has attained finality. The Ld. AR also relied upon the decision of the Tribunal in DCIT vs. Gearhert India Ltd (1999) 64 TTT 63 (Del) wherein it was held that if the plant and equipment are of the same nature as used in mineral concerns, depreciation has to be allowed at higher rate. In order to determine the rate of depreciation, it is not necessary that the assessee should own the mineral oil concern, but the principle of end use of the assets is applicable. The Ld. AR relied upon the decision of Jurisdictional High Court in CIT vs. Bansal Credits Ltd. & Ors (2003) 259 ITR 69 (Del) wherein it was held that it is the end user of the specified asset which is relevant for determining the rate of depreciation. Further, Hon'ble Apex Court in the case of CIT(A) vs. Shaan Finance Pvt. Ltd. (1992) 231 ITR 308 (SC) has observed that the owner is entitled to depreciation on the machinery which has been hired out. Similar view was given in the case of CIT(A) vs. First Leasing Co. of India Ltd. (1995) 216 ITR 455 (Mad) and CIT vs. M.G.F. (India) Ltd. (2006) 285 ITR 142 (Del). 19. We have heard both the parties and perused the material available on re....