2019 (6) TMI 1403

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....lized foreign exchange loss on account of reinstatement of assets and liabilities of Rs. 68,63,845/- by ignoring the fact that this is a notional loss and not allowable to be set off against the taxable income in view of CBDT's instruction no. 3 of 2010 dated 23.03.2010? 2. Whether on the facts & the circumstances of the case, Id. CIT(A) is right in deleting the addition of interest on refund of Rs. 1,35,51,996/- by ignoring the fact that the interest income of Rs. 1,35,51,996/- was received during the year under consideration and cannot be deferred to further years as the assessee is using mercantile system of accounting? 3. Whether on the facts & the circumstances of the case, ld. CIT(A) is right in deleting the addi....

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....ange loan on account of reinstatement of assets and liabilities by ignoring the fact that this is a notional loss and not eligible to be set off against the taxable income in view of the CBDT Instruction No. 3/10 dated 23/03/2010. As regards Ground No. 2, the Ld. DR submitted that the CIT(A) was incorrect in deleting the addition of interest on refund of Rs. 1,35,51,996/- by ignoring the fact that the interest income was received during the year under consideration and cannot be defer to further years when the assessee is using mercantile systems of accounting. As regards Ground No. 3, the Ld. DR submitted that the CIT(A) erred in deleting the addition on account of defect as per AIR Information of Rs. 1,13,58,600/- by ignoring the fact tha....

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.... (d) The fact that the department taxed the foreign exchange gains of Rs. 2,00,01,430/- on fluctuation on the basis of accrual in appellant's own case for AY 2010-11. Therefore, disallowing the loss in this year shall amount to the double standards adopted by the Department. (e) U/s 43A (pre-amendment), the change in the rate of exchange subsequent to the acquisition of asset triggers the adjustment in the actual cost of the assets. Actual payment of the liability as a consequence of the exchange variation is not required. The amendment of s. 43A by the FA 2002 w.e.f. 1.4.2003 is not clarificatory. Note: The judgement of the ITAT Special Bench in ONGC vs. ITO 83 1TD 151 has been approved by the Hon. Supreme Court in ....

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.... which the refund is received. Therefore, an addition on account of interest on refund is directed to be treated as income of AY 2015-16(the year in which the refund is actually received). The AO shall grant the consequential relief.  The records show that no refund has been received by the assessee in A.Y. 2011-12 which was received in June 2014 after adjustment of outstanding demands. The interest income was offered to tax in A.Y. 2015-16 by the assessee. Therefore, the CIT(A) has given a proper finding and there is no need to interfere with the same. Ground No. 2 of Revenue's appeal is dismissed. 9. As regards Ground No. 3, the CIT(A) held as under:- "I have considered all the facts and circumstances of the case as we....