TaxTMI 
TaxTMI 
2019 (12) TMI 974
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, we find that CIT(A) has followed his detailed discussion in assessment years 2007-08, 2009-10 and 2010-11 in assessee's case itself deleting identical "ALP" adjustment on the ground that a corporate guarantee does not amount to an international transaction in view of various judicial precedents i.e. Bharti Airtel Ltd. Vs. Addl. CIT (2014) 39 CCH 0445 (ITAT Delhi) M/s Videocon Industries Ltd. vs. ACIT (2015) 55 taxmann.com 263 (Mum), DCIT vs. Manalesia Ltd. ITA No.980/Kol/2017 and (2016) 157 ITD 132 (Ahd) Micro Ink Ltd. vs. Add. CIT have also taken note of corresponding amendment in sec. 92B by way of explanation vide Finance Act, 2012 w.r.e.f 01.04.2002. We thus affirm the CIT(A)'s findings going by the very analogy & reject the Revenue's instant first substantive grievance. 3. Next comes the second issue of sec. 14A r.w.s. 8D disallowance of Rs.2,08,89,076/- as well as consequential u/s 115JB computation. We notice herein as well hon'ble jurisdictional high court's decision in CIT vs. Ashika Global Securities Ltd ITAT 100/2009 GA No.2122 of 2014 dated 11.06.2018 holds that the impugned disallowance does not apply in absence of any exempt income. The same takes care of bo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ended by the appellant that an erroneous figure by an excess of Rs. 71,48,01,733/- [Rs. 74,39,71,483 - Rs. 2,91,69,750] has been considered in the draft order. However, as has been submitted by the appellant, while passing the final assessment order, the Ld. AO did not consider the said 154 petition, and alleged that the assessee could not substantiate the business expediency for loss of Rs. 51,77,406/- on premature cancellation of Forward Exchange Contracts. The Learned. AO also did not accept the assessee's explanation with respect to notional loss on closing value of PCFC & ECB. The Ld. AO has held that the foreign exchange fluctuation loss being a notional loss not incurred in the normal course of business was not on revenue account and hence not allowable u/s 37(1) of the Act. The Ld. AO thus disallowed foreign exchange fluctuation loss amounting to Rs. 74,39,71,483/- u/s. 37(1) of the Act and added back the same to the assessee's total income. On examination of the contentions made by the Ld. AR for the appellant, I find myself in agreement with the contentions of the appellant that the Learned. AO has made a mistake in considering the figure of PCF....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Court in the case of S.A. Builders Ltd. Vs. CIT (2007) 288 ITR 1 (SC). The losses are, in my considered view to be examined from the point of view of the assessee, as it is seen that these are regular losses / gains coming to the assessee year on year as it ins in the business of import and export of items, and it is a regular importer of cooking coal and exporter of metcoke. Further courts have held that such losses are business losses when there is failure of an assessee to execute certain export contracts for which it has to incur losses, as it is quite a normal practice to hedge against losses by booking foreign exchange in the forward market with banks. I also find that the claim of the assessee that the loss of Rs. 1,37,89,339/- on account of revaluation of forward contracts as at the end of the reporting period would be covered by the case of the Hon'ble Apex Court in CIT vs. Woodward Governor India (P) Ltd. (2009) 312 ITR 0254 (SC) wherein it was held that loss due to foreign exchange fluctuation in foreign currency transactions has to be considered on the last date of accounting year and it is deductible u/s 37(1) of the Act. The Hon'ble Court has clarified that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., the appellant drew attention to the letter issued by the company to Yes Bank Limited at page 4, [of the Paper Book] wherein the assessee company has requested the Bank to grant PCFC loan against sale and purchase of low ash metallurgical coke. The assessee also enclosed sample advice copies of the payments credited to the account of the assessee issued by Standard Chartered Bank of India and Yes Bank Limited at page 5-9. of the PB. It was contended that said loss of Rs. 2,91,69,750/- was computed taking into consideration the exchange rate of home currency vis-a-vis foreign currency as on the date of taking the loans and the last day of the reporting period. The said loss of Rs. 10,61,88,940/- was. actual loss suffered by the assessee on account of fluctuation in the rate in foreign currency vis-a-vis the home currency. r also note that as has been brought to notice the Ld AO himself in A.Y 2013-14 has held in the assessment order that exchange loss of Rs,45,11,62,855/-, being actual foreign exchange loss incurred on account of import of coking coal and export of metcoke is allowable u/s 37(1) of the Act. Therefore, it is quite obvious that the Ld AO has in this year und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the un-expired foreign currency contracts as at the end of accounting period is to be accounted for in the books of accounts prepared for the afore-stated accounting period, Therefore, there is adequate merit in the argument that the ratio of the above discussed decisions are applicable to the facts emergent in the case of the appellant-company and it appears that the loss booked as at the end of the year is allowable loss u/s 37(1), of the Act. It is seen that the appellant has been able to submit the details relating to the profit/loss on foreign exchange transactions earned/incurred by the assessee-company in the preceding and succeeding years. From such details it is observed that in a succeeding year A.Y 2013-14, the Ld AO has allowed Loss of Rs,45,11,62,855/- treating the same as actual loss suffered by the assessee., whereas a loss of Rs. 14,98,89,621/- disallowed. In the A.Y 2011-12, as there is gain and the same was offered to tax by the appellant. Similar is the position in A.Y 2010-11. In the A.Y 2009-10, there was a loss of Rs. 114,72,34,192/- and .such loss was allowed by the Id.AO. In the A.Y 2007- 08 and 2008-09 the appellant has offered gains which were accepted a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ompany is deserving of relief. The Ld. AO is directed accordingly, and these grounds of appeal 7 to 9 stands allowed." 5. We have heard rival contentions. We find no merit in Revenue's instant last grievance as well. We make it clear that there is no dispute on facts so far as all the corresponding items of the impugned foreign exchange loss are concerned. The Revenue's twin arguments, inter alia, are that Assessing Officer had rightly declined the impugned foreign exchange loss on the ground that neither there was any business exigency involved in cancellation of the assessee's forward contracts involving net loss of Rs.51,77,406/- nor the sum of Rs.74,39,71,483/- on account of revaluation; PCFC and ECB i.e. pre-shipment in foreign currency and external commercial borrowings; respectively could be taken as revenue items u/s 37(1) being notional capital loss(es). We see no reason to accept either of Revenue's twin arguments. Hon'ble apex court's decision in S.A Builders Ltd. vs. Commissioner of Income Tax (2007) 288 ITR 1 (SC) has settled the law that the department cannot claim itself to be put in arm cheker of the businessman or the board of directors to decide as to in wh....