TaxTMI 
TaxTMI 
2016 (10) TMI 1329
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....ficer u/s. 143(3) of the Act by making certain additions. The appeal filed by the assessee before learned CIT(A) was partly allowed. Hence both the parties have filed these appeal before us challenging the decision rendered against each of them. 3. First we take up the appeal filed by the assessee. The first issue urged by the assessee relates to the disallowance of deduction claimed under the head "provision of leave encashment". The AO disallowed the same by invoking the provisions of sec. 43B(f) of the Act. The Ld CIT(A) also confirmed the same. 4. Learned AR submitted that an identical issue was considered by the Coordinate Bench of the Tribunal in assessee's own case relating to A.Y. 2007- 08 in ITA No. 4061 & 4338/Mum/2011 and t....
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....urt, referred (supra). 6. The next issue urged by the assessee relates to disallowance of employees contribution to ESIC and Labour welfare fund. 7. Learned AR submitted that the assessee has paid the employees contribution to ESIC and labour welfare fund before the due date of filing the return of income and hence no disallowance is called for in view of the decision of Hon'ble Jurisdictional High Court in the case of Ghatge Patil Transport (368 ITR 749). On the contrary, the Ld D.R placed reliance on the provisions of sec. 36(1)(va) of the Act and submitted that the Ld CIT(A) was justified in confirming the disallowance. He submitted that the plea of the assessee to allow deduction on the basis of decision of Hon'ble High Court ....
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....entitled to deduction u/s. 80IB of the Act. In the appellate proceedings, learned CIT(A) rejected the claim of the assessee that the excise duty refund was a capital receipt. However, he held that the assessee is entitled for deduction u/s. 80IB of the Act and in this regard the Ld CIT(A) placed reliance on the decision of Hon'ble Gauhati High Court rendered in the case of CIT Vs. Megalaya Steels Ltd. (356 ITR 235). 10. The Learned counsel appearing for the assessee submitted that identical issue was considered by Hon'ble J&K High Court in the case of Shree Balaji Alloys (2011) 333 ITR 335 and Hon'ble High Court has held that excise refund received by that assessee, on identical circumstances, is capital in nature. He further....
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....ed by him while adjudicating this issue. 12. The next issue relates to disallowance of Rs. 2.56 crores relating to mark to market loss. The assessee provided for loss arising on the outstanding derivative contracts on foreign exchange on account of valuation done as at the year end. The AO accepted the actual loss/profit arising on maturity of foreign exchange forward contract as business transactions. However, in respect of provision made for loss on account of valuation, the AO took the view the same is not allowable in view of the Instruction No.3/2010 dated 23/3/2010 and accordingly rejected the claim of the assessee. The Ld CIT(A) also confirmed the same. 13. We heard the parties on this issue. We notice that the assessee is ente....
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.... year. 14. A specific query was put to Ld A.R as to whether the sales invoice raised by the assessee and the forward contract in foreign exchange are composite transactions or separate transactions. The Ld A.R submitted that both are to be treated as composite transaction. It was pointed out to Ld A.R that a forward contract in foreign exchange taken to hedge the export sales would not result in loss at any point of time, since the loss in one wing of transaction would be offset by the gain in other wing of transaction. Accordingly, the Ld A.R was asked to justify the valuation of forward contract in foreign exchange. The Ld A.R submitted that the assessee would be entering into forward contract in foreign exchange immediately on finaliz....