TaxTMI 
TaxTMI 
2024 (10) TMI 859
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.... revised on 31.03.2017 disclosing total loss of Rs. (-)35,61,69,137/-. The return was revised modifying the claim of deduction u/s 35(2AB) of the Income-tax Act, 1961 (for short 'the Act'). In both the return of income, the book profit disclosed of Rs. 20,114,60,260/- u/s 115JB of the Act and relevant tax was paid thereon. Subsequently, the case was selected for scrutiny and notices u/s 143(2) & 142(1) of the Act were issued and served on the assessee. In response, ld. AR for the assessee attended and furnished the relevant information as called for. 4. The assessee is engaged in the business of manufacturing and automotive air-conditioning systems and components. 5. At the time of hearing, ld. AR for the assessee brought to our h\notice grounds of appeal raised by the assessee in this appeal and for the sake of brevity, the same is reproduced below :- "1 That the learned Commissioner Income Tax (Appeals) has grossly erred both in law and on facts in sustaining a disallowance of a sum of Rs. 4,715/- on account of employees contribution towards PFI/ESI. 2. That the learned Commissioner Income Tax (Appeals) has grossly erred both in law and on facts in sustaining a disallowance....
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.... it is as per mercantile system of accounting and as per accounting standards. Further he relied on the decision of Hon'ble Apex Court in the case of Oil & Natural Gas Corporation Ltd. vs. Commissioner of Income-tax & Anr. 322 ITR 180. After considering the submissions of the assessee, Assessing Officer rejected the same and observed that if there is conflict between accounting policy/accounting standard and provisions of law, the latter will prevail over former and further observed that M to M loss is on account of valuation loss which is contingent in nature. By relying on the decision of Woodward Governor India Pvt. Ltd. 312 ITR 254 and CBDT Instruction No.3/2010 dated 23.03.2010, he observed that M to M loss of foreign exchange contract is to be treated as contingent losses. Accordingly, he dismissed the claim of the assessee under normal provisions as well as profit u/s 115JB of the Act. 8. Ld. AR submitted that against that above order, assessee preferred an appeal before the ld. CIT (A) and filed detailed submissions. Ld. CIT(A) after considering the submissions of the assessee dismissed the ground raised by the assessee and sustained the addition made by the Assessing Offi....
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....ct of the underlying contracts for provisions of consultancy and project management. Concededly, the assessee is not dealing in foreign exchange. Clearly, the said transactions were to hedge against the risk of foreign exchange fluctuations and thus, fall within the exceptions of proviso (a) to section 43(5) of the Act. The Forward Contracts were to guard against any loss on account of future exchange fluctuations in respect of inflows and outflows relating to contracts for execution of the works entered into by the assessee." 12. And further the decision in Bechtel India Pvt. Ltd. (supra), the ld. CIT(A) has relied on the decision of ITAT Bench and the same was considered by Hon'ble Delhi High Court and decided the issue in favour of the assessee and held as under :- "Having heard learned counsels for parties, we find that the principal question which stands raised appears to be conclusively settled in light of the following binding conclusions rendered by a coordinate Bench of this Court in Pr. Commissioner of Income Tax vs Simon India Ltd. [2022 SCC Online Del 4284]. We deem it apposite to extract the following passages from that decision: "25. Thus, according to the Revenu....
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....respect of imports as reduction in the import price on the debit of the Profit & Loss account. In other words, the entire transaction of either realization of debtors in foreign exchange / payment for imports in foreign exchange which are designated in foreign currency and the entering into Forward cover contract are integral part of the same transaction i.e. two sides of the same coin. By considering both sides of the P&L the correct net profit is worked out. Therefore, in order to ascertain the correct taxable profits of the appellant the loss has to be allowed as a business loss because it is due to the business exigency the forward contracts are entered into to 2022/DHC/005364 ITA No.67/2018 Page 12 of 15 protect against any loss that might result due to foreign exchange Currency fluctuation foreign currency fluctuation. 30. Undisputedly, the Forward Contracts, in the present case, are hedging transactions, The Assessee has reinstated its debits and credits from the underlying transactions on the value of the foreign exchange on the due date. The corresponding losses/gains under the Forward Contracts, thus, were also required to be accounted for to arrive at the real profits,....
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....3577/Del/2023, the issues involved are exactly similar to the issues raised by the assessee in AY 2015-16. Since the facts in AY 2015-16 are exactly similar, our above findings in AY 2015-16 are applicable mutatis mutandis in AY 2016-17. Accordingly, the appeal being ITA No. 3577/Del/2024 for AY 2016-17 filed by the assessee is also partly allowed. 17. With regard to AY 2017-18, the first ground of appeal along with sub-grounds are relating to the issue of Marked to Market, we have decided the similar issue in AY 2015-16 in favour of the assessee. Accordingly, this ground is also decided in favour of the assessee, hence ground no.1 raised by the assessee is allowed. 18. Coming to ground no.2, the relevant facts are, the AO observed that assessee has deposited Rs. 34,04,500/- of SBN (demonetized currency) during the period 09.11.2016 to 30.11.2016. The Assessing Officer has reproduced the comparative chart of monthly cash receipts and deposits in his order at page 7. Based on the above chart, the Assessing Officer observed that assessee has deposited Rs. 3,36,000 during the month of November and Rs. 30,68,500/- during the month of December 2016. On an enquiry, the assessee submitt....
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....r failed to cross examine the same. In this regard, he relied on the following decisions :- (i) CIT vs. Genesis Commet (P) Ltd. - 163 Taxman 482; (ii) Faiz Murtza Ali vs. CIT - 334 ITR 370; and (iii) Jhaveri Bihari Lal & Co. vs. CIT - 154 ITR 591. 21. On the other hand, ld. DR for the Revenue brought to our notice para 6.7 of the assessment order and submitted that the Assessing Officer has given clear-cut findings. Therefore, he relied on the findings of the Assessing Officer and submitted that even the assessee has not submitted invoices or bills in support of the sales. In this regard, he relied on the decision of ITAT, Hyderabad Bench in the case of Vaishnavi Bullion Private Ltd. vs. ACIT & Ors. order dated 28.11.2022. 22. Considered the rival submissions and material placed on record. We observed from the record that the assessee has deposited SBN during demonetization period and the source for the above was from their cash sales and scrap sales. Assessing Officer observed that assessee has deposited Rs. 21,00,000/- during the demonetization period and the source is claimed to be from scrap sales. On an enquiry, assessee has submitted the party-wise details of such scr....
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....ok a view that the fact that the assessee was not in a position to produce the two commission agents is not its fault and the Assessing Officer could have exercised powers available to him to summon and cross-examine these two parties, if, for some reason, he did not accept the statement furnished by these two parties. The Assessing Officer could also have made independent enquiries from the customers of the assessee. However, none of this was done. 10. Therefore, we are of the opinion that the Tribunal has not committed any error in the view that it has taken. The assessee produced all the material that it could possibly produce and if the Assessing Officer was not inclined to believe the material produced, he could have used the coercive powers available to him, which he failed to exercise." 23. Further, Hon'ble Delhi High Court in the case of Jhaveri Bihari Services vs. ACIT (supra) held as under :- "9. Admittedly, the assessee had produced its books of account did mention the name of the six creditors whose cash credits have not been accepted by the department in spite of the production of certificates from them by the assessee. It was, therefore, incumbent on the ITO to h....
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....y held earlier, the Tribunal may take appropriate steps by directing the ITO to issue notices to the six creditors in question and, thereafter, to finalize the assessment in relation to the cash credits to the extent aforementioned. On the facts and in the circumstances of the case, however, we shall make no order as to costs." 24. From the above decisions, we observed that Hon'ble High Court held that the Assessing Officer could have further enquired with the parties and not resorted to reject the documents and information submitted by the assessee in order to claim that the source of the cash deposits were from the parties brought on record by them. Even, in the present case, assessee has submitted the source of cash deposits from the sale of scrap sales and also filed the details of the parties along with confirmations. Assessing Officer rejected the same without making further enquiries. Therefore, we are inclined to follow the decision of Hon'ble Delhi High Court and decide the issue in favour of the assessee. 25. Coming to the submissions of the ld. DR for the Revenue and ld. DR relied on the decision of ITAT, Hyderabad Bench in the case of Vaishnavi Bullion Private Limited....