AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1503
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.... a letter of intent dated 19.04.2005 to Loesche India P. Ltd. and Loesche GmbH Germany expressing its intent to import plant & machinery for its new cement plant, Kapilas Unit. The assessee entered into an agreement dated 10.05.2006 with Loesche GmbH Germany and Loesche India P. Ltd. for import of Cement Vertical Roller Mill along with all equipments accessories and essential spare parts. The consideration for supply of plant & machinery from overseas was EUR41,79,800/-. The assessee booked a forward contract with UTI Bank on 04.07.2005 to guard against exchange rate fluctuations for EUR41,70,000/- for the delivery period from 15.06.2006 to 17.07.2006. The said forward contract was cancelled on 13.07.2006 resulting into a net gain of $1,98,909/- equivalent to Rs. 92,05,509/-. The assessee treated the said gain as capital receipt and the same was reduced while computing total income. During scrutiny assessment proceedings, the Assessing Officer (AO) held that the gain on cancellation of forward contract was speculative business income u/s. 43(5) of the Act. He further held that in the subsequent year of purchase of machinery, the above gain was not reduced from cost of machinery, he....
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....ts that during the Financial Year relevant to assessment year 2007-08, the assessee had accepted deposits from public by way of issue of advertisement in newspaper u/s. 58A of the Companies Act, 1956 r.w. Companies (Acceptance of Deposits) Rules, 1975. As per the terms and condition of the advertisement, only depositors making fixed deposit of Rs. 50,000/- or above were required to furnish their PAN. The assessee furnished list of depositors before the CIT(A). It was contended before the CIT(A) that the deposits amounting to Rs. 44,36,000/- are fresh deposits accepted during the year and remaining deposits of Rs. 2,17,80,000/- were merely renewals of the old deposits from earlier assessment years. The CIT(A) granted part relief holding that old deposits renewed during the year amounting to Rs. 2,17,80,000/- could not be added back u/s. 68 of the Act and in respect of balance deposits of Rs. 44,36,000/- confirmed the addition u/s. 68 of the Act. The CIT(A) confirmed the addition without examining the deposits. The ld. Counsel pointed that a complete list of depositors is at page no.66 to 72 of the paper book. He further contended that out of the addition in respect of deposits amoun....
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....t from above two issues, the assessee has raised two more additional grounds of appeal i.e. ground no. 5 on exclusion of profit on sale of fixed assets and investment while computing book profit u/s. 115JB of the Act and ground no. 6 of appeal relating to exclusion of debenture redemption reserve while computing book profit u/s. 115JB of the Act. The ld. Counsel for the assessee submits that he has not pressing ground no. 5 and 6 of appeal. In respect of additional ground of appeal no. 2, 3 and 4 i.e. in respect of pre operative expenses and additional depreciation. He submitted that these grounds are legal in nature and no additional/fresh documentary evidences are required for adjudicating these grounds. Therefore, this ground should be admitted for adjudication in the light of decision of Hon'ble Supreme Court of India in the case of NTPC Ltd. vs. CIT 229 ITR 383 (SC) and Jute Corporation of India vs. CIT, 187 ITR 668 (SC). 4. Shri Amaninder Singh, representing the department vehemently defended findings of the CIT(A) in so far as gain on cancellation of forward contracts treated as capital receipt. With regard to ground of appeal no. 2 of assessee appeal, the ld. DR submitte....
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....essee in order to guard against the exchange rate fluctuation booked a forward contract with UTI Bank Ltd. for EUR41.70 lakhs. The assessee cancelled the aforesaid forward contract on 13.07.2006 and in the process gained $1,91,909/- which was equivalent to 92,05,509/-. Since, the said contract was in respect of acquiring capital asset i.e. plant and machinery, the assessee treated the aforesaid gain on cancellation of forward contract as capital in nature. The AO held the capital gain as speculative income u/s. 43(5) of the Act. In First Appellate proceedings, the CIT(A) held the gain as revenue in nature. 8. Now, the short issue for consideration before us is; Whether the gain on foreign exchange fluctuation is revenue receipt or capital in nature? The Hon'ble Supreme Court of India in the case of Sutlej Cotton Mills Ltd vs. CIT (supra) while dealing with an issue where the assessee has suffered loss on account of devaluation of currency in International trade held that, whether the loss suffered by the assessee was a trading loss or not would depend on whether the loss was in respect of trading asset or a capital asset. The excerpts from the judgment rendered by the Hon'ble Ap....
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.... capital asset i.e. plant and machinery as detailed in the contract agreement and the same was subsequently purchased in the period relevant to assessment year 2009-10. The assessee has reduced the capital gain arising on cancellation of forward contract from the cost of acquisition of said machinery. Even depreciation has been claimed in the subsequent assessment years on the reduced amount of capital asset. In support of this contention, the assessee has placed on record revised deprecation schedule for AY 2009-10 at page 61 of the paper book. Dehors the fact that in subsequent AY capital gain on cancellation of forward contract was reduced from the cost of acquisition of capital asset, once it is held that the transaction was with respect to acquisition of capital asset for which forward contract was taken and the gain on cancellation of such contract would be on capital account, hence, such gain would not be exigible to tax. Thus, assessee succeeds on ground of appeal no. 4. 10. In ground no. 2 of appeal, the assessee has assailed disallowance of unsecured loans to the tune of Rs. 44,36,000/-. During the period relevant to assessment year under appeal, the assessee had invit....
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....ddition to the extent of Rs. 2,17,80,000/-. In so far as balance amount of Rs. 44,36,000/- the same was confirmed in the absence of PAN details. The contention of the assessee is that PAN details were asked from the depositors who had made deposits of Rs. 50,000/- or more. Where the deposits were less than Rs. 50,000/- there was no mandatory requirement to ask for PAN details. 10.2. A perusal of the impugned order reveals that the CIT(A) has deleted the addition to the extent of Rs. 2,17,80,000/- merely on the basis of statement made on behalf of the assessee, without examining as to whether in the preceding assessment years any fixed deposits were accepted by the assessee. As pointed earlier, the advertisement for acceptance of deposit was approved by the Board on 15.05.2006. No material is placed before us to substantiate that in the preceding assessment years the assessee has accepted fixed deposits u/s. 58A of the Companies Act, 1956 r.w.r Companies (Acceptance of Deposits) Rules, 1975. In so far as the argument of the assessee that PAN details of only those depositors were asked where the deposits were Rs. 50,000/- or more, we find that the threshold limit for furnishing PA....
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.... allow this ground of the assessee." No material has been placed on record by the Revenue to distinguish or controvert the aforesaid decision of the Coordinate Bench. Therefore, ground no. 3 & 4 of appeal are allowed for parity of reasons. 12. In ground no. 5 to 7 of appeal, the assessee has assailed disallowance of Environment Study Expenses while treating the same as capital expenditure. We find that this issue is also considered by the Tribunal in assessee's appeal for AY 2005-06 and 2006-07 in ITA No. 2843/Del/2011 and 3203/Del/2011, respectively. The relevant extract of the findings of the Tribunal on this issue are as under:- "8. Ground no.2 is against the disallowance of environmental study expenses by treating the same as capital expenditure. The assessee in this case has incurred an expenditure of Rs. 12,10,000/- towards carrying out Environmental Impact Assessment study for the proposed modernisation cum expansion of its existing Rajgangpur Cement Plant. Both the A.O. as well as the Ld.CIT(A) held that the expenditure was in the capital field." 8.1. After hearing rival contentions, we observe that the expenditure was incurred for modernisation cum ....
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.... Ltd. - vs.- CIT (2009) 311 ITR 405 (Del) [SLP filed by the Department has been dismissed by Hon'ble Supreme Court vide order in SLP Civil (Appeal) No. 9818/2008 dated 28-07- 2008]. 3.0. Claim of additional depreciation in second & subsequent years [Rs. 18,29,68,743/-] 3.1. For the previous year relevant to assessment year 2007-08, the assessee is entitled to claim additional depreciation @20% on all eligible plant & machinery acquired on or after 01-04-2005, subject to the conditions specified in Sec. 32(1)(tia) and subject to overall criteria that total depreciation does not exceed the actual cost. The above view is supported by the decision of Hon'ble Kolkata Tribunal in DCIT -vs.- Graphite India Ltd. [ITA No. 472/Kol/2018 dated 22-11-2019] and also in DCIT -VS.- Gloster Jute Mills Ltd. (2017) 88 taxmann.com 738 (Kolkata - Trib.) 4.0. Claim of balance additional depreciation on asset put to use for less than 180 days in the preceding financial year [Rs. 33,68,933/-] 4.1. Without prejudice to the above, if the claim of additional depreciation is not allowed on all eligible assets, the assessee is entitled to claim balance additional depreciatio....