TaxTMI 
TaxTMI 
2025 (3) TMI 1781
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.... "1. On the facts and in the circumstances of the case and in law, the learned assessing officer erred in initiating the reassessment proceedings u/s.147 of the Act for the impugned assessment year in absence of any new material on record forming cogent reasons to believe that income chargeable to tax has escaped assessment. The appellant hereby prays that the reassessment proceedings be treated as void-ab-initio and order passed u/s.143(3) r.w.s 147 be quashed. 2. On the facts and in the circumstances of the case and in law, the learned assessing officer erred in initiating the reassessment proceedings u/s 147 of the act for the impugned assessment year without appreciating the fact that assessment under sub-section (3) of section 143 has been made for the assessment year under consideration and the appellant has disclosed fully and truly all material facts necessary for its assessment. The appellant hereby prays that the reassessment proceedings be treated as void-ab-initio and order passed u/s 143(3) r.w.s 147 be quashed. 3. At the outset, Ld. Counsel for the assessee has not pressed the above common grounds raised in the Cross Objections for both the assessment year....
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....ering the value of one US dollar in Indian rupees. However, no corresponding entries have been passed in the P & L Account by the assessee company. (2) Further the Authorized Representative has not given any comments regarding the working of foreign exchange gain / loss on account of restatement of ECB loan liability as on 31/03/2010. (3) Even in the computation of income no reasons were given by the company as how it is eligible of reducing an amount of Rs. 5,23,00,000/- on account of foreign exchange gain. (4) The finance Act 2002 w.e.f 2003 has effected charge to Sec 43A, which provides for income/decrease in liability only for currency fluctuation at the time has been effected by the assessee company during the previous year relevant to the AY. In view of this the claim of the assessee for deduction on account of foreign exchange loss is not in accordance. In view of the above facts, the explanation given by the Authorized Representative to justify its claim in not found to be prima-facie acceptable and therefore an addition of Rs. 5,23,00,000/- is hereby made to the total income." 5. Dissatisfied assessee filed an appeal before the First ....
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....unting Standards consistently followed by the assessee company which are mandatorily required to be complied while preparing the audited financial statements. 8. We have heard the rival contentions and perused the records placed before us. The Revenue is aggrieved with the finding of ld.CIT(A) allowing of the claim of the assessee of reducing the notional gain of Rs. 5.23 crore from its book profit for the purpose of calculating the tax on the income for the year. It is observed that the assessee had shown the gain of Rs. 5.23 crore on account of Foreign Exchange Fluctuation on the ECB loan of USD 10 million availed for acquisition of fixed assets by the company. In the computation of income, assessee has reduced the said gain of Rs. 5.23 crore from the net profit as per the profit and loss account. This claim of the assessee was denied by the AO but the ld.CIT(A) granted relief to the assessee by observing as under : "Finding of ld.CIT(A) : "8. Decision on Grounds of Appeal: During the appellate proceedings, Statement of Facts, Grounds of appeal, Assessment order and appellant's submission was carefully scrutinized by the under signed. Ground 1: T....
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....out giving any logical reason for the same. It is also pertinent to note that the facts have not changed at all in this case, which could have been one of the reasons for departing from the already accepted stand. In support of our claim we rely on following judgments pronounced by various authorities: Gopal Purohit Vs CIT reported in 20 DTR 0099- Wherein the honorable Bombay High Court has held - "Tribunal has correctly held that though the principle of res judicata is not attracted since each assessment year is separate in itself, there ought to be uniformity in treatment and consistency when the facts and circumstances are identical." In this case income treated as investment in earlier years was treated as business in subsequent years whereas the facts and circumstances were the same and the tribunal accepted the position that though the principle of res-judicata is not attracted there ought to be uniformity in treatment and consistency when facts are identical. The learned AO while passing order has given four different reasons for not allowing the claim of assessee company. We would like to submit as follows: 1. In its fir....
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....ed charge to Sec 43A which provides for income/decrease in liability only for currency fluctuation at the time of payment. In the case of the assessee, no payment of foreign exchange liability has been effected by the assessee company during the previous year relevant to the AY. In the view of this the claim of the assessee for deduction on account of foreign exchange loss is not in accordance". Our Submission - Though the AO has correctly referred to Sec 43A of the Act, it seems that the AO has not correctly applied the provisions to the facts of the case. We would like to produce provisions of Sec 43A which read as under: It is clear from the text highlighted above that exchange gain or loss is to be adjusted to the cost of the asset at the time of PAYMENT. If the exchange loss or gain on restatement is not adjusted in computing taxable income it will always result in either allowing same deduction on more than one occasions or offering same income to tax on two occasions. It is only to avoid this situation, the assessee company has reduced the above referred amount in computing taxable income. The company has also recognised exchange loss at the time o....
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....s/gain, the net loss to the assessee is Rs. 5,09,63,947/- and the same already stood disallowed on year to year basis of adjustment in the computation of income. Except for A.Y. 2010-11, the Revenue authorities have accepted the adjustment made by the assessee in the computation of income. Now in case the observation of the AO is accepted and the alleged sum of also added back to the income, then the total of the notional loss of foreign currency exchange would amount to Rs. 10,43,63,947/- which would be much more than the actual loss incurred by the assessee and therefore it will tantamount to making double addition in the hands of assessee. Therefore, considering the facts and circumstances of the case and discussion made hereinabove and also taking note of the consistent accounting treatment being made by the assessee in its regular books of account for the notional loss/gain of the currency fluctuation with regard to ECB loan is found to be correct and thus no infirmity is called for in the finding of the ld.CIT(A). Effective Grounds of appeal raised by the Revenue for A.Y. 2010-11 are dismissed. 11. Now we take up ITA No.1002/PUN/2024 for the A.Y. 2011-12. Revenue has raise....
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....ee of reducing the excess provision for slow moving inventory by Rs. 4,15,70,964/- reversed during the year was disallowed by the ld.CIT(A) observing as follows : "8. Decision on Grounds of Appeal: During the appellate proceedings, Statement of Facts, Grounds of appeal, Assessment order and appellant's submission was carefully scrutinized by the under signed. Grounds 1 & 2: During the appeal proceedings the appellant has stated that in AY 2010-11 a provision for slow moving inventory amounting to Rs. 4,23,52,470/- was made in its books of accounts and the value of closing inventory as of 31st March 2010 was brought to Rs. 2,46,33,12,648/- from Rs. 2,50,56,65,118/- i.e reduction of Rs. 4,23,52,470/-, the company has added back this provision as it was a provision towards reduction in value of asset. Company has paid tax on this book profit amounting to Rs. 8,14,70,943/- in AY 2010-11. For AY 2011-12 i.e. year under consideration, there was recalculation of provision and the company reduced the provision for slow moving inventory by Rs. 4,15,70,964/-. It has increased the value of closing inventory from Rs. 1,98,67,47,765/- to Rs. 2,02,83,18,729/- due to the red....