TaxTMI 
TaxTMI 
2022 (3) TMI 1671
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....f the learned Principal Commissioner that has been challenged before us. 2. The material facts are not in dispute. The assessee before us is a public sector company engaged in the business of banking and allied activities. The assessee had filed an income tax return disclosing a taxable income of Rs 5,272.63 crores on 30th November 2017. It was subjected to scrutiny assessment proceedings, and the assessment was finally framed at Rs 10,174.33 crores, vide assessment order dated 19th March 2019. Subsequently, vide show cause notice dated 22nd January 2020, the revision proceedings were initiated as follows: 2. Return of income in this case was e-filed on 30.11.2017 declaring total income of Rs.5272,63,72,980/- which was subsequently revised on 31.3.2018 declaring total income at Rs.4535,87,04,470/- . Assessment in this case was completed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961, on 19.3 2019 determining total income at Rs.10174,33,52.812/- under normal provisions and Book Profit was recomputed at Rs.10673,62,01,341/-. 3. On examination of records, it is observed that the assessment order dated 19.3.2019 passed by the Assessing Officer is e....
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....hat a mere re-valuation of closing stock- without considering opening stock does not give rise to taxable-income even under the newly introduced ICDS VI. Several judicial decisions endorse this principle. In this regard reference may be made to transitional provisions contained in ICDS VI - para 9(3) which is as under: "Exchange differences arising in respect of monetary items or non-monetary items, on the settlement thereof during the previous year commencing on the 1st day of April, 2016 or on conversion thereof at the last day of the previous year commencing on the 1st day of April, 2016, shall be recognised in accordance with the provisions of this standard after taking into account the amount recognised on the last day of the previous year ending on the 31st March, 2016 for an item, if any, which is carried forward from said previous year." 3. The expression exchange difference arising clearly denotes income or loss arising in the current year. The expression after taking into account the amount recognized on the last day of the previous year ending on the 31st March, 2010 for an item, if any, which is carried forward from said previous year does not give inf....
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.... legal principle, both opening and closing monetary items relating to non-integral operations at year end exchange rates and claimed the difference as deduction. By this manner the assessee complied with the requirements of ICDS VI without violating the legal principle of income determination. 6. Even otherwise, we submit that on the issue; of scope of circulars issued by CBDT, based on a number of judicial decisions, it is, not binding on the assessee when it is in variance with judicial principle. 7. We also wish to bring to your kind notice the opinion given in the Technical Guide on ICDS issued by ICAI which is produced as under- 10.3 As regards the treatment of the opening Foreign Currency Translation Reserve, a reference may be made to the clarifications on ICDS contained in Circular no. 10/2017, dated 23rd March, 2017 issued by the CBDT. Question no. 16 and answer thereto deal with the; impact of the transitional provision of the ICDS. The same are reproduced below: Question 16: What is the taxability of opening balance as on 1st day of April 2016 of foreign Currency translation Reserve (FCTR) relating to nonintegral foreign operation, if ....
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....inly be prejudicial to the interests of the revenue. The phrase prejudicial to the interests of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer." It was further held by the Apex Court that the assessment orders was erroneous if the assessing officer passed the assessment order without applying his mind to the case in all perspective. In view of the aforesaid judgment of the Apex Court, if assessment has been made without application of mind in all perspective and there is consequential loss of revenue the order becomes erroneous in so far it is prejudicial to the interest of revenue. In this case the A.O failed to apply his mind on the aspect of recognition of revenue on FCTR in compliance with Circular No. 10/2017 dated 23.3.2017 w.e.f 1.4.2016, thereby causing loss of tax to the Department. Therefore, the assessment order is held to be erroneous in so far it is prejudicial to the interest of revenue. 6 In this case, as is evident from the preceding paragraphs, the Assessing Officer by not bringing to tax the opening balance of FCTR amounting to Rs.2238,55,01,000/- to assessee's income for the years under cons....