GENUS INNOVATION LIMITED, Jaipur v. DCIT, Jaipur

ITA 389/JPR/2016 | 2012-2013
Pronouncement Date: 28-09-2016 | Result: Allowed

Appeal Details

RSA Number 38923114 RSA 2016
Assessee PAN AACCG4460D
Bench Jaipur
Appeal Number ITA 389/JPR/2016
Duration Of Justice 5 month(s) 15 day(s)
Appellant GENUS INNOVATION LIMITED, Jaipur
Respondent DCIT, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted Not Allotted
Tribunal Order Date 28-09-2016
Assessment Year 2012-2013
Appeal Filed On 12-04-2016
Judgment Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCHE S JAIPUR JH DQY HKKJR] U;KF;D LNL; OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT JM & SHRI VIKRAM SINGH YAD AV AM VK;DJ VIHY LA-@ ITA NO. 389/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13. M/S. GENUS INNOVATION LIMITED GANPATI ENCLAVE B-9 AJMER ROAD JAIPUR. CUKE VS. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE2 JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AACCG 4460 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL (C.A) JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23.09.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 28/09/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT JM. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT (APPEALS)- I JAIPUR DATED 26.02.2016 PERTAINING TO ASSESSMENT YEAR 2012-13. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FACTS AND CIRCUMSTANCES LD. CIT (A) HAS GRO SSLY ERRED IN SUSTAINING THE ADDITION MADE BY LD. AO OF RS. 53 87 634/- ON A CCOUNT OF FOREIGN EXCHANGE GAIN ARBITRARILY BY ALLEGING THAT ASSESSE E HAS NOT ACCOUNTED FOR FOREIGN EXCHANGE GAIN WITHOUT APPRECIATING THE FACT THAT EXPORT RECEIVABLE OUTSTANDING AS ON 31.03.2012 WERE NOT REALIZABLE AN D WERE LIABLE TO BE WRITTEN OFF IN BOOKS THUS RECOGNITION OF EXCHANGE G AIN RECEIVABLES TURNING INTO BAD DEBTS IS AGAINST THE ACCOUNTING PRINCIPAL AND STANDARD NO PRUDENT BUSINESS MAN WILL RECOGNIZE THE INCOME WHIC H WOULD NOT RECEIVE IN FUTURE THUS THE ADDITION OF RS. 53 87 634/- MAD E BY THE LD. AO DESERVES TO BE DELETED. 2 ITA NO. 389/JP/2016 M/S. GENUS INNOVATION LTD. 1.1 THAT THE LD. AO HAS FURTHER ERRED IN IGNORING T HE EVIDENCE FILLED BY THE ASSESSEE IN SHAPE OF SANCTION LETTERS FROM BANKS RE GARDING THE WRITE-OFF THE AMOUNT OF UNREALIZED EXPORTS PROCEEDS THUS ADD ITION MADE BY THE LD. AO WITHOUT PROPERLY APPRECIATING THE FACTS ON RECOR DS DESERVES TO BE DELETED. WITHOUT PREJUDICE TO GROUND OF APPEAL NO. 1 TO 1.1 AND IN THE ALTERNATIVE : 1.2. THAT THE LD. AO HAS GROSSLY ERRED IN FAILING TO CON SIDER THE FACT THAT THE ADDITION OF RS. 53 87 634/- CONSISTS OF THE OPENING BALANCE OF RS. 37 05 685/- ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUAT ION GAINS FOR THE IMMEDIATELY PRECEDING YEAR I.E. AY 2011-12 WHICH HA D BEEN DELETED BY CIT (A) VIDE ORDER DATED 19.12.2014 THEREFORE THE ADDITIONS IF SUSTAINED AT ALL MUST BE REDUCED TO THE SAID EXTEN T. 2. ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT (A ) HAS GROSSLY ERRED IN DIRECTING THE LD. AO TO EXAMINE THE ISSUE OF AVAILMENT OF EXP ORT INCENTIVE BY ASSESSEE AND SURRENDER THEREOF BEFORE WRITING OFF OF DEBTORS WI THOUT ANY BASIS AND WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE. THUS THE CONCERNED OBSERVATIONS OF LD. CIT (A) DESERVES TO BE EXCLUDED AND STRUCK DOWN . 3. ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT (A) HAS GROSSLY ERRED IN MAKING THE OBSERVATIONS SPECIFIED IN GROUND OF APPEAL NO. 02 ABOVE BY TRAVELLING BEYOND THE POWERS CONFERRED UPON HIM U/S 250 & 251 OF THE INCOME TAX ACT 1961 IN AS MUCH AS THE CIT (A) IS NOT EMPOWERED TO EXAMINE AN ISSUE IN APPEAL WHICH NEITHER ARISES OUT OF THE ASSESSMENT NOR BORN E OUT FROM ASSESSMENT ORDER. THUS THE ACTION OF LD. CIT (A) BEING DEVOID OF JURISDICTION DESERVES TO BE HELD BAD IN LAW AND THE CONCERNED OBSERVATIONS DESE RVE TO BE EXCLUDED AND STRUCK DOWN. 4. THAT THE APPELLANT CRAVES THE RIGHT TO ADD DELETE AMEND OR ABANDON ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF H EARING OF APPEAL. 2. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT HE DOES NOT WISH TO PRESS GROUND NOS. 2 & 3. THE LD. D/R H AS NO OBJECTION. THEREFORE GROUND NOS. 2 & 3 ARE DISMISSED AS NOT PRESSED. 3. GROUND NO. 4 IS GENERAL IN NATURE NEEDS NO SEPA RATE ADJUDICATION. 4. THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS WITH REGARD TO SUSTAINING THE ADDITION MADE BY THE AO OF RS. 53 87 634/-. 3 ITA NO. 389/JP/2016 M/S. GENUS INNOVATION LTD. 5. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY AND ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAME D VIDE ORDER DATED 30.01.2015. WHILE FRAMING THE ASSESSMENT THE AO MADE DISALLOWA NCE OF RS. 1 00 469/- AND RS. 2401/- IN RESPECT OF LATE PAYMENT OF EMPLOYEES CONT RIBUTION TOWARDS PF AND ESI. FURTHER THE AO MADE DISALLOWANCE OF RS 6 83 065/- BY INVOKING PROVISIONS OF SECTION 14A OF THE ACT AND ALSO MADE DISALLOWANCE O F EXPENDITURE CLAIMED IN RESPECT OF FOREIGN EXCHANGE GAIN OF RS. 53 87 634/-. THE A SSESSEE AGGRIEVED BY THIS ORDER PREFERRED AN APPEAL BEFORE LD. CIT (A) WHO AFTER C ONSIDERING THE SUBMISSIONS PARTLY ALLOWED THE APPEAL. WHILE ALLOWING THE APPEAL THE LD. CIT (A) SUSTAINED THE ADDITION OF RS. 53 87 634/- WHICH IS THE SUBJECT MATTER OF T HIS APPEAL. 6. AGGRIEVED BY THIS ORDER THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 7. THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATED THE SUBMISSIONS AS WERE MADE IN THE WRITTEN SUBMISSION. IT IS SUBMITTED THAT THE NOTIONAL AMOUNT OF GAIN TOWARDS FOREIGN EXCHANGE FLUCTUATION OF RS. 53 87 634/- CAN NOT BE TREATED AS INCOME BECAUSE IT IS A HYPOTHETICAL INCOME WHICH WAS NEVER RECEIVED BY THE ASSESSEE. HE SUBMITTED THAT IDENTICAL ADDITION WAS MADE BY THE A O IN THE A.Y. 2011-12 IN THE ASSESSEES OWN CASE AND THE HONBLE TRIBUNAL WAS PL EASED TO APPROVE THE ORDER OF LD. CIT (A) DELETING THE ADDITION. 7.1. ON THE CONTRARY LD. D/R SUPPORTED THE ORDER O F THE AO. 7.2 WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IDENTICAL ISSUE WAS CAME UP B EFORE THE ITAT IN ITA NOS. 231/JP/2015 AND 265/JP/2015 IN THE ASSESSEES OWN C ASE. THE HONBLE TRIBUNAL 4 ITA NO. 389/JP/2016 M/S. GENUS INNOVATION LTD. DELETED THE DISALLOWANCE BY OBSERVING THAT THE AO H AD CALCULATED THIS FOREIGN EXCHANGE GAIN ON NOTIONAL BASIS WHICH WAS NOT REAL . IN THE PRESENT CASE ALSO THE AO HAS CALCULATED THE FOREIGN EXCHANGE GAIN ON NOTI ONAL BASIS. THEREFORE TAKING A CONSISTENT VIEW WE HEREBY DIRECT THE AO TO DELETE THE DISALLOWANCE. 3. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 28/09/2016 . SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 28/09/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. GENUS INNOVATION LTD. JAIP UR. 2. THE RESPONDENT- THE DCIT CIRCLE-2 JAIPUR. 3. THE CIT 4. THE CIT (A) 5. THE DR ITAT JAIPUR 6. GUARD FILE (ITA NO. 389/JP/2016) VKNS'KKUQLKJ@ BY ORDER LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 5 ITA NO. 389/JP/2016 M/S. GENUS INNOVATION LTD.