JT CIT 16(3), MUMBAI v. RUPAM IMPEX, MUMBAI

ITA 4008/MUM/2012 | 2008-2009
Pronouncement Date: 21-10-2013 | Result: Dismissed

Appeal Details

RSA Number 400819914 RSA 2012
Assessee PAN AAAFR1798L
Bench Mumbai
Appeal Number ITA 4008/MUM/2012
Duration Of Justice 1 year(s) 4 month(s) 14 day(s)
Appellant JT CIT 16(3), MUMBAI
Respondent RUPAM IMPEX, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 21-10-2013
Date Of Final Hearing 21-10-2013
Next Hearing Date 21-10-2013
Assessment Year 2008-2009
Appeal Filed On 07-06-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH MUMBAI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI RAJENDRA ACCOUNTANT MEMBER ITA NO.4008/MUM/2012 (ASSESSMENT YEAR:2008-09) ACIT 16(3) MATRU MANDIR TARDEO ROAD MUMBAI-400 007. VS. M/S. RUPA M IMPEX 1407 PRASAD CHAMBERS TATA ROAD OPERA HOUSE MUMBAI-400 004. (APPELLANT) (RESPONDENT) P.A. NUMBER : AAAFR 1798 L ASSESSEE BY : SHRI PANKAJ T OPRANI REVENUE BY : SHRI SANJIV JAIN DATE OF HEARING : 21/10/2013 DATE OF PRONOUNCEMENT : 21/10/2013 O R D E R PER I.P. BANSAL JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A) DATED 05/03/2012 FOR THE ASSESSMENT YEAR 2008-09. T HE GROUND OF APPEAL RAISED BY THE REVENUE READ AS UNDER :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD .CIT (A) HAS ERRED IN HOLDING THAT MARKET TO MARKET LOSS OF RS.1 06 47 416/- ARISING ON VALUATI ON OF FORWARD EXCHANGE CONTRACTS ON THE CLOSING DATE OF A CCOUNTING YEAR IS NOT A NOTIONAL LOSS AND THEREFORE ALLOWAB LE. ITA NO.4008/MUM/12 A.Y.08-09 2 1.1 THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXPO RT AND IMPORT OF DIAMONDS. IT HAS MADE A PROVISION FOR EXCHANGE DIFF ERENCE LOSS OF RS.1 06 47 416/- ON FORWARD EXCHANGE CONTRACTS FOR EXPORT. AO DISALLOWED SUCH LOSS ON THE GROUND THAT INCOME TAX ACT DOES NOT ALLOW DEDUCTION OF SUCH NOTIONAL LOSS FOR WHICH LIABILITY HAS NOT BEEN CRYSTALLIZED. ACCORDING TO ASSESSING OFFICER THE LO SS CLAIMED BY THE ASSESSEE ON FORWARD EXCHANGE CONTRACTS IS A NOTIONA L LOSS. IN THIS MANNER THE LOSS WAS DISALLOWED. LD. CIT(A) RELYING ON THE FOLLOWING DECISIONS HAS DECIDED THE ISSUE IN FAVOUR OF ASSESS EE. 1. CIT VS. WOODWARD GOVERNOR INDIA (P) LTD. (294 ITR 451)(DEL.); 2. CIT VS. WOODWARD GOVERNOR INDIA (P) LTD. (312 ITR 2 54)(SC); 3. ITAT SPECIAL BENCH DECISION IN THE CASE OF DCIT VS . BANK OF BAHRAIN AND KUWAIT (ITA NOS.4404 & 1883/MUM/2004) A ND 4. ONGC VS. CIT (322 ITR 180)(SC) 1.2 RELYING ON THE AFOREMENTIONED DECISIONS THE LD. CIT(A) HELD THAT FOREIGN EXCHANGE LOSS INCURRED BY THE ASSESSEE DURI NG ITS NORMAL COURSE OF BUSINESS REGARDING RESTATEMENT OF FORWARD CONTRA CT OBLIGATIONS IS IN ACCORDANCE WITH AS-11 AND ASSESSEE IS CLAIMING SUCH LOSS IN A CONSISTENT MANNER OVER THE YEARS. THE GAIN EARNED B Y THE ASSESSEE REGARDING SIMILAR TRANSACTIONS WAS ACCEPTED AND BRO UGHT TO TAX BY THE DEPARTMENT IN EARLIER YEARS AND ACCORDING TO AFOREM ENTIONED DECISIONS THE ISSUE WAS TO BE DECIDED IN FAVOUR OF ASSESSEE. 2. AT THE OUTSET IT WAS CLAIMED BY THE LD. AUTHORIZ ED REPRESENTATIVE THAT CIT(A) HAS RIGHTLY DECIDED THE ISSUE WHICH IS IN ACCORDANCE WITH AFOREMENTIONED DECISIONS. 2.1 ON THE OTHER HAND LD. DR RELIED ON THE ORDER P ASSED BY AO. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT THE LD. CIT(A) DID NOT COMMIT ANY ERROR IN DECIDING THE ISSUE IN FAVOUR OF ASSESSEE. THE HON'BLE ITA NO.4008/MUM/12 A.Y.08-09 3 SUPREME COURT IN CASE OF ONGC VS. CIT (SUPRA) FOLL OWING THE EARLIER DECISION IN THE CASE OF CIT VS. WOODWARD GOVERNOR I NDIA (P.) LTD. (SUPRA) HAVE HELD THAT THE ASSESSEE HAVING MAINTAINED ACCOU NT ON MERCANTILE SYSTEM OF ACCOUNTING LOSS CLAIMED BY THE ASSESSEE ON ACCOUNT FLUCTUATION IN THE RATE OF FOREIGN EXCHANGE AS ON T HE DATE OF BALANCE SHEET IN RESPECT OF LOANS TAKEN FOR REVENUE PURPOSE IS AL LOWABLE AS EXPENDITURE U/S. 37(1) NOTWITHSTANDING THE FACT THAT LIABILITY HAS NOT BEEN ACTUALLY DISCHARGED IN THE YEAR IN WHICH THE FLUCTUATION RAT E OF FOREIGN EXCHANGE IS ACCRUED. THEREFORE WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) AND WE DECLINE TO INTERFERE. 3. APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER 2013. SD/- SD/- (RAJENDRA) ACCOUNTANT MEMBER (I.P. BANSAL ) JUDICIAL MEMBER MUMBAI DATED: 21/10/2013. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.