DCIT (LTU), New Delhi v. M/s. Whirlpool of India Ltd., Gurgaon

ITA 861/DEL/2010 | 2002-2003
Pronouncement Date: 07-05-2010 | Result: Dismissed

Appeal Details

RSA Number 86120114 RSA 2010
Bench Delhi
Appeal Number ITA 861/DEL/2010
Duration Of Justice 2 month(s) 4 day(s)
Appellant DCIT (LTU), New Delhi
Respondent M/s. Whirlpool of India Ltd., Gurgaon
Appeal Type Income Tax Appeal
Pronouncement Date 07-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 07-05-2010
Date Of Final Hearing 04-05-2010
Next Hearing Date 04-05-2010
Assessment Year 2002-2003
Appeal Filed On 03-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I: NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO. 861/DEL/2010 ASSESSMENT YEAR: 2002-03 DCIT (LTU) NBCC PLAZA PUSHP VIHAR NEW DELHI. VS. M/S WHIRLPOOL OF INDIA LTD. PLOT NO. 40 SECTOR 44 GURGAON (HARYANA) PAN NO. - (APPELLANT) (RESPONDENT) APPELLANT BY : SH. G.S. SAHOTA DR RESPONDENT BY: JANPRIYA AJAY VOHRA O R D E R PER I.P. BANSAL J.M. THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE ORDER OF CIT(A) DATED 18.12.09 FOR A.Y. 2002-03. G ROUNDS OF APPEAL READ AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN HOLDING THAT DEPRECIATION OF RS. 75 47 507/- ON INCREASED OF ASSETS DUE TO INCREASE IN LIABILITY IN CONSEQUENCE OF FLUCTUATION IN FOREIGN EXCHANGE IS ALLOWABLE TO THE ASSESSEE. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD AMEND OR ALTER ANY OF THE GROUND OF APPEAL. 2. IMPUGNED ASSESSMENT IS A REASSESSMENT ORDER DATE D 24.12.08 PASSED U/S 147/143(3) OF I.T. ACT 1961 (ACT). 3. EARLIER ASSESSMENT WAS PASSED ON 21.03.05 WHICH WAS REOPENED BY ISSUING NOTICE ON 25.3.05. THE ONLY REASON FOR REOPENING THE 2 ITA NO. 861DEL/2010 ASSESSMENT WAS THE CLAIM OF DEPRECIATION AMOUNTING TO RS. 75 47 507/- ON FIXED ASSETS DUE TO FLUCTUATION IN RATE OF EXCHA NGE AND ACCORDING TO REVENUE SINCE THE REMITTANCE WAS NOT MADE THE LOSS WAS NOT ALLOWABLE. ACCORDING TO REASONS RECORDED SUCH FOREIGN EXCHANGE FLUCTUATION LOSS WAS CONTINGENT IN NATURE HENCE NOT ALLOWABLE AND U PON THE BASIS OF REASONS RECORDED THE AO DISCARDING THE SUBMISSIONS AND HAS MADE AN ADDITION OF RS. 75 47 507/-. THE ADDITION IS DELETE D BY LD. CIT(A).FOLLOWING THE DECISIONS OF ITAT IN ASSESSEE S OWN CASE FOR ASSESSMENT YEARS 1993-94 1995-96 & 1996-97 IN WHIC H ITAT HAD FOLLOWED THE DECISION OF HONBLE DELHI HIGH COURT I N THE CASE OF CIT VS. WOODWARD GOVERNORS INDIA PVT. LTD. 294 ITR 451 WHE REIN HONBLE COURT HAS HELD THAT AMENDMENT OF SEC. 43A OF THE AC T IS PROSPECTIVE IN NATURE AND PRIOR TO THAT COST OF ASSET WAS TO BE AD JUSTED ON ACCOUNT OF FOREIGN EXCHANGE CURRENCY FLUCTUATION IN THE YEAR O F FLUCTUATION AND NOT IN THE YEAR IN WHICH THE RELATED LIABILITY IS ACTUALLY PAID. THE SAID DECISION OF HONBLE DELHI HIGH COURT HAS BEEN APPROVED BY HO NBLE SUPREME COURT IN CIVIL APPEAL NO. 2206 OF 2009. THE DEPART MENT IS AGGRIEVED BY SUCH DELETION HENCE IN APPEAL. 4. AFTER NARRATING THE FACTS LD. AR RELYING UPON T HE ASSESSMENT ORDER PLEADED THAT ADDITION WAS RIGHTLY MADE. 5. ON THE OTHER HAND IT WAS SUBMITTED BY LD. AR TH AT THE ISSUE IN THE PRESENT APPEAL IS COVERED IN FAVOUR OF ASSESSEE BY THE EARLIER DECISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASES IN WHICH TH E SIMILAR DISALLOWANCE MADE BY THE DEPARTMENT WAS DELETED. R EFERENCE WAS 3 ITA NO. 861DEL/2010 MADE TO THE DECISION OF TRIBUNAL FOR A.Y. 1996-97 W HICH IS REPORTED AS 22 SOT 103 (DEL.) WHEREIN SIMILAR DISALLOWANCE OF RS. 7 54 793/- WAS DELETED FOLLOWING THE DECISION OF HONBLE DELHI HIG H COURT IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA P. LTD. (SUPRA) AND IT WAS SUBMITTED THAT DEPARTMENTAL APPEAL MAY BE DISMISSED. 6. WE HAVE HEARD BOTH THE PARTIES. WE FOUND THAT T HIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE EARLIER ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1993-94 9 5-96 & 96-97. FOR THE SAKE OF CONVENIENCE THE OBSERVATIONS OF TRI BUNAL WHILE DEALING WITH ISSUE IN A.Y. 1996-97 (22 SOT 103) ARE REPRODU CED BELOW: - 14. NEXT GROUND OF APPEAL IS AGAINST DELETION OF DISALLOWANCE OF CLAIM OF DEPRECIATION OF RS. 7 54 7 93/- ARISING ON ACCOUNT OF ADDITIONAL LIABILITY DUE TO F LUCTUATION IN THE FOREIGN EXCHANGE RATE OF THE LIABILITIES INCURR ED FOR ACQUIRING CAPITAL ASSETS. THE ASSESSEE HAD CLAIMED DEPRECIATION OF RS. 7 54 793/- ON ADDITIONS MADE TO THE COST OF FIXED AS ASSETS ON ACCOUNT OF FOREIGN EXCHANGE F LUCTUATION IN RESPECT OF FOREIGN CURRENCY LOAN TAKEN TO ACQUIR E SUCH FIXED ASSETS WHICH REMAINED OUTSTANDING AT THE END OF THE RELEVANT FINANCIAL YEAR. THE AO RELYING ON THE ORD ER FOR ASSESSMENT YEARS 1995-96 DISALLOWED THE CLAIM OF DEPRECIATION ON ACCOUNT THAT THE SAME WAS ADMISSIBL E ONLY AT THE TIME OF ACTUAL REPAYMENT OF THE FOREIGN CURR ENCY LOAN AND NOT ON THE INTERMEDIATE FLUCTUATION IN THE RATE OF EXCHANGE WHICH IS RECOGNIZED AT THE END OF THE YEAR . THE CIT(A) DELETED THE ADDITION BY RELYING ON EARLIER Y EAR ORDERS FOR A.Y. 1995-96. 15. AT THE TIME OF HEARING BOTH THE COUNSELS AGREE D THAT THE ISSUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY T HE 4 ITA NO. 861DEL/2010 DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA (P) LTD. (2007) 294 ITR 451 WHEREIN THE COURT HELD THAT THE AMENDMENT TO SEC. 4 3A OF THE ACT IS PROSPECTIVE WITH EFFECT FROM 1.4.2003 AN D PRIOR THERETO THE COST OF ASSET WAS TO BE ADJUSTED ON ACC OUNT OF FOREIGN EXCHANGE CURRENCY FLUCTUATION IN THE YEAR O F FLUCTUATION AND NOT IN THE YEAR IN WHICH THE RELATE D LIABLE IS ACTUALLY PAID. THIS GROUND ACCORDINGLY FAILS. 7. IN THIS VIEW OF THE SITUATION AS THE ISSUE IS C OVERED IN FAVOUR OF ASSESSEE. WE FOUND NO INFIRMITY IN THE ORDER OF CI T(A) ON THIS ISSUE HENCE THE GROUND RAISED BY THE REVENUE IS DISMISSED . 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 07.05.201 0 (R.C. SHARMA) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: 07.05.2010 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR