Bumi Hiway (India) Ltd., New Delhi V. ACIT, Circle- 5(1), New Delhi

CO 78/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9139 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 27-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AND CROSS OBJECTION; CROSS APPEAL
• Keywords: Depreciation; Business expenditure; Revenue expenditure
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: A NEW DELHI BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.600/DEL/2018 ASSESSMENT YEAR: 2012-13 AND ITA NO.601/DEL/2018 ASSESSMENT YEAR: 2013-14 ACIT, CIRCLE-5(1), NEW DELHI VS. BUMI HIWAY (INDIA) LTD., A-1/292, PANKHA ROAD, JANAKPURI, NEW DELHI PAN : AABCB5995M (APPELLANT) (RESPONDENT) AND C.O. NO.78/DEL/2018 [ARISING OUT OF ITA NO.600/DEL/2018] ASSESSMENT YEAR: 2012-13 AND C.O. NO.77/DEL/2018 [ARISING OUT OF ITA NO.601/DEL/2018] ASSESSMENT YEAR: 2013-14 BUMI HIWAY (INDIA) LTD., A-1/292, PANKHA ROAD, JANAKPURI, NEW DELHI VS. ACIT, CIRCLE-5(1), NEW DELHI PAN :AABCB5995M ( APPELLANT ) (RESPONDENT) 2 ITA NO. 600 & 601/DEL/2018; C.O. NO. 77 & 78/DEL/2018; ITA NO.488/DEL/2018 AND ITA NO.488/DEL/2018 ASSESSMENT YEAR: 2012-13 BUMI HIWAY (INDIA) LTD., A-1/292, PANKHA ROAD, JANAKPURI, NEW DELHI VS. ACIT, CIRCLE-5(1), NEW DELHI PAN :AABCB5995M (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THE PRESENT APPEALS BY THE REVENUE AND CROSS OBJECT ION AND CROSS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEA RS 2012-13 HAVE BEEN PREFERRED AGAINST THE ORDER DATED 23/10/2 017 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX, (APPEALS )-2, NEW DELHI [IN SHORT THE LD. CIT(A)]. THE APPEAL BY T HE REVENUE AND CROSS OBJECTION BY THE ASSESSEE FOR ASSESSMENT YEAR 2013-14 HAVE BEEN PREFERRED AGAINST ORDER DATED 24/10/2017 PASSE D BY THE LD. CIT(A). THESE APPEALS AND CROSS OBJECTIONS RELATES TO A COMMON ISSUE IN DISPUTE, AND THEREFORE SAME WERE HEARD TOG ETHER AND DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER FOR CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEALS AND CROSS OBJECTION FOR ASSESSMENT YEAR 2012-13. THE GROUNDS OF APPEAL OF T HE REVENUE DEPARTMENT BY SH. SATPAL GULATI, CIT(DR) ASSESSEE BY SH. R.R. MAURYA, ADV. DATE OF HEARING 04.08.2021 DATE OF PRONOUNCEMENT 10.08.2021 3 ITA NO. 600 & 601/DEL/2018; C.O. NO. 77 & 78/DEL/2018; ITA NO.488/DEL/2018 IN ITA NO. 600/DEL/2018 FOR ASSESSMENT YEAR 2012-13 ARE REPRODUCED AS UNDER: 1. WHETHER THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE 50% ADDITION OF RS.13,78,30,136/- ON ACCOUNT OF ADDITION MADE AFTER DISALLOWANCE OF FOREIGN EXCHANGE LOSS, WITHOUT APPRECIATING THE FACT THAT ASSESSEE ITSELF HAS FAIL ED TO PROVE THAT THE SAID LOANS WERE NOT USED IN INVESTMENT IN EQUIT Y SHARES AND THE LOAN WAS USED WHOLLY & EXCLUSIVELY FOR BUSINESS PURPOSE. IF INTEREST ON LOAN IS NOT CORRELATED WITH BUSINESS PU RPOSE THEN FOREIGN EXCHANGE LOSS SUFFERED IS ALSO NOT ALLOWABL E. 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEA L AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2.1 THE GROUNDS RAISED BY THE ASSESSEE IN CROSS OBJECT ION ARE REPRODUCED AS UNDER: 1. THAT THE LD. CIT(APPEAL) ERRED IN LAW IN UPHOLDI NG THE 50% OF DISALLOWANCE MADE BY THE ASSESSING OFFICER TOWARDS FOREIGN EXCHANGE LOSS OF RS.6,89,15,068/- WITHOUT APPLYING HIS MIND TO THE MERITS OF THE CASE, AND ON AD-HOC BASIS AS NOT BEING INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE RESPONDENT. 2. THAT THE LD. CIT(APPEAL) FAILED TO APPRECIATE TH AT THE GAIN ON REVALUATION OF FOREIGN EXCHANGE ON SIMILAR BASIS HA S BEEN TAXED AS INCOME IN EARLIER YEARS BY THE RESPONDENT FOLLOW ING MERCANTILE SYSTEM OF ACCOUNTING AND IN ACCORDANCE WITH THE ACC OUNTING POLICY PRESCRIBED IN ACCOUNTING STANDARD IIACCOUNT ING FOR THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES. 3. THE CROSS OBJECTION, AS SUBMITTED, AS NOTWITHSTA NDING EACH OTHER. THE RESPONDENT CRAVES TO AMEND, ALTER OR ADD FRESH GROUNDS DURING THE COURSE OF PROCEEDING BEFORE YOUR GOODSEL F. 2.2 THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL F OR ASSESSMENT YEAR 2012-13 ARE REPRODUCED AS UNDER: THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 2, NEW DELHI (HEREINAFTER REFERRED TO AS THE 'LD CIT (APPEAL)) ERRED IN UPHOL DING DISALLOWANCE MADE BY THE ASSESSING OFFICER TOWARDS FOREIGN EXCHA NGE FLUCTUATION LOSS OF RS 6,89,15,068. 4 ITA NO. 600 & 601/DEL/2018; C.O. NO. 77 & 78/DEL/2018; ITA NO.488/DEL/2018 1. THAT THE LD CIT (APPEAL) ERRED IN LAW IN UPHOLD ING THE 50% OF DISALLOWANCE MADE BY THE ASSESSING OFFICER TOWARDS FOREIGN EXCHANGE LOSS OF RS 6,89,15,068 WITHOUT APPLYING HI S MIND TO THE MERITS OF THE CASE, AND ON AD-HOC BASIS AS NOT BEIN G INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE APPELLANT. 2. THAT THE LD CIT (APPEAL) FAILED TO APPRECIATE T HAT THE GAIN ON REVALUATION OF FOREIGN EXCHANGE OF SIMILAR BASIS HA S BEEN TAXED AS INCOME IN EARLIER YEARS BY THE APPELLANT FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND IN ACCORDANCE WITH THE ACC OUNTING POLICY PRESCRIBED IN ACCOUNTING STANDARD 11 - ACCO UNTING FOR THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES. THE GROUNDS OF APPEAL, AS SUBMITTED, ARE NOTWITHSTA NDING EACH OTHER. THE APPELLANT COMPANY CRAVES TO AMEND, ALTER OR ADD FRESH GROUNDS OF APPEAL DURING THE COURSE OF PROCEEDING BEFORE YOUR GOODSELF. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE COMPANY WAS ENGAGED IN CONSTRUCTION OF HIGHWAYS, IN FRASTRUCTURE DEVELOPMENT ETC. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME ON 29/11/2012, DECLARING LOS S OF 14,16,04,895/-. IN THE SCRUTINY ASSESSMENT COMPLETE D ON 20/02/2015 UNDER SECTION 143(3) OF THE INCOME-TAX A CT, 1961 (IN SHORT THE ACT), THE ASSESSING OFFICER DISALLOWED FOREIGN EXCHANGE FLUCTUATION LOSS OF 13,78,30,136/- ON THE GROUND THAT LOAN TAKEN BY THE ASSESSEE ON WHICH FLUCTUATION LOSS HAD BEEN CLAIMED, WERE NOT UTILIZED FOR THE PURPOSE OF THE B USINESS AND THOSE FUNDS HAD BEEN USED FOR INVESTMENT IN EQUITY SHARES. THE LD. CIT(A) HOWEVER DELETED 50% OF DISALLOWANCE AND SUSTAINED BALANCE 50% OF DISALLOWANCE OBSERVING AS UNDER: 3.3.1 I HAVE CONSIDERED THE SUBMISSIONS OF THE APP ELLANT AS WELL AS THE FINDINGS OF THE AO. THE AO HAS DISALLOWED LO SS OF RS. 13,78,30,136/- INCURRED ON ACCOUNT OF FOREIGN EXCHA NGE FLUCTUATION AS HE WAS OF THE VIEW THAT THE LOANS WERE NOT UTILI ZED FOR BUSINESS PURPOSES BUT THESE FUNDS WERE ESSENTIALLY UTILIZED IN INVESTMENT IN EQUITY SHARES OF M/S. SWAMA TOLLWAY PVT. LTD. (STPL ) AND, 5 ITA NO. 600 & 601/DEL/2018; C.O. NO. 77 & 78/DEL/2018; ITA NO.488/DEL/2018 THEREFORE, THE EXPENDITURE/LOSS WAS NOT COVERED U/S 37(1) OF THE ACT. 3.3.2 THE GENERAL PRINCIPLES REGARDING THE TREATMEN T OF FOREIGN EXCHANGE FLUCTUATION ARE AS BELOW: I. A LOSS ARISING IN THE PROCESS OF CONVERSION OF FOREIGN CURRENCY WHICH IS PART OF THE TRADING ASSET OF THE ASSESSEE IS A TRADING LOSS. II. A LOSS SUFFERED BY THE ASSESSEE ON ACCOUNT OF EXCHANGE DIFFERENCES AS ON THE DATE OF BALANCE SHEET IS AN A LLOWABLE EXPENDITURE U/S 37(1) OF THE I.T ACT (CIT VS WOODWA RD GOVERNOR INDIA PVT. LIMITED (2009) 312 ITR 254 (SC) /179 TAXMAN 326 (SC), THEREBY CONFIRMING THE ORDER OF TH E HONBLE DELHI HIGH COURT IN CIT VS. WOODWARD GOVERNOR INDIA PVT. LIMITED 294 ITR 451 (DEL), WHERE IT WAS HELD THAT T HE CHANGE IN THE VALUE OF FOREIGN CURRENCY IN RELATION TO IND IAN CURRENCY IS A FAIT ACCOMPLI AND NOT A NOTIONAL ONE AND THERE FORE, THE INCREASE IN LIABILITY DUE TO FOREIGN EXCHANGE FLUCT UATION AS PER THE EXCHANGE RATE PREVAILING ON THE LAST DATE OF TH E FINANCIAL YEAR IS ALLOWABLE AS A DEDUCTION AND IS NOT NOTIONA L OR CONTINGENT [BEML V CIT (2000) 245 ITR 428 (SC) RELI ED ON], III. IN DETERMINING THE TRUE NATURE AND CHARACTER OF THE LOSS, THE CAUSE WHICH OCCASIONS THE LOSS IS IMMATERIAL, WHAT IS MATERIAL IS WHETHER THE LOSS HAS OCCURRED IN THE COURSE OF T HE BUSINESS OR IS INCIDENTAL TO IT. IV. THE LOSS RESULTING FROM DEPRECIATION OF THE FO REIGN CURRENCY WHICH IS UTILIZED OR INTENDED TO BE UTILIZED IN BUS INESS AND IS A PART OF THE CIRCULATING CAPITAL WOULD BE A TRADING LOSS, BUT DEPRECIATION OF FIXED CAPITAL ON ACCOUNT OF ALTERAT ION IN EXCHANGE RATE WOULD BE A CAPITAL LOSS. V. TO DETERMINE, WHETHER DEVALUATION LOSS IS REVEN UE OR CAPITAL IN NATURE, WHAT IS RELEVANT IS THE UTILIZATION OF T HE AMOUNT AT THE TIME OF DEVALUATION AND NOT THE OBJECT FOR WHIC H THE LOAN HAD BEEN OBTAINED OR EVEN IF THE FOREIGN CURRENCY W AS INTENDED OR HAD ORIGINALLY BEEN UTILIZED FOR ACQUIS ITION OF FIXED ASSET, IF AT THE TIME OF DEVALUATION, IT HAD CHANGE D ITS CHARACTER AND HAD ASSUMED THE NEW CHARACTER OF STOC K IN TRADE OR CIRCULATING CAPITAL, THE LOSS THAT OCCURRE D ON ACCOUNT OF DEVALUATION SHALL BE REVENUE LOSS AND NOT A CAPI TAL LOSS. VI. THE ENTRIES MADE BY THE ASSESSEE IN THE BOOKS OF THE ACCOUNT ARE NOT DETERMINATIVE OF THE QUESTION WHETHER THE A SSESSEE HAS EARNED ANY PROFIT OR SUFFERED ANY LOSS; WHAT DO ES NEED TO BE CONSIDERED IS THE TRUE NATURE OF THE TRANSACTION AND WHETHER IN FACT IT HAS RESULTED IN PROFIT OR LOSS T O THE ASSESSEE [SUTLEJ COTTON MILLS LTD VS CIT (1979) 116 ITR 1 (S C)]. VII. EVEN AN UNREALIZED LOSS ON AN INTEREST RATE S WAP TRANSACTION HAS BEEN ALLOWED AS A DEDUCTION AS THE ASSESSEE HAD 6 ITA NO. 600 & 601/DEL/2018; C.O. NO. 77 & 78/DEL/2018; ITA NO.488/DEL/2018 CONSISTENTLY FOLLOWED THE SAME METHOD OF ACCOUNTING AS MANDATED BY THE RBI GUIDELINES (JP MORGAN CHASE BAN K VS ADIT (2010) 42 SOT 30 (MUM) (URO). VIII. IN A CASE, WHERE ASSESSEE SEEKS DEDUCTION FOR FOREIGN EXCHANGE LOSS IN RESPECT OF CONVERSION OF DIFFERENT EXPENDITURE AT A UNIFORM RATE, THOUGH IT IS NOT A FOREIGN EXCHA NGE FLUCTUATION, THE SAME SHALL BE ALLOWED AS DEDUCTION - [CIT VS. ENRON OIL & GAS LIMITED (2008) 305 ITR 75 (SC)]. 3.3.3 THE APPELLANT COMPANY HAS CATEGORICALLY SUBMI TTED THAT IT SUPERVISED THE TWO PROJECTS (JALANDHAR AND ORISSA) DIRECTLY UNDERTAKEN BY ITS MALAYSIAN AE I.E. M/S BUMI HIWAY (M) SDN. BHD (BHM) IN INDIA WHILE IT ALSO SUPERVISED ONE ROAD PR OJECT (VIJAYAWADA), AWARDED TO IT DIRECTLY BY M/S. SWAMA TOLLWAY PRIVATE LIMITED (STPL). REGARDING THE PROJECTS OF J ALANDHAR AND ORISSA, THE SAME WERE ORIGINALLY AWARDED BY THE NAT IONAL HIGHWAY AUTHORITY OF INDIA (NHAI) TO M/S BUMI HIWAY (M) (BH M) BUT SUBSEQUENTLY M/S BUMI HIWAY (M) (BHM) SUB-CONTRACTE D THEM TO THE APPELLANT COMPANY. MOREOVER, BHI (APPELLANT COM PANY) HELD 16.8% EQUITY SHARES IN STPL, A CONSORTIUM COMPANY S PECIFICALLY INCORPORATED IN EXECUTING THE AGREEMENT BETWEEN THE GOVERNMENT OF INDIA AND THE GROUP OF COMPANIES IN MALAYSIA, TO BU ILD A CERTAIN LENGTH OF NATIONAL HIGHWAY, BY WAY OF DESIGN, BUILD , OPERATE AND TRANSFER AND AS A SHAREHOLDER OF STPL, THE APPELLAN T WAS AWARDED PROJECT BY STPL TO CONSTRUCT CERTAIN STRETCH OF HIG HWAYS. IN ORDER TO FINANCE THE WORKING CAPITAL REQUIREMENT AND INVESTM ENT IN STPL, THE APPELLANT SECURED LOAN FINANCING FROM M/S BANK OF NOVA SCOTIA, INDIA IN 2002. THE LOAN USED FOR INVESTMENT IN STPL EQUITY AMOUNTING TO RS. 20,67,83,000 WAS REPAID BY THE APP ELLANT COMPANY IN THE FY 2002-03 ITSELF. 3.3.4 THEREFORE, THE ADVANCES RECEIVED FROM BUMI H IWAY VENTURES BERHAD, BUMI HIWAY (M) (SDN BHD), BUMI HIWAY MAURIT IUS LIMITED, ECB LOAN ACCOUNT WERE UTILIZED FOR BUSINES S PURPOSES AND SINCE THE ADVANCES RECEIVED WERE IN FOREIGN CURRENC Y, THEY HAVE BEEN REVALUED IN ACCORDANCE WITH AS-11 ISSUED BY IC AI AND ALSO FOLLOWING ACCRUAL SYSTEM OF ACCOUNTING. THEREFORE, THE APPELLANT COMPANY HAS ESTABLISHED THAT- I) LOANS, FUNDS AND ECB LOANS AS APPEARING IN THE F INANCIAL STATEMENTS OF THE APPELLANT COMPANY FOR THE YEAR EN DING 2012 HAVE BEEN USED FOR REVENUE EXPENDITURE AND EXCLUSIV ELY FOR BUSINESS PURPOSE. II) THE INVESTMENT MADE IN STPL EQUITY WAS UNDER CO MMERCIAL EXPEDIENCY TO SECURE CONTRACT AND ITS GROUPING IN T HE BOOKS OF ACCOUNT AS INVESTMENT WAS AS PER COMPANIES ACT AND ALSO ACCORDING TO THE ACCOUNTING STANDARDS ISSUED BY THE ICAI. 7 ITA NO. 600 & 601/DEL/2018; C.O. NO. 77 & 78/DEL/2018; ITA NO.488/DEL/2018 III) THE APPELLANT COMPANY HAS RIGHTFULLY TRANSFERR ED PROFIT AS WELL AS LOSS ACCRUING ON REVALUATION OF UNSECURED L OAN TO ITS PROFIT AND LOSS ACCOUNT FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING (FOLLOWED CONSISTENTLY) AND AS PER THE A S-11 IN THE RESPECTIVE YEAR. 3.3.5 IDENTICAL ISSUE AROSE IN THE CASE OF THE APP ELLANT FOR A.Y. 2011-12 AND THE CIT (APPEALS)-14 VIDE HIS ORDER IN A. NO. 551/14- 15/I.T./DEL/2015-16 DATED 23.03.2016 HAS HELD AS FO LLOWS:- 4. CONSIDERING THE SUBMISSION OF THE APPELLANT THA T THE FOREIGN EXCHANGE FLUCTUATION LOSS ON REVALUATION OF FOREIGN CURRENCY LOANS AND ADVANCE IS ALLOWABLE AS BUSINESS EXPENDITURE U/ S 37(1) OF THE ACT BY WAY OF BUSINESS PURPOSE AND COMMERCIAL EXPED IENCY, I AM OF THE VIEW THAT THE LD. A.O. SHOULD HAVE ALLOWED 5 0% OF THE LOSS ON FOREIGN EXCHANGE FLUCTUATION PARTICULARLY WHILE ON SIMILAR FACTS, HE HAS ALLOWED 50% OF BANK CHARGES U/S 37(1) OF ACT AND ALSO KEEPING IN VIEW THE JUDGEMENT OF THE HONBLE SUPREM E COURT OF INDIA IN CIT VS. WOODWARD GOVERNOR INDIA PVT. LTD. (2009) 312 ITR 254 (SC)/179 TAXMAN 326 (SC) AS DELIBERATED IN THE ABOVE SAID PARAS. HOWEVER, IT IS ALSO A FACT ON RECORD, THAT L OOKING INTO THE TRUE NATURE OF TRANSACTION, IT CANNOT BE SAID THAT THE S UM EXPENDED FOR THE ENTIRE TRANSACTIONS ARE WHOLLY OR EXCLUSIVELY F OR THE BUSINESS EXPEDIENCY OR BUSINESS PURPOSES. THEREFORE, THE ADD ITION OF RS. 3,29,11,946/- AS MADE BY THE LD. A.O. ON ACCOUNT OF DISALLOWANCE ON FOREIGN EXCHANGE LOSS IS HEREBY RESTRICTED TO RS .1,64,55,973/-. HENCE THE GROUNDS OF APPEAL IS THIS RESPECT ARE PAR TLY ALLOWED. 3.3.6 SINCE THE FACTS DURING THE YEAR UNDER APPEA L ARE IDENTICAL TO THOSE IN THE A.Y. 2011-12 DISCUSSED ABOVE, FOLLOWI NG THE FINDINGS OF THE FIRST APPELLATE AUTHORITY FOR THE PRECEDING YEAR, THE ADDITION OF RS.13,78,30,136/- AS MADE BY THE AO ON ACCOUNT O F DISALLOWANCE OF FOREIGN EXCHANGE LOSS IS HEREBY RES TRICTED TO RS.6,89,15,068/-(50% OF THE DISALLOWANCE MADE BY TH E A.O.). HENCE, THESE GROUNDS OF APPEAL ARE PARTLY ALLOWED. 3.1 AGGRIEVED, BOTH THE REVENUE AND THE ASSESSEE ARE B EFORE US BY WAY OF RAISING RESPECTIVE GROUNDS IN THEIR APPEA LS AND CROSS OBJECTION. 4. BEFORE US, THE PARTIES APPEARED THROUGH VIDEO CONF ERENCE FACILITY AND FILED DECISIONS RELIED UPON THROUGH EM AIL. 5. AT THE OUTSET, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT ISSUE IN DISPUTE IS COVERED BY THE ORDER OF TH E TRIBUNAL IN ITA NO. 3131 & 3132/DEL/2016 FOR ASSESSMENT YEAR 2010-1 1 AND 8 ITA NO. 600 & 601/DEL/2018; C.O. NO. 77 & 78/DEL/2018; ITA NO.488/DEL/2018 2011-12 AND ITA NO. 489/DEL/2018 FOR ASSESSMENT YEA R 2013- 14. 6. THE LEARNED DR FAIRLY CONCEDED THAT ISSUE IN DISPU TE RAISED IN THE APPEALS OF THE ASSESSEE HAS BEEN RESTORED BA CK TO THE FILE OF THE ASSESSING OFFICER BY THE TRIBUNAL, HOWEVER, HE SUBMITTED THAT IN ASSESSMENT YEAR 2010-11, THE GROUNDS OF THE REVE NUE DISMISSED BY THE TRIBUNAL RELATES TO DISALLOWANCE O F INTEREST IN WORKING CAPITAL AND NOT RELATES TO FOREIGN EXCHANGE FLUCTUATION LOSS. 7. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON T HE ISSUE IN DISPUTE AND PERUSED THE RELEVANT MATERIAL ON REC ORD. IN THE INSTANT APPEALS AND CROSS OBJECTION, THE ISSUE IN D ISPUTE IS WHETHER THE FOREIGN EXCHANGE FLUCTUATION LOSS CLA IMED BY THE ASSESSEE SHOULD BE ALLOWED TO THE ASSESSEE OR SHOUL D BE DISALLOWED. ACCORDING TO THE ASSESSING OFFICER, THE LOANS WERE NOT UTILIZED FOR THE BUSINESS PURPOSE, WHEREAS CLAIM OF THE ASSESSEE THAT SAME HAVE BEEN UTILIZED FOR THE PURPOSE OF THE BUSINESS. THE IDENTICAL ISSUE RAISED BY THE ASSESSEE IN CROSS OBJ ECTION FOR ASSESSMENT YEAR 2010-11 HAS BEEN RESTORED BY THE TR IBUNAL TO THE FILE OF THE ASSESSING OFFICER OBSERVING AS UNDE R: 15. REGARDING THE CROSS OBJECTIONS OF THE ASSESSEE , THE MATTER IS BEING REFERRED TO THE FILE ASSESSING OFFICER FOR VE RIFICATION OF THE UTILIZATION OF THE LOAN FOR BUSINESS PURPOSE BY TAK ING INTO ACCOUNT THE AMOUNT OF THE LOAN RAISED, THE QUANTUM OF THE O WN CAPITAL AND THE RESERVES & SURPLUS, UTILIZATION OF THE AMOUNT F OR DAY-TO-DAY RUNNING OF THE BUSINESS AND UTILIZATION OF THE AMOU NT FOR INVESTMENT IN THE EQUITY SHARES OF THE SUBSIDIARY COMPANY OR T HE AMOUNT INVESTED FOR INFUSION OF THE CAPITAL IN ANY OTHER C OMPANY. THE AO MAY THEN TAKE A CONSIDERED DECISION WITH REGARD TO DISALLOWANCE OF INTEREST ON LOAN AND BANK CHARGES IN ACCORDANCE WIT H THE PROVISIONS OF THE INCOME TAX ACT. 9 ITA NO. 600 & 601/DEL/2018; C.O. NO. 77 & 78/DEL/2018; ITA NO.488/DEL/2018 7.1 WHILE ARRIVING AT THE ABOVE DECISION, THE TRIBUNAL (SUPRA) HAS FOLLOWED THE FINDING OF THE TRIBUNAL IN ITA NO. 5871/DEL/2013 FOR ASSESSMENT YEAR 2009-10 IN THE CA SE OF THE ASSESSEE. 7.2 THE IDENTICAL ISSUE IN THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2013-14 HAS BEEN SENT TO THE FILE O F THE ASSESSING OFFICER BY THE TRIBUNAL IN ITA NO. 489/DE L/2018 OBSERVING AS UNDER: 7. WE HAVE GONE THROUGH THE ORDER OF THE CO-ORDINA TE BENCH OF THE TRIBUNAL FOR THE EARLIER YEARS IN ITA NO.5871/DEL/2 013 AND IN CO NOS. 239 & 240/DEL/2016 WHEREIN THE MATTER HAS BEEN REFERRED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF THE UTILIZATION OF THE LOAN FOR BUSINESS PURPOSE BY TAKING INTO ACCOUNT TH E AMOUNT OF THE LOAN RAISED, THE QUANTUM OF THE OWN CAPITAL AND THE RESERVES & SURPLUS, UTILIZATION OF THE AMOUNT FOR DAY-TO-DAY R UNNING OF THE BUSINESS AND UTILIZATION OFF THE AMOUNT FOR INVESTM ENT IN THE EQUITY SHARES OF THE SUBSIDIARY COMPANY OR THE AMOUNT INVE STED FOR INFUSION OF THE CAPITAL IN ANY OTHER COMPANY. 7.3 RESPECTFULLY, FOLLOWING THE FINDINGS OF THE TRIBUN AL (SUPRA) ABOVE, WE RESTORE THE APPEAL OF THE REVENUE; APPEAL OF THE ASSESSEE; AND CROSS OBJECTION FILED BY THE ASSESSEE TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE ISSUE-IN-DIS PUTE IN THE LIGHT OF THE DIRECTION GIVEN BY THE TRIBUNAL(SUPRA) IN AS SESSMENT YEAR 2013-14. 7.4 ACCORDINGLY, THE GROUNDS RAISED IN APPEALS AND CRO SS OBJECTION ARE ACCORDINGLY ALLOWED FOR STATISTICAL P URPOSES. 8. THE GROUNDS RAISED BY THE REVENUE IN ITA NO. 601/DEL/2018 FOR ASSESSMENT YEAR 2013-13 ARE REPROD UCED AS UNDER: 10 ITA NO. 600 & 601/DEL/2018; C.O. NO. 77 & 78/DEL/2018; ITA NO.488/DEL/2018 1. WHETHER THE LD. CIT(A) HAS ERRED ON FACTS AND I N LAW IN DELETING THE 50% ADDITION OF RS. 6,77,95,765/- ON ACCOUNT OF ADDITION OF ADDITION MADE AFTER DISALLOWANCE OF FOREIGN EXCHANG E LOSS, WITHOUT APPRECIATING THE FACT THAT ASSESSEE ITSELF HAD FAILED TO PROVE THAT THE SAID LOANS WERE NOT USED IN INVESTME NT IN EQUITY SHARES AND THE LOAN WAS USED WHOLLY & EXCLUSIVELY F OR BUSINESS PURPOSE. IF INTEREST ON LOAN IS NOT CORRELATED WITH BUSINESS PURPOSE THEN FOREIGN EXCHANGE LOSS SUFFERED IS ALSO NOT ALLOWABLE. 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RI GHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUNDS(S) OF APPE AL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 8.1 THE GROUNDS RAISED BY THE ASSESSEE IN CROSS OBJECT ION FOR ASSESSMENT YEAR 2013-14 REPRODUCED AS UNDER: 1. THAT THE LD CIT (APPEAL) ERRED IN LAW IN UPHOLD ING THE 50% OF DISALLOWANCE MADE BY THE ASSESSING OFFICER TOWARDS FOREIGN EXCHANGE LOSS OF RS 3,38,97,823 WITHOUT APPLYING HI S MIND TO THE MERITS OF THE CASE, AND ON AD-HOC BASIS AS NOT BEIN G INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE RESPONDENT. 2. THAT THE LD CIT (APPEAL) FAILED TO APPRECIATE T HAT THE GAIN ON REVALUATION OF FOREIGN EXCHANGE OF SIMILAR BASIS HA S BEEN TAXED AS INCOME IN EARLIER YEARS BY THE RESPONDENT FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND IN ACCORDANCE WITH THE ACC OUNTING POLICY PRESCRIBED IN ACCOUNTING STANDARD 11 - ACCO UNTING FOR THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES. 3. THE GROUNDS OF APPEAL, AS SUBMITTED, ARE NOTWIT HSTANDING EACH OTHER. THE RESPONDENT CRAVES TO AMEND, ALTER OR ADD FRESH GROUNDS OF APPEAL DURING THE COURSE OF PROCEEDING B EFORE YOUR GOODSELF. 9. AS THE ISSUE INVOLVED IN ASSESSMENT YEAR 2013-14 I N APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE IS IDENTICAL TO THE ISSUE RAISED IN ASSESSMENT YEAR 2012-13, THE GR OUNDS RAISED IN APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE FOR ASSESSMENT YEAR 2013-14 ARE ACCORDINGLY ALLOWED FOR THE STATISTICAL PURPOSES. 11 ITA NO. 600 & 601/DEL/2018; C.O. NO. 77 & 78/DEL/2018; ITA NO.488/DEL/2018 10. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AND ASSESSEE AND CROSS OBJECTION OF THE ASSESSEE ARE ALLOWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2021. SD/- SD/- (KULDIP SINGH) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 TH AUGUST, 2021. RK/- (DTDC) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI