SANJANA CRYOGENIC STORAGES LTD, MUMBAI V. DCIT CIR 3(3)(1), MUMBAI

ITA 1031/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9241 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 06-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 16-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTEINSR
• Assessee Lawyers: LAL CHAND CHOUDHARYLD
• Keywords: Capital asset; Business income; Depreciation; Rule of consistency
• Section: 143(3)

Judgement Text

ITA NO.1031/M/2015 SANJANA CRYOGENIC STORAGES LIMITED ASSESSMENT YEAR 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 1031/MUM/2015 ( / ASSESSMENT YEAR: 2010-11) SANJANA C RYOGENIC STORAGES LIMITED 116, BAJAJ BHAVAN 11 TH FLOOR, NARIMAN POINT MUMBAI 400 021 / VS. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 3(3)(1) AAYKAR BHAVAN 6 TH FLOOR, M.K.ROAD MUMBAI 400 020 ./ ./PAN/GIR NO. AADCS-5093-D ( /APPELLANT ) : ( !' / RESPONDENT ) A SSESSEE BY : LAL CHAND CHOUDHARY,LD.AR RE VENUE BY : V.JUSTEIN,SR.D R / DATE OF HEARING : 31/08/2017 / DATE OF PRONOUNCEMENT : 04 /10/2017 ITA NO.1031/M/2015 SANJANA CRYOGENIC STORAGES LIMITED ASSESSMENT YEAR 2010-11 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2010-11 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)- 7 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-7/DCIT-3(3)/IT-41/13- 14 DATED 14/11/2014 IN DENYING DEDUCTION U/S 80-IA. T HE ASSESSMENT WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX [AO], CIRCLE 3(3), MUMBAI ON 27/02/2013. THE GROUNDS OF APPEAL R AISED BY THE ASSESSEE READS AS FOLLOWS:- 1. THE CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER DENYING THE DEDUCTION OF RS.1,34,85,051 AS CLAIMED U/S 80IA BY HOLDING A VIEW THAT LOSS AND DEPRECIATION OF EARLIER YEARS IN RESPECT OF THE ELIGIBLE WIND MILLS HAD TO BE NOTIONALLY BROUGHT FO RWARD AND SET OFF AGAINST PROFITS OF ELIGIBLE BUSINESS WHILE COMPUTIN G DEDUCTION U/S 80IA OF THE INCOME TAX ACT, 1961. 2. THE CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO OF EXCLUDING THE INTEREST INCOME OF RS.1,83,654 AND FOREIGN EXCH ANGE GAINS OF RS.23,10,796 FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80-IA OF THE INCOME TAX ACT, 1961 AND ASSESSING COMBINED INCOME OF RS.24,94,451 UNDER THE HEADING INCOME FROM OTHER SOURCES. THE GROUND NUMBER 2, SO FAR AS PERTAINING TO INTEREST INCOME IS CONCERNED, HAS NOT BEEN PRESSED BY LD. COUNSEL FOR ASSESSEE [AR] DURING PROCEEDINGS BEFORE US AND THEREFORE, THE SAM E STANDS DISMISSED AS BEING NOT PRESSED TO THAT EXTENT . 2.1 BRIEFLY STATED THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE , WAS ASSESSED FOR IMPUGNED AY U/S 143(3) ON 27/02/2013 A T RS.2,09,14,500/- AS AGAINST RETURNED INCOME OF RS.74,49,479/- E-FILED BY THE ASSESSEE ON ITA NO.1031/M/2015 SANJANA CRYOGENIC STORAGES LIMITED ASSESSMENT YEAR 2010-11 3 15/10/2010 WHICH WAS LATER REVISED ON 03/02/2011 TO RS.74,21,462/-. THE ASSESSEE HAS BEEN DENIED DEDUCTION U/S 80-IA OF THE INCOME TAX ACT AND THE SAME FORM SUBJECT MATTER OF THIS APPEAL . 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE HAD WIND POWER UNIT AT KARNATAKA UNDER THE NAME AND STYLE OF SANJANA POWER KARNATAKA WHICH WAS AN ELIGIBLE UNIT TO CLAIM DEDUCTION IN T ERMS OF SECTION 80-IA. IT STARTED GENERATING ELECTRICITY FROM AY 2005-06 AND INCURRED LOSSES IN AY 2005-06 & 2006-07 TO THE TUNE OF RS.4.09 CRORES & RS. 2.50 CRORES RESPECTIVELY, WHICH WERE ADJUSTED F ROM PROFITS OF OTHER BUSINESS OF THE ASSESSEE IN THOSE YEARS. THE ASSESS EE, GENERATED PROFITS IN NEXT THREE AYS I.E. AY 2007-08, 2008-09 & 2009-10 TO THE TUNE OF RS.0.29 CRORES, RS.1.37 CRORES & RS.0.17 CRORES RESPECTIVELY, BUT CHOSE NOT TO CLAIM THE SAID DEDUCTION AS PER 80-IA( 2). THE ASSESSEE GENERATED INCOME OF RS.1.34 CRORES IN IMPUGNED AY A ND THE SAME BEING 6 TH YEAR OF OPERATION, THE ASSESSEE CLAIMED THE SAID D EDUCTION FOR THE FIRST TIME IN IMPUGNED AY. THE LD. AO, APPLYING THE PROVISIONS OF SECTION 80-IA(5), WAS OF THE VIEW THAT BY TREATING THE SAID BUSINESS ON STAND- ALONE BASIS , THE EARLIER YEARS LOSSES AND DEPRECIATION WAS FIR ST REQUIRED TO BE BROUGHT FORWARD NOTIONALLY AND ADJUSTED FROM THE INCOME OF THE ELIGIBLE UNIT IN IMPUGNED AY. SINCE, NET CUMULATIVE LOSSES OF FIRST 5 YEARS WERE RS.4.75 CRORES AND THE INCOME EARNED BY THE AS SESSEE FROM ELIGIBLE UNIT IN THE IMPUGNED AY WAS RS.1.34 CRORES AND THEREFORE, NO DEDUCTION COULD BE GRANTED TO THE ASSESSEE U/S 80-I A. 2.3 THE ASSESSEE CONTENDED THAT SECTION 80-IA(5) DI D NOT APPLY TO DEPRECIATION OR LOSS RELATED TO A PERIOD PRIOR TO I NITIAL AY OPTED BY THE ITA NO.1031/M/2015 SANJANA CRYOGENIC STORAGES LIMITED ASSESSMENT YEAR 2010-11 4 ASSESSEE AND ALREADY ADJUSTED IN EARLIER YEARS. THE PROVISIONS MANDATED ONLY THE LOSS OR DEPRECIATION FOR THE INIT IAL AY AND FOR ANY SUBSEQUENT YEARS AND DID NOT ALLOW MOVING BACKWARD. IN NUTSHELL, THE ASSESSEE CONTENDED THAT LOSSES OF YEARS EARLIER TO INITIAL AY FOR WHICH A CLAIM U/S 80-IA HAS BEEN MADE AND WHICH HAD ALREADY BEEN ABSORBED AGAINST THE PROFITS OF OTHER BUSINESS IN EARLIER YE ARS NEED NOT BE NOTIONALLY BROUGHT FORWARD AND ADJUSTED FROM THE IN COME OF THE ELIGIBLE UNIT. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBL E MADRAS HIGH COURT RENDERED IN VELAYUDHASWAMY SPINNING MILLS PVT. LTD. VS ACIT [23 1 CTR 368] . 2.4 HOWEVER, PLACING RELIANCE ON SEVERAL JUDICIAL P RONOUNCEMENTS, LD. AO CONCLUDED THAT INITIAL YEAR FOR THE PURPOSE OF SECTION 80-IA MEANS THE YEAR IN WHICH THE MANUFACTURE OR PRODUCTION OR OTHER ACTIVITY BEGINS AND THEREFORE, REJECTED THE CLAIM OF THE ASSESSEE. 2.5 THE LD. AO, IN THE ALTERNATIVE, NOTED THAT THE ASSESSEE EARNED INTEREST INCOME OF RS.1.83 LACS AND EXCHANGE GAIN O F RS.23.10 LACS IN RESPECT OF KARNATAKA POWER UNIT AND THE SAME WERE CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND THEREFORE, DEDUCTION U/S 80-IA, AT LEAST, ON THESE ITEMS WERE NOT AVAILABLE TO THE ASSESSEE IN VIEW OF THE JUDGMENT OF HONBLE APEX COURT RENDERED IN LIBERTY INDIA VS. CIT [317 ITR 218]. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD.CIT(A) VIDE IMPUGNED ORDER DATED 14/11/20 14 WHERE THE STAND OF LD. AO WERE CONFIRMED. AGGRIEVED, THE ASSESSEE I S IN FURTHER APPEAL BEFORE US. ITA NO.1031/M/2015 SANJANA CRYOGENIC STORAGES LIMITED ASSESSMENT YEAR 2010-11 5 4.1 THE LD. COUNSEL FOR ASSESSEE [AR], AT THE OUTSE T, DREW OUR ATTENTION TO CBDT CIRCULAR NO. 1/2016 DATED 15/02/2016 TO CONTEND THAT THE ISSUE STOOD SQUARELY IN ASSESSEES FAVOR BY THE SAID CIRCULAR SINCE THE CIRCULAR HAS CLARIFIED THE MEANING OF EXPRESSIO N INITIAL ASSESSMENT YEAR FOR THE PURPOSE OF SECTION 80-IA(5). OUR ATTENTION IS DRAWN TO THE FACT THAT THE SAID EXPRESSION WOULD MEAN THE FIRST YEAR OPTED FOR BY THE ASSESSEE FOR CLAIMING DEDUCTION U/S 80-IA AND NOT T HE FIRST YEARS OF COMMENCEMENT OF OPERATIONS OF THE ELIGIBLE UNIT. 4.2 THE LD. AR ALSO DREW OUR ATTENTION TO THE FOLLO WING JUDICIAL PRONOUNCEMENTS WHERE A VIEW FAVORABLE TO THE ASSESS EE HAS BEEN TAKEN:- (I) HONBLE KARNATAKA HIGH COURT IN CIT VS. ANIL H.LAD [45 TAXMANN.COM 98] (II) HONBLE MADRAS HIGH COURT IN VELAYUDHASWAMY S PINNING MILLS P. LTD VS. ACIT [21 TAXMNAN.COM 95] (III) ITAT MUMBAI IN SHEVIE EXPORTS VS. JCIT [33 TA XMANN.COM 446] 4.3 PER CONTRA, THE LD. DR, WHILE OPPOSING THE SAME, FAIRLY CONCEDE D THE SETTLED LEGAL POSITION. 5. HEARD AND PERUSED RELEVANT MATERIAL ON RECORD IN CLUDING CITED CBDT CIRCULAR AND JUDICIAL PRONOUNCEMENTS. AFTER GOING THROUGH T HE SAME, WE CONCUR WITH THE STAND OF LD. AR SINCE THE ISSUE HAS BEEN MADE CRYSTAL CLEAR BY THE CITED CBDT CIRCULAR WHICH IS CLARIFICATORY IN NATURE. FOR THE SAKE OF READY REFERENCE, THE SAME I S REPRODUCED BELOW:- CIRCULAR NO.1/2016 [F.NO.200/31/2015-ITA-I] , DATED 15-2-2016 SECTION 80-IA OF THE INCOME-TAX ACT, 1961 ('ACT'), AS SUBSTITUTED BY THE FINANCE ACT, 1999 WITH EFFECT FROM 1-4-2000, PROVIDES FOR DEDUCTION O F AN AMOUNT EQUAL TO 100 % OF THE PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR ENTE RPRISE FROM AN ELIGIBLE BUSINESS (AS REFERRED TO IN SUB-SECTION (4) OF THAT SECTION) IN ACCORDANCE WITH THE PRESCRIBED PROVISIONS. ITA NO.1031/M/2015 SANJANA CRYOGENIC STORAGES LIMITED ASSESSMENT YEAR 2010-11 6 SUB-SECTION (2) OF SECTION 80-IA FURTHER PROVIDES T HAT THE AFORESAID DEDUCTION CAN BE CLAIMED BY THE ASSESSEE, AT HIS OPTION, FOR ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS (TWENTY YEARS IN CERTAIN CASES) BEGIN NING FROM THE YEAR IN WHICH THE UNDERTAKING COMMENCES OPERATION, BEGINS DEVELOPMENT OR STARTS PROVIDING SERVICES ETC. AS STIPULATED THEREIN. SUB-SECTION (5) OF SECTION 8 0-IA FURTHER PROVIDES AS UNDER 'NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PR OVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH THE PROVISIO NS OF SUB-SECTION (1) APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTIO N UNDER THAT SUB-SECTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOU S YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO B E MADE'. IN THE ABOVE SUB-SECTION, WHICH PRESCRIBES THE MANN ER OF DETERMINING THE QUANTUM OF DEDUCTION, A REFERENCE HAS BEEN MADE TO THE TERM 'I NITIAL ASSESSMENT YEAR'. IT HAS BEEN REPRESENTED THAT SOME ASSESSING OFFICERS ARE INTERP RETING THE TERM 'INITIAL ASSESSMENT YEAR' AS THE YEAR IN WHICH THE ELIGIBLE BUSINESS/ M ANUFACTURING ACTIVITY HAD COMMENCED AND ARE CONSIDERING SUCH FIRST YEAR OF COMMENCEMENT /OPERATION ETC. ITSELF AS THE FIRST YEAR FOR GRANTING DEDUCTION, IGNORING THE CLEAR MANDATE PROVIDED UNDER SUB-SECTION (2) WHICH ALLOWS A CHOICE TO THE ASSESSEE FOR DECIDING THE YE AR FROM WHICH IT DESIRES TO CLAIM DEDUCTION OUT OF THE APPLICABLE SLAB OF FIFTEEN (OR TWENTY) YEARS. THE MATTER HAS BEEN EXAMINED BY THE BOARD. IT IS AB UNDANTLY CLEAR FROM SUB-SECTION (2) THAT AN ASSESSEE WHO IS ELIGIBLE TO CLAIM DEDUCTION U/S 80-IA HAS THE OPTION TO CHOOSE THE INITIAL/ FIRST YEAR FROM WHICH IT MAY DESIRE THE CL AIM OF DEDUCTION FOR TEN CONSECUTIVE YEARS, OUT OF A SLAB OF FIFTEEN ( OR TWENTY) YEARS, AS PRE SCRIBED UNDER THAT SUB-SECTION. IT IS HEREBY CLARIFIED THAT ONCE SUCH INITIAL ASSESSMENT YEAR HA S BEEN OPTED FOR BY THE ASSESSEE, HE SHALL BE ENTITLED TO CLAIM DEDUCTION U/S 80-IA FOR TEN CONSECUTIVE YEARS BEGINNING FROM THE YEAR IN RESPECT OF WHICH HE HAS EXERCISED SUCH OPTI ON SUBJECT TO THE FULFILMENT OF CONDITIONS PRESCRIBED IN THE SECTION. HENCE, THE TE RM 'INITIAL ASSESSMENT YEAR' WOULD MEAN THE FIRST YEAR OPTED FOR BY THE ASSESSEE FOR CLAIMI NG DEDUCTION U/S 80-IA. HOWEVER, THE TOTAL NUMBER OF YEARS FOR CLAIMING DEDUCTION SHOULD NOT TRANSGRESS THE PRESCRIBED SLAB OF FIFTEEN OR TWENTY YEARS, AS THE CASE MAY BE AND THE PERIOD OF CLAIM SHOULD BE AVAILED IN CONTINUITY. THE ASSESSING OFFICERS ARE, THEREFORE, DIRECTED TO ALLOW DEDUCTION U/S 80-IA IN ACCORDANCE WITH THIS CLARIFICATION AND AFTER BEING SATISFIED T HAT ALL THE PRESCRIBED CONDITIONS APPLICABLE IN A PARTICULAR CASE ARE DULY SATISFIED. PENDING LI TIGATION ON ALLOWABILITY OF DEDUCTION U/S 80 IA SHALL ALSO NOT BE PURSUED TO THE EXTENT IT RELAT ES TO INTERPRETING 'INITIAL ASSESSMENT YEAR' AS MENTIONED IN SUB-SECTION (5) OF THAT SECTION FOR WHICH THE STANDING COUNSELS/D.R.S BE SUITABLY INSTRUCTED. THE ABOVE BE BROUGHT TO THE NOTICE OF ALL ASSESSING OFFICERS CONCERNED . FURTHER, HONBLE KARNATAKA HIGH COURT IN THE CITED CASE HAS HELD THAT WHERE DEPRECIATION AND LOSSES OF EARLIER ASSESSMENT YEARS HAVE ALREADY ITA NO.1031/M/2015 SANJANA CRYOGENIC STORAGES LIMITED ASSESSMENT YEAR 2010-11 7 BEEN SET OFF IN THOSE YEARS AND SUBSEQUENTLY DEDUCT ION U/S 80-IA IS CLAIMED BY THE ASSESSEE, THERE IS NO NEED TO NOTION ALLY CARRY FORWARD THE SAME AND SET OFF FROM THE INCOME OF THE CURRENT YEA R. SAME VIEW HAS BEEN TAKEN IN OTHER JUDICIAL PRONOUNCEMENTS. RESPEC TFULLY FOLLOWING THE SAME, WE HOLD THAT THERE WAS NO NEED TO NOTIONALLY CARRY FORWARD THE EARLIER YEARS LOSSES / DEPRECIATION TO IMPUGNED AY BEFORE DEDUCTION COULD BE GRANTED TO THE ASSESSEE. RESULTANTLY, THE FIRST GROUND OF ASSESSEES APPEAL STANDS ALLOWED. 6. IN GROUND NO. 2, LD. AR, BY ALTERNATIVE SUBMISSI ONS, HAS PRESSED FOR DEDUCTION U/S 80-IA AGAINST FOREIGN EXCHANGE GA IN OF RS. 23.10 LACS EARNED BY THE ASSESSEE IN THE ELIGIBLE UNIT. 7. THE LD. AR, FIRST OF ALL, EXPLAINED THAT THE ASS ESSEE OBTAINED CERTAIN TERM LOAN FACILITY FROM ROBO BANK, SINGAPORE VIDE CREDIT FACILITIES OFFER LETTER DATED 31/03/2005 FOR THE PURPOSE OF SETTING UP OF WIND FARM PROJECT WHICH CONSTITUTE CAPITAL ASSETS IN THE HANDS OF THE ASSESSEE. THE OUTSTANDING TERM LOAN IS RE-CASTED BY THE ASSESSEE ON BALANCE SHEET DATES IN INDIAN RUPEES AND THE SAME GIVE RISE TO IM PUGNED FOREIGN EXCHANGE GAINS / LOSSES. THEREFORE, THE RESULTANT G AINS / LOSSES, BEING PART AND PARCEL OF ASSESSEES BUSINESS, ARISES OUT OF BUSINESS OPERATIONS OF THE ASSESSEE AND THEREFORE, ASSESSABL E UNDER THE HEAD BUSINESS INCOME. IN SUPPORT, OUR ATTENTION IS DRAWN TO THE FACT THAT THE ASSESSEE EARNED SIMILAR GAINS IN AY-2007-08, 2008-0 9, 2011-12 & 2012-13 AND OFFERED THE SAME TO TAX AS BUSINESS INCOME AND ASSESSEES STAND HAS BEEN ACCEPTED BY THE REVENUE I N ALL THOSE YEARS IN ASSESSMENT U/S 143(1) AS WELL AS UNDER 143(3) AND T HEREFORE, RULE OF ITA NO.1031/M/2015 SANJANA CRYOGENIC STORAGES LIMITED ASSESSMENT YEAR 2010-11 8 CONSISTENCY DEMANDS THAT THE SAME TREATMENT IS GIVE N TO THE SAME IN THE IMPUGNED AY. 8. THE LD. AR FURTHER PLEADED THAT THE RESULTANT GA IN, BEING CAPITAL IN NATURE, WAS NOT TAXABLE AT ALL IN VIEW OF SEVERAL J UDICIAL PRONOUNCEMENTS ON THE ISSUE. IN THE ALTERNATIVE, LD. AR CONTENDED THAT THE RESULTANT GAINS WERE ELIGIBLE FOR DEDUCTION U/S 80-IA. 9. PER CONTRA, LD. DR CONTENDED THAT PRINCIPLE OF RES JUDICATA WAS NOT APPLICABLE TO INCOME TAX PROCEEDINGS. MOREOVER, THE ASSESSEE HIMSELF OFFERED THE GAINS TO TAX IN EARLIER AYS AND THEREFO RE, DEBARRED FROM TAKING A STAND THAT THE SAME BEING ON CAPITAL ACCOU NT, ARE EXEMPTED. FURTHER, DEDUCTION U/S 80-IA WAS AVAILABLE ONLY TO THE PROFITS DERIVED FROM THE ELIGIBLE BUSINESS IN VIEW OF THE SETTLED L EGAL POSITION. 10. SO FAR AS THE FACTUAL MATRIX IS CONCERNED, THE DOCUMENTS PLACED ON RECORD REVEAL THAT THE ASSESSEE OBTAINED TERM LOAN FACILITY OF USD 17.50 LACS FROM ROBO BANK, SINGAPORE VIDE OFFER OF CREDIT FACILITIES LETTER DATED 31/03/2005. THE PURPOSE OF THE SAME WAS TO FINANCE THE SETTING UP OF 1.85 MW WIND FARM PROJECT . THE LOAN WAS REPAYABLE IN 22 EQUAL QUARTERLY INSTALLMENTS AFTER SPECIFIED PERIOD. AGAI NST THE SAME, AN AMOUNT OF USD 3,97,727 WAS OUTSTANDING AS ON 31/03/ 2009 AS WELL AS ON 31/03/2010. THE DIFFERENTIAL OF EXCHANGE RATE ON THESE TWO DATES HAS GIVEN RISE TO THE RESULTANT GAIN OF RS.23.10 LACS. IT IS NOTED THAT LIABILITY IN DOLLAR TERMS AS ON TWO DATES REMAINS THE SAME. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ONS AND PERUSED RELEVANT MATERIAL ON RECORD. FIRST OF ALL, SO FAR A S THE HEAD UNDER WHICH FOREX GAINS SHALL BE CHARGEABLE IS CONCERNED, WE ARE CONVINCED WITH THE ITA NO.1031/M/2015 SANJANA CRYOGENIC STORAGES LIMITED ASSESSMENT YEAR 2010-11 9 ARGUMENTS OF LD. AR THAT THE SAME BEING PART AND PA RCEL OF ASSESSEES BUSINESS OPERATIONS ARE ASSESSABLE AS BUSINESS INCOME ONLY AND ALSO IN VIEW OF RULE OF CONSISTENCY. THE REVENUE IN ALL THE OTHER YEARS HAS ACCEPTED THE SAME UNDER THE HEAD BUSINESS INCOME. UNDOUBTEDLY, THE PRINCIPLES OF RES JUDICATA DO NOT APPLY TO INCOME TAX PROCEEDINGS, YET RULE OF CONSISTENCY DEMANDS THAT THERE BEING NO CHA NGE IN FACTS OR CIRCUMSTANCES, THE REVENUE IS DEBARRED FROM SHIFTIN G STANDS WITHOUT ANY COGENT REASONS AS HELD BY HONBLE APEX COURT IN RADHASOAMI SATSANG VS. CIT [193 ITR 321]. ON THE BASIS OF ABOVE, WE CONCLUDE THAT THE FOREIGN GAINS WERE ASSESSABLE UNDER THE HEAD BUSINESS INCOME ONLY. 12. PROCEEDING FURTHER, LET US FIRST EXAMINE THE AS SESSEES CONTENTION THAT RESULTANT GAIN WAS NOT CHARGEABLE TO TAX AT AL L, BEING ON CAPITAL ACCOUNT. AT THE OUTSET, THE ISSUE IN HAND IS NOT CO VERED BY THE PROVISIONS OF SECTION 43A SINCE THE ASSET HAS NOT BEEN ACQUIRE D FROM OUTSIDE INDIA BUT ONLY A TERM LOAN HAS BEEN TAKEN BY THE ASSESSEE TOWARD SETTING UP THE PROJECT AND THEREFORE, SECTION 43A HAS NO APPLI CABILITY. THIS CONTENTION IS WELL SUPPORTED BY THE DECISION OF HON BLE APEX COURT RENDERED IN CIT VS. TATA IRON & STEEL CO. LTD. [1998 231 ITR 28 5] WHERE IT HAS BEEN HELD THAT COST OF AN ASSET AND COST OF RAISING MONEY FOR PURCHASE OF ASSET ARE TWO DIFFERENT AND INDEPENDENT TRANSACTIONS AND THEREFORE, FLUCTUATIONS IN FOREIGN EXCHANGE RATE WH ILE REPAYING INSTALLMENTS OF FOREIGN LOAN RAISED TO ACQUIRE ASSE T CANNOT ALTER ACTUAL COST OF ASSET. AS A LOGICAL CONSEQUENCE, ON THE SAM E LINE, WE CONCLUDE THAT FLUCTUATION GAIN ACCRUING TO THE ASSESSEE BEAR S NO RELATION TO THE ACQUISITION OF CAPITAL ASSET AND DO NOT ALTER THE C OST OF THE ASSET, ITA NO.1031/M/2015 SANJANA CRYOGENIC STORAGES LIMITED ASSESSMENT YEAR 2010-11 10 13. FURTHER, IN TERMS OF ACCOUNTING STANDARD-11 TITLED AS EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES , SUCH RESULTANT FOREIGN EXCHANGE DIFFERENCES WERE REQUIRED TO BE RECOGNIZED AS INCOM E / LOSS IN THE PROFIT & LOSS ACCOUNT DURING RELEVANT ACCOUNTING PERIOD WH ICH IS FULLY SUPPORTED BY THE DECISION OF PUNE BENCH OF TRIBUNAL RENDERED IN COOPER CORPORATION PVT. LTD. VS. DCIT [159 ITD 165] WHERE RESULTANT FOREX LOSSES, IN SIMILAR SITUATION, HAS BEEN ALLOWED TO T HE ASSESSEE U/S 37(1). MOREOVER, IT MAY FURTHER BE NOTED THAT THE ASSESSEE HIMSELF HAS OFFERED THE SAME TO TAX IN ALL OTHER ASSESSMENT YEARS AND T HEREFORE, DEBARRED FROM CHANGING STANDS SINCE RULE OF CONSISTENCY EQUA LLY APPLIES TO THE ASSESSEE. 14. IN VIEW OF THE ABOVE, WE ARE INCLINED TO CONCLU DE THAT THE RESULTANT FOREX GAIN EARNED BY THE ASSESSEE WAS CHARGEABLE TO TAX AND SIMILARLY LOSSES ACCRUING TO HIM ON THIS ACCOUNT WERE ALLOWAB LE TO HIM, BEING REVENUE IN NATURE. 15. THE ONLY ISSUE REMAINING TO BE DECIDED IS WHETH ER THE DEDUCTION U/S 80-IA WOULD BE AVAILABLE TO THE ASSESSEE AGAINS T FOREX GAIN. WE FIND THAT THIS ISSUE STOOD SQUARELY AGAINST THE ASSESSEE BY THE JUDGMENT OF HONBLE APEX COURT RENDERED IN LIBERTY INDIA VS. CIT [317 ITR 218] WHERE THE HONBLE COURT HAS HELD THAT THE WORDS 'DERIVED FROM' IS NARROWER IN CONNOTATION AS COMPARED TO THE WORDS 'ATTRIBUTABLE TO' . IN OTHER WORDS, BY USING THE EXPRESSION 'DERIVED FROM' , PARLIAMENT INTENDED TO COVER SOURCES NOT BEYOND THE FIRST DEGREE. CLEAR LY THE FOREX GAINS IN THE INSTANT CASE ARE NOT DERIVED FROM THE ACTIVITY OF GENERATION OF POWER ITA NO.1031/M/2015 SANJANA CRYOGENIC STORAGES LIMITED ASSESSMENT YEAR 2010-11 11 AND THEREFORE, DEDUCTION THEREOF COULD NOT BE GRANT ED TO THE ASSESSEE IN TERMS OF SECTION 80-IA. 16. THE ASSESSEE HAS PLACED RELIANCE ON SEVERAL JUD ICIAL PRONOUNCEMENTS FOR VARIOUS CONTENTIONS. HOWEVER, WE FIND ALL OF THEM DISTINGUISHABLE ON FACTS. THE JUDGMENT OF HONBLE B OMBAY HIGH COURT IN CIT VS. RACHNA UDYOG [230 CTR 72] DEALT WITH A SITUATION WHERE FOREX GAINS AROSE DIRECTLY ON EXPORT SALES TRANSACTIONS W HICH WERE ELIGIBLE FOR DEDUCTION U/S 80-IA. SIMILARLY, THE JUDGMENT OF HON BLE BOMBAY HIGH COURT RENDERED IN CIT VS. XYLON HOLDINGS PRIVATE LIMITED [ITA NO. 370 4 OF 2010 DATED 13/09/2012] DEALT WITH A SITUATION WHERE THERE WAS A REMISSION / CESSATION OF LIABILITY U/S 41(1) BY WAY OF WAIVER OF LOAN AGAINST CAPITAL ASSET. THIS DECISION PLACED RELIANC E ON THE DECISION OF SAME COURT RENDERED IN MAHINDRA & MAHINDRA LTD. VS. CIT [128 TAXMAN 394]. SIMILARLY, THE DECISION OF HONBLE DELHI HIGH COURT RENDERED IN LOGITRONIX (P) LTD. VS. CIT [197 TAXMAN 394] DEALT WITH A SITUATION WHERE THERE WAS WAIVER OF LOAN TAKEN FOR ACQUIRING CAPITA L ASSET. 17. TO SUM UP, WE CONCLUDE THAT IMPUGNED FOREX GAINS EARNED BY THE ASSESSEE WERE ASSESSABLE AS BUSINESS INCOME A ND THE SAME WERE NOT ELIGIBLE FOR DEDUCTION U/S 80-IA. RESULTANTLY, GROU ND NO. 2 OF ASSESSEES APPEAL STANDS PARTLY ALLOWED. THE LD. AO IS DIRECTE D TO RE-COMPUTE ASSESSED INCOME OF THE ASSESSEE UNDER NORMAL PROVIS IONS AS WELL AS UNDER SECTION 115JB, BEING CONSEQUENTIAL IN NATURE, IN TERMS OF OUR ABOVE ORDER. 18. IN NUTSHELL, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ITA NO.1031/M/2015 SANJANA CRYOGENIC STORAGES LIMITED ASSESSMENT YEAR 2010-11 12 ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH OCTOBER, 2017. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04.10.2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. !$- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI