Gold Finch Jewellery Ltd., Ahmedabad V. The Pr. CIT-2, Ahmedabad

ITA 1283/AHD/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4756 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 31-01-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 17-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Assessee Lawyers: ASSEEM THAKKAR
• Keywords: Capital expenditure
• Section: 143(3); 142(1); 250; 22; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (VIRTUAL COURT) BEFORE: SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER GOLD FINCH JEWELLERY LTD. G-5, PARISEEMA COMPLEX, NR. SWAGAT CROSS ROADS, C.G. ROAD, AHMEDABAD PAN: AAACG6992L (APPELLANT) VS PR. COMM. OF INCOME TAX-2, AHMEDABAD (RESPONDENT) REVENUE BY: SHRI O.P. SHARMA, CIT-D.R. ASSESSEE BY: SHRI ASSEEM THAKKAR, A .R. DATE OF HEARING : 08-09-2020 DATE OF PRONOUNCEMENT : 07-10-2020 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS ASSESSEES APPEAL FOR A.Y. 2013-14, ARISES FRO M ORDER OF PR. CIT-2, AHMEDABAD DATED 28-03-2018, IN PROCEEDINGS UNDER SE CTION 263 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE FACT IN BRIEF IS THAT RETURN OF INCOME DECLARIN G LOSS OF RS. -7,75,561/- WAS FILED ON 24 TH NOV, 2014. THE SCRUTINY ASSESSMENT U/S. 143(3) O F THE ACT FINALIZED ON 22 ND MARCH, 2016 AND TOTAL INCOME WAS ASSESSED AT RS. 6 ,97,550/- . SUBSEQUENTLY, THE LD. PR. CIT-2, AHMEDABAD HAS ISSU ED NOTICE U/S. 263 OF THE ACT ON 23 RD MARCH , 2018 STATING THAT ASSESSMENT ORDER U/S. 14 3(3) OF THE ACT PASSED ON ITA NO. 1283/AHD/2018 ASSESSMENT YEAR 2013-14 I.T.A NO. 1283/AHD/2018 A.Y. 2013-14 PAGE NO GOLD FINCH JEWELLERY LTD. VS. PR. CIT 2 22 ND MARCH, 2016 WAS ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF THE REVENUE FOR THE FOLLOWING REASONS:- 2.1 IT IS PERUSED THAT YOU HAVE CLAIMED AN EXPEND ITURE TITLED FOREIGN EXCHANGE PREMIUM AMOUNTING TO RS. 98S9746/-. THE AO HAS ALLOWED THE SAID CLAIM WITHOUT APPLICATION OF MIND AND WITHOUT MAKING ANY PROPER AND DUE ENQUIRIES AND VER IFICATION IN THIS REGARD. 2.2 AN ASSESSMENT ORDER PASSED WITHOUT APPLICATION OF MIND AND/OR WITHOUT MAKING PROPER ENQUIRIES AND VERIFICATION OF FACTS AND THE LAW ON THE SUBJECT MAKES SUCH ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IN TERMS OF CLAUSE(A) OF EXPLANATION II APPENDED TO SECTION 263 OF THE IT ACT.. I THEREFORE INTEND TO REVISE TH E SAME U/S 263 OF IT ACT. ' IN RESPONSE TO THE AFORESAID NOTICE, THE ASSESSEE H AS FILED WRITTEN SUBMISSIONS REPRODUCED AS UNDER:- '1. IT HAS BEEN STATED AT PARA 1OF THE ASSESSMENT O RDER U/S. 143(3) DATED 22.3.2016 DETERMINING TOTAL INCOME AT RS.697550/- FOR AY 2013-14 IS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF THE REVENUE. THE REASON FOR HOLDING THAT THE ORDER IS GIVEN AT PARA 2.1 OF THE LETTER UNDER REPLY WHEREIN IT HAS BEEN STATED THAT 'THE ASSESSEE HAD CLAIMED AN EXPENDITURE TITLED FOREIGN EXCHANGE PREMIUM AMOUNTING TO RS.9889746/-, THE AO HAS ALLOWED THE SAID CLAIM WITHOUT APPLICATION OF M IND AND WITHOUT MAKING ANY PROPER AND DUE ENQUIRIES AND VERIFICATION IN THIS REGARD. ' 1.1 AT PARA 2.2 OF THE LETTER UNDER REPLY IT HAS BE EN FURTHER ALLEGED THAT 'AN ASSESSMENT ORDER PASSED WITHOUT APPLICATION OF MIND AND / OR WITHOUT MAKING PROPER ENQUIRIES AND VERIFICATION OF FACTS AND THE LAW ON THE SUBJECT MAKE SUCH ORDER ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF THE REVENUE IN TERMS OF CLAUSE (A ) OF EXPLANATION II APPENDED TO SECTION 263 OF THE IT AC T. ' ON THE ABOVE PREMISES YOUR HONOURS INTEND TO R EVISE THE ASSESSMENT ORDER REFERRED TO ABOVE U/S. 263 OF THE IT ACT. VIDE PARA 3 OF THE LETTER UNDER REPLY THE ASSESSEE HAD BEEN GIVEN AN OPPORTUNITY TO REPRESE NT THE CASE AND HEARING IS FIXED ON 27.3.2018 A T 11.00 AM. ' IN THIS CONNECTION IT IS SUBMITTED THAT THE NOTICE U/S. 263 DATED 23.3.2018 REQUIRING COMPLIANCE ON 27 .3.2018 HAS NOT PROVIDED THE ASSESSEE WITH SUFFICIEN T TIME TO MAKE AN EFFECTIVE REPRESENTATI ON ON ACCOUNT OF THE FACT THAT HARDLY I WORKING DAY WAS AVAILABLE . THE NOTICE DATED 23.3.2018 REQUIRING COMPLIANCE O N 27.3.2018 WAS IN FACT SERVED ON THE ASSESSEE ONLY ON 24.3.2018 AT 3.50 PM I.E. WHICH IS SATURDAY. 25 TH BEING SUNDAY AND RAMNAVAMI WAS A CLOSED HOLIDAY. THUS THE ASSESSEE HAD BEEN GIVEN HARDLY ONE DAY FOR COMPLYING WITH THE NOTICE U/S. 263. IT IS THEREFORE SUBMITTED THAT ADEQUATE TIME HAS NOT BEEN GRANTED TO THE ASSESSEE COMPANY FOR MAKING A EFFECTIVE REPRESENTAT ION AND WE RESERVE THE RIGHT FOR FURTHER REPRESENTA TION. THE OBSERVATION MADE IN THE NOTICE UNDER REPLY TO T HE EFFECT THAT 'THE A O HAD ALLOWED THE SAID CLAIM WITHOUT APPLICATION OF MIND AND WITHOUT MAKING ANY PROPER A ND DUE ENQUIRIES AND VERIFICATION IN THIS REGARD' I S NOT JUSTIFIABLE. THE AO HAD PASSED THE ASSESSMENT ORDE R U/S. 143(3) DATED 22.3.2016 AFTER MAKING PROPER ENQUIRIES AND DUE VERIFICATION OF THE BOOKS OF ACCO UNT AND RELEVANT RECORDS. AS MENTIONED EARLI ER, THE ASSESSEE HAD CLAIMED EXPENDITURE FOR A SUM OF RS. 9 8,89,746/- UNDER THE HEAD FONVARD EXCHANGE PREMIUM WHICH IS INCLUDED IN THE MAJOR HEADING OF 'OTHER EX PENSES'. THE AO HAS ISSUED A DETAILED NOTICE U/S. 1 42(1) DATED 14.8.2015. AT .SR NO. 35 OF THE SAID QUESTIO NNAIRE THE AO HAD SPECIFICALLY ASKED TO FURNISH COM PLETE BREAKUP AND DERAILS OF O TO BUILDING AND INSURANC E. COPY OF THE SAID NOTICE U/S. 142(1) IS PLACED ON PG.64 TO 69 OF THE PB ATTACHED FOR YOUR KIND PERUSAL FROM WH ICH IT WILL BE EVIDENT THAT THE AO HAD SPECIFICALLY ENQUIRED COMPLETE DETAILS WITH REGARD TO OTHER EXPE NSES. AS MENTIONED EARLIER, THE OTHER EXPENSES, AS PER NOTE 26 OF THE AUDITED P&L ACCOUNT INCLUDED THE AMO UNT OF RS.98,89,746/-CLAIMED BY THE ASSESSEE UNDER THE HEAD FORWARD EXCHANGE PREMIUM. THEREFORE, IT IS CLE AR BEYOND ANY SHADOW OF DOUBT THAT THE AO HAD MADE NECESSARY ENQUIRIES WITH RESPECT TO THE CLAIM OF EX PENDITURE OF RS.98,89,746/- ON ACCOUNT OF FORWARD EXCHANGE PREMIUM. IN RESPONSE TO NOTICE U/S. 142(1) THE ASSESSEE HAD FILED SUBMISSION DATED 2. 9.2015 WHICH WAS SUBMITTED BEFORE THE AO ON 3.9.2015. VIDE SR. NO. 35 OF THE SAID LETTER, THE ASSESSEE HAS CL EARLY STATED TO THE EFFECT THAT BREAKUP OF OTHER EXPENSES , REPAIRS TO BUILDING AND INSURANCE GIVEN IN THE AT TACHED STATEMENT. THUS IT IS AN IRREFUTABLE THAT IN COURSE OF ASSESSMENT PROCEEDINGS THE AO HAD MADE ENQUIRIE S WITH REGARD TO THE EXPENDITURE IN QUESTION AND COMPLIANC E THERETO THE ASSESSEE HAD FURNISHED DETAILS OF SUC H EXPENDITURE BEFORE THE AO. THEREFORE, THE ALLEGATIO N THAT THE AO HAD ALLOWED THE SAID CLAIM WITHOUT APPLICATION OF MIND AND WITHOUT MAKING ANY PROPER AND DUE ENQUIRIES AN D VERIFICATION IN THIS REGARD IS FAR REMOVED FROM TRUTH. AT THE COST OF REPETITION, THE ASSESSEE ONCE AGAIN REITERATES T HAT THE AO HAS ALLOWED THE CLAIM AFTER MAKING NECESSARY; ENQUIRIES AND DUE VER IFICATION. THEREFORE, THE ASSESSMENT ORDER PASSED B Y THE AO AFTER MAKING DUE VERIFICATION OF THE FACTS CANNO T BE SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE IN TEREST OF I.T.A NO. 1283/AHD/2018 A.Y. 2013-14 PAGE NO GOLD FINCH JEWELLERY LTD. VS. PR. CIT 3 THE REVENUE WITHIN THE MEANING AND SCOPE OF SECTION 263 OF THE IT ACT, THE ADMISSIBILILY OF THE CLAIM OF EXPENDITURE OF RS.98,89,746/- HAS BEEN DULY CONSI DERED BY THE AO AND AFTER DUE VERIFICATION HE HAS T AKEN A CONSCIOUS DECISION THEREON. THEREFORE THE ASSESSEE SUBMITS THAT WHEN THE AO HAS DECIDED THE ISSUE IN O NE OF THE POSSIBLE WAYS, THE SAME CANNOT BE SAID TO BE ER RONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVEN UE. AT THIS STAGE IT IS PERTINENT TO EXPLAIN THE NATURE OF CREDIT FACILITIES ENJOYED BY THE ASSESSEE COMPANY WITH RESPECT TO THE 'FOREIGN CURRENCY LOAN' ON WHICH PREMIUM IS CHARGED. IN THIS FACILITY THE BANK GRANTS A LIMIT A S IN OUR CASE IS RS. 15.00 CRORES WHICH WAS SUBSEQUENTLY ENH ANCED TO RS. 18.00 CRORES. FROM THE LIMIT SO SANCTI ONED YOU ENJOY CREDIT FACILITIES FOR PURCHASE OF USS AT THE PREDEFINED RATE. THIS LOAN HAS TO BE REPAID IN US$ TERMS AFTER A SPECIFIED PERIOD. TO NOT BE BURDENED WITH T HE FOREIGN EXCHANGE FLUCTUATIONS THE PREMIUM IS CHA RGED BY THE BANK SO .THAT THE REPAYMENT OF US$ IS AT THE PREDETERMINED RATE. THE FACILITIES IN QUESTION HAD BEEN OBTAINED IN THE PREVIOUS YEAR RELEVANT TO A.Y.2012- 13. COPY OF THE SANCTION LETTER FOR THE EARLIER YE AR IS PLACED ON PG.42 TO 53 OF THE PB & WHERE THE LIMIT H AS BEEN ENHANCED HAS BEEN PLACED ON PG.54 TO 63 OF THE PB. IN THE PREVIOUS YEAR RELEVANT TO A.Y.2012-13 CO MPLETE VERIFICATION OF THE FACILITIES AS ENJO YED BY US HAD BEEN 'UNDERTAKEN THEN. COPY OF THE LETTER FI LED ON 23.01.2015 IS ENCLOSED FOR YOUR KIND REFEREN CE. IT WAS AFTER EXAMINATION OF THE SAME THAT THE EXPENSES HAVE COME TO BE ACCEPTED IN A. Y. 2012-13. COPY OF THE AUDITED ACCOUNT FOR THE PREVIOUS YEAR RELEVANT TO A .Y.2012-13 IS ENCLOSED FROM WHERE THE CLAIM OF FORE IGN EXCHANGE PREMIUM CAN BE VERIFIED. ATTENTION IS INVI TED TO PG.25 OF THE PB FOREIGN EXCHANGE PREMIUM HAS BEEN INCLUDED IN THE HEAD 'OTHER EXPENSES '. IT IS WORTHWHILE TO NOTE THAT THE EXPENSES HAVE BEEN AFT ER VERIFICATION IN A.Y.2012-13 HAVE BEEN ACCEPTED. S IMILAR EXPENDITURE HAS BEEN INCURRED IN THE .2013- 14 WHERE REVISION PROCEEDINGS HAVE BEEN INVOKED. TH EREFORE, ONCE THE EXPENDITURE AFTER VERIFICATION H AS BEEN ACCEPTED IN A.Y.2012-13 TO UNDERTAKE REVISION PROCEEDINGS FOR A.Y.2013-14 ON THE SAME ISSUE WOULD NOT BEEN JUSTIFIABLE. FURTHERMORE, THE FACILITIES IN QUESTION ARE USED FO R PURCHASING DIAMONDS AND OTHER STOCK IN TRADE AND NOT FOR ANY CAPITAL EXPENDITURE. FOR THE PURPOSE OF INVOKING THE PROVISIONS OF SECTI ON 263 THE TWIN CONDITIONS MUST BE SATISFIED: A. THE ORDER IN QUESTION MUST BE ERRONEOUS, AND B. IT SHOULD BE PREJUDICIAL TO THE INTEREST O F THE REVENUE. BOTH THE CONDITIONS MUST BE SATISFIED IN CONJUNCTIO N. MERE SATISFACTION OF ANY ONE CONDITION CANNOT BE THE REASON FOR INVOKING REVISION PROCEEDINGS. IT CAN THUS, BE SEEN THAT THE VIEW ADOPTED BY THE A SSESSING OFFICER WAS AFTER PROPER SCRUTINY OF RELEV ANT FACTS AND CLEARLY A PLAUSIBLE VIEW WAS ADOPTED AND THEREF ORE, WAS NOT OPEN TO REVISION AT THE HANDS OF THE COMMISSIONER. IT IS 'WELL SETTLED PROPOSITION OF LA W AS WELL AS FACTS THAT IF AFTER PROPER INQUIRIES, THE ASSESSING OFFICER HAS ADOPTED A VIEW WHICH IS A PLA USIBLE ONE, THE VIEW WOULD NOT BE OPEN TO REVISION BY THE COMMISSIONER. [PARA 10] AS WAS HELD IN THE CASE OF MICRO INKS PR. CIT (2017) 85 TAXMAN. COM 310(GUJARAT) THEREFORE, THE CONDITION FOR PROCEEDING WITH THE EX ERCISING OF REVISIONAL POWER U/S 263 IS THAT THE OR DER IN QUESTION SHOULD NOT ONLY BE ERRONEOUS BUT SUCH E RRONEOUS ORDER SHOULD HAVE RESULTED IN PREJUDICE T O THE INTEREST OF THE REVENUE. THEREFORE, MERE ERROR IF PRESUMED BY ALLEGED NON VERIFICATION O F EXPENDITURE WOULD NOT CONFER JURISDICTION TO EXERCISE REVISIONA L POWER. IT IS HEREBY SUBMITTED THAT THE AO HAD CONDUCTED AL L POSSIBLE INQUIRIES AND AFTER CONSIDERING THE MATE RIALS AND EXPLANATION CAME TO DEFINITE CONCLUSION IN A.Y. 2012-13. SINCE THE EXPENDITURE IN QUESTION HAD ALRE ADY BEEN ACCEPTED IN A.Y.2012-13 THERE WAS NO NEED AND NECESSITY FOR VERIFYING THE SAME INFORMATION WHICH HAD COME TO BE ACCEPTED IN THE EARLIER YEARS AND HAD AT TAINED FINALITY IN TERM SO OF REVISION PROCEEDINGS U/S 263 OF THE ACT. THEREFORE, TO TREAT THAT SPECIFIC INFOR MATION HAD NOT BEEN CALLED FOR IN THE YEAR UNDER RE VISION AND THEREFORE THE ORDER SHOULD BE CONSIDERED AS ERRONEO US SHOULD BE VIEWED IN THE LIGHT OF THE INQUIRIES H AVING ALREADY BEEN CONDUCTED IN THE EARLIER YEARS. THE AS SESSEE COMPANY RELIES ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS IN SUPPORT OF ITS CONTENTION. 9. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES IT CAN BE OBSERVED THAT THE NATURE, OF EXPENSES HAVE ALREADY BEEN INQUIRED INTO IN A.Y.2012-13. SIMILAR EXPENDITURE HAD BEEN INCURRED IN THE PREVIOUS YEAR RELEVANT TO A.Y.2013-24. DETAILED INQUIRIES HAD BEE N CONDUCTED IN TO THE NATURE OF EXPENDITURE IN THE PREVIOUS YEAR RELEVANT TO A.Y.2012-13 AND THEREAFTE R ASSESSMENT HAS CAME TO BE COMPETED U/S 143(3) OF THE ACT. THIS FACT IS ALSO CROSS VERIFIED FROM THE COPY OF LETTER FURNISHED DURING THE COURSE OF ASSESSMEN T PROCEEDINGS AS WELL AS AUDITED ACCOUNTS FOR A.Y.201 2-13. SINCE THERE WAS NO CHANGE IN THE NATURE OF EXPENDITURE INCURRED IN THE PREVIOUS YEAR RELEVANT TO A. Y. 2013-14 AS COMPARED, TO A.Y.2012-13 THE SA ME CAME TO BE ACCEPTED. THIS BY ITSELF DOES NOT LEAD T O THE FORMATION OF OPINION THAT THE ASSESSMENT ORDE R PASSED IS ERRONEOUS.' 3. THE ASSESSEE HAS RELIED UPON FOLLOWING CASE LAWS : 1. ARYAN ARCADE V CIT (2017) 250 TAXMAN 138 (GUJ.) 2. CIT V. VIKAS POLYMERS (2012) 341ITR 537 (DEL.) I.T.A NO. 1283/AHD/2018 A.Y. 2013-14 PAGE NO GOLD FINCH JEWELLERY LTD. VS. PR. CIT 4 EVEN IN THE CASE OF THE ASSESSEE COMPANY THE ALLEGA TION IS THAT THERE IS NON VERIFICATION OF THE EXPEN SES. HOWEVER, THE EXPENSES IN QUESTION THEIR NATURE AND DEDUCIBILITY HAVE ALREADY BEEN EXAMINED IN THE EARL IER YEAR I.E. A.Y.2012-13 AND DULY ACCEPTED. THERE IS N O LACK OF INQUIRY AS HAS BEEN WRONGLY PRESUMED. THE RATIO LAID DOWN IN THE ABOVE REFERRED CASE IS SQUARELY AP PLICABLE AND THEREFORE THE REVISION PROCEEDINGS IN E CASE OF THE ASSESSEE COMPANY MAY KINDLY BE DROPPED. ' THE ASSESSEE HAS EXPLAINED IN ABOVE REFERRED SUBMIS SION THAT THE ASSESSING OFFICER HAD PASSD THE ASSESSMENT ORDER U/S. 143(3) DATED 22.03.2016 AFTER MAKING PROPER ENQUIRIES AND DUE VERIFICATION OF THE BOOKS OF ACCOUNT AND RELEVANT RECORDS. THE ASSESSING OFFICER HAD ISSUED A DETAILED NOTICE U/S. 142(1) AS PER SR. NO. 35 OF THE SAID QUESTIONNAIRE, THE ASSESSING OFFICER HAS S PECIFICALLY ASKED TO FURNISH COMPLETE BREAK UP AND DETAILS OF OTHER EXPENSES WHI CH INCLUDED THE COMPLETE DETAILS OF RS. 98,89,746/- CLAIMED BY THE ASSESSEE UNDER THE HEAD FORWARD EXCHANGE PREMIUM. THE ASSESSING OFFICER HAD MADE E NQUIRIES WITH REGARD TO THE EXPENDITURE AND IN COMPLIANCE THE ASSESSEE HAD FURN ISHED DETAILS OF SUCH EXPENDITURE. THE ASSESSING OFFICER HAD ALLOWED THE CLAIM AFTER EXAMINATION AND VERIFICATION OF THE DETAILS FILED. THE LD. PR. CIT HAS NOT ACCEPTED THE SUBMISSION OF THE ASSESSEE. HE WAS OF THE VIEW THAT ASSESSEE HAD NOT SHOWN ANY EXPENDITURE IN FOREIGN EXCHANGE IN THIS FINANCIAL YEAR OR IN THE E ARLIER FINANCIAL YEAR WHICH MEANS THAT THE ASSESSEE WAS NOT IMPORTING ANY GOLD/DIAMON D AND THE EXPENDITURE IN THE FORM OF FOREIGN EXCHANGE PREMIUM SHOWN WAS BOGUS. THEREFORE, THE LD. PR. CIT HAS HELD THAT ACCEPTANCE OF SUCH CLAIM BY THE ASSES SING OFFICER WITHOUT MAKING AN ENQUIRY OR VERIFICATION WAS ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF THE REVENUE. 3. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. COUNSEL HAS FILED PAPER BOOK COMPRISING COPIES OF NOTICES AND REPLIES ALONG WITH COPIES OF DOCUMENT FILED DURING THE COURSE OF ASSESSMENT PROCEEDING BEFORE T HE ASSESSING OFFICER AND DURING THE COURSE OF PROCEEDINGS U/S. 263 OF THE AC T BEFORE THE PR. CIT. THE LD. COUNSEL HAS ALSO CONTENDED THAT THESE EXPENSES WERE RECURRING NATURE OF EXPENSES WHICH WERE ALSO INCURRED IN THE EARLIER YEAR. HE H AS ALSO MENTIONED THAT ASSESSING I.T.A NO. 1283/AHD/2018 A.Y. 2013-14 PAGE NO GOLD FINCH JEWELLERY LTD. VS. PR. CIT 5 OFFICER IN THE QUESTIONNAIRE ISSUED U/S. 142(1) OF THE ACT ON 14 TH AUGUST, 2015 AT SERIAL NO. 35 HAS SPECIFICALLY ASKED THE COMPLETE B REAKUP AND DETAIL OF OTHER EXPENSES WHICH ALSO INCLUDED EXPENSES PERTAINING TO FOREIGN EXCHANGE PREMIUM. THE LD. COUNSEL HAS ALSO REFERRED COPIES OF LETTER OF SANCTION OF CREDIT FACILITY ISSUED BY THE UNION BANK OF INDIA VIDE LETTER DATED 27 TH FEB, 2012 AND 19 TH DECEMBER, 2012 AND ALSO REFERRED COPIES OF PROFIT A ND LOSS ACCOUNT FOR THE YEAR ENDED ON 31 ST MARCH, 2012 WHEREIN DETAIL OF SUCH EXPENSES WERE P ROVIDED AT NOTE NO. 27 TO THE P & L ACCOUNT. ON THE OTHER HAND, LD . DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF LOWER AUTHORITIES. 4. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. THE CASE OF THE ASSESSEE WAS SUBJECT TO SCRUTINY ASSESSMENT AND TOTAL INCOME WAS ASSESSED AT RS. 6,97,550/- ON 22 ND MARCH, 2016. SUBSEQUENTLY, THE LD. PR. CIT HAS PA SSED ORDER U/S. 263 OF THE ACT ON 28 TH MARCH, 2018 HOLDING THAT THE SAID ASSESSMENT ORDER U/S. 143(3) WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS THE ASSESSING OFFICER HAS ALLOWED THE CLAIM OF EXPENDIT URE PERTAINING TO FOREIGN EXCHANGE PREMIUM AMOUNTING TO RS. 98,89,746/- WITHO UT MAKING ANY PROPER AND DUE INQUIRIES. THE ASSESSING OFFICER HAD ISSUED A DETAILED NOTICE U/S. 142(1) DATED 14 TH AUGUST, 2015 AND AT SERIAL NO. 35 OF THE SAID QUES TIONNAIRE, THE ASSESSING OFFICER HAD SPECIFICALLY ASKED THE ASSESSEE TO FURN ISH THE COMPLETE BREAK UP AND DETAIL OF OTHER EXPENSES WHICH ALSO INCLUDED THE AM OUNT OF RS. 98,89,746/- CLAIMED BY THE ASSESSEE UNDER THE HEAD FORWARD EXCH ANGE PREMIUM. IN COMPLIANCE, THE ASSESSEE HAD SUBMITTED RELEVANT DET AILS OF SUCH EXPENDITURE BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS N OT POINTED OUT ANY DISCREPANCY IN THE ADMISSIBILITY OF THE CLAIM OF EXPENDITURE OF RS. 98,89,746/-. IT IS FURTHER NOTICED FROM THE PROFIT AND LOSS ACCOUNT NOTE NO. 27 THAT SUCH FOREIGN EXCHANGE PREMIUM EXPENSES WAS OF RECURRING NATURE AND SAME WAS ALSO CLAIMED IN A.Y. 2012-13. DURING THE COURSE OF PROCEEDING U/S. 263 OF THE ACT BEFORE THE LD. I.T.A NO. 1283/AHD/2018 A.Y. 2013-14 PAGE NO GOLD FINCH JEWELLERY LTD. VS. PR. CIT 6 PCIT, THE ASSESSEE HAS FURNISHED COPIES OF THE RELE VANT DOCUMENTS EXPLAINING THAT THE ASSESSING OFFICER HAS DULY CONSIDERED THE CLAIM OF EXPENDITURE AND EXPLAINED THAT ASSESSEE HAS AVAILED THE CREDIT FACILITY WITH RESPECT TO THE FOREIGN CURRENT LOAN ON WHICH THE PREMIUM WAS CHARGED. IN THIS FACILITY , THE BANK HAS GRANTED A LIMIT OF RS. 15 CRORE WHICH WAS SUBSEQUENTLY ENHANCED TO RS. 18 CRORES AND FROM THIS FACILITY, THE ASSESSEE HAS AVAILED CREDIT FACILITY FOR PURCHASE OF U.S. $ AT PREDETERMINED RATE TO COVER THE RISK OF FOREIGN EXC HANGE FLUCTUATION, THE PREMIUM WAS CHARGED BY THE BANK SO THAT THE USA DOLLAR WAS AT THE PREDETERMINED RATE. THE ASSESSEE HAS ALSO FILED THE RELEVANT DETAIL TO DEMONSTRATE THAT SUCH FACILITY WAS ALSO OBTAINED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2012-13 AND ALSO FILED THE RELEVANT COPIES OF SANCTION LETTER O F THE BANK. THE LD. PR. CIT HAS FAILED TO CONTROVERT THE ABOVE REFERRED FACTS AND M ATERIAL CITED BY THE ASSESSEE TO DEMONSTRATE THAT ITS CLAIM OF FOREIGN EXCHANGE PREM IUM WAS ALLOWED BY THE ASSESSING OFFICER AFTER VERIFICATION OF THE RELEVAN T MATERIALS/DETAILS AS ELABORATED ABOVE. HAVING EXAMINED THE MATTER AT LENGTH ON FA CTS AS WELL AS LAW, WE CONSIDER THAT IN THE PRESENT CASE IT IS VERY CLEAR THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS NEITHER ERRONEOUS OR PREJUDICIAL. THE REFORE, WE ARE NOT INCLINED WITH THE DECISION OF LD. PR. CIT IN HOLDING THAT THE OR DER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY, THE APPEA L OF THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07-10-2020 SD/- SD/- (RAJPAL YADAV) (AMARJIT SINGH) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD : DATED 07/10/2020 / COPY OF ORDER FORWARDED TO:- I.T.A NO. 1283/AHD/2018 A.Y. 2013-14 PAGE NO GOLD FINCH JEWELLERY LTD. VS. PR. CIT 7 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,