Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 137560 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 3 month(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
10-09-2020
Appeal Filed By
Assessee
Order Result
DismissedDismissed
Bench Allotted
B
Next Hearing Date
15-08-2023
Assessment Year
2012-2013
Appeal Filed On
22-05-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE – VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA No.1317/PUN/2017 िनधा रण वष / Assessment Year : 2012-13 Classic Citi Investment Pvt. Ltd., Hotel Sun n Sand, 262, Bund Garden Road, Pune 411 001 PAN : AABCC7550P Vs. Pr.CIT-1, Pune Appellant Respondent आदेश / ORDER PER R.S.SYAL, VP : This appeal by the assessee is directed against the order dated 27-03-2017 passed by the Pr. Commissioner of Income-tax u/s.263 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2012-13. 2. This appeal was taken up for hearing for the first time on 24- 07-2019 when the assessee remained unrepresented. The matter was adjourned for 23-09-2019. Again the assessee did not appear. Once again the matter was adjourned for 20-11-2019. Again the Assessee by None Revenue by Shri Navin Gupta Date of hearing 11-09-2020 Date of pronouncement 11-09-2020 ITA No.1317/PUN/2017 Classic Citi Investment Pvt. Ltd., 2 assessee remained unrepresented. The case was again adjourned for 18-02-2020 and 20-03-2020, when assessee did not register its presence. The case was finally fixed for hearing on 11-09-2020 and today again, the assessee neither appeared in person or through his representative nor filed any adjournment application. As such, we are proceeding to dispose off the appeal ex parte qua the assessee. 3. Briefly stated, the facts of the case are that the assessee has been running business of Hotels at Pune and Nagpur and also engaged in renting of its fixed assets. It filed a return declaring loss of Rs.2,80,497/-. Assessment was finalised u/s.143(3) assessing the loss at Rs.1,45,615/- by making few small additions amounting to Rs.1,34,882/-. On perusal of the assessment record, the ld. Pr. CIT observed that the assessee had borrowed certain funds from Bank of India in foreign currency in earlier years, that is, 2009-10 and 2010-11, which were payable in 32 equal quarterly instalments. At the beginning of the year, i.e., as on 01-04-2011 an amount of Rs.44.43 crore was outstanding, whereas at the end of the year an amount of Rs.47.52 crore was shown as outstanding after repayment of loan of Rs.3.14 crore. The ld. Pr. CIT observed that despite payment, the outstanding amount of loan, which was ITA No.1317/PUN/2017 Classic Citi Investment Pvt. Ltd., 3 taken for acquiring capital assets and not on revenue account had swelled because the assessee restated its foreign currency liability and claimed foreign exchange fluctuation loss of Rs.6,23,43,841/- as its revenue expenditure with the corresponding increase in the liability of loan. This issue was not found to have been examined by the Assessing Officer (AO). The ld. Pr.CIT held that this was only a notional loss resulting out of restatement of foreign currency borrowings which could not be allowed as deduction in terms of section 43A of the Act. The assessee was show caused. After considering the assessee’s submissions, the ld. Pr.CIT opined that the AO had not enquired this issue from the angle of allowability of notional foreign exchange fluctuation loss on restatement of allowability at the year ending and further the applicability of section 43A of the Act was not considered as per which the loss on account foreign exchange loss was to be allowed at the time of making payment and not on year to year basis. This is how, the ld. Pr.CIT treated the assessment order as erroneous and prejudicial to the interest of revenue. Setting aside the assessment order, he directed the AO to examine the eligibility of deduction claimed on account of foreign exchange loss. The assessee is aggrieved by the findings of the ld. Pr.CIT. ITA No.1317/PUN/2017 Classic Citi Investment Pvt. Ltd., 4 4. We have heard the ld. DR through virtual court and gone through the relevant material on record. The ld. DR stated that the Finance Act, 2002 has carried out an amendment to section 43A w.e.f. 01-04-2003, the effect of which is that the foreign exchange fluctuation loss can be allowed as deduction only at the time of making payment and not otherwise on year to year basis as was claimed by the assessee and allowed in the assessment. He submitted that this amendment has the effect of unsettling the earlier position which allowed deduction on account of foreign exchange fluctuation loss on year to year basis despite non- payment. We find that the ld. Pr. CIT has recorded a categorical finding that the AO did not examine this issue at all in the assessment order. The Hon’ble Supreme Court in Malabar Industrial Company Ltd. Vs. CIT (2000) 243 ITR 83 (SC) has held that CIT can revise an assessment order where the AO does not apply his mind before finalising the assessment. In an earlier judgment, the Hon’ble Supreme Court in Tara Devi Aggarwal Vs. CIT (1973) 88 ITR 323 (SC) has also laid down similar proposition. Similar view has been taken by the Hon’ble Delhi High Court in Gee Vee Enterprises Vs. Addl.CIT and ors (1975) 99 ITR 375 (Delhi). Since it is evident from the facts and ITA No.1317/PUN/2017 Classic Citi Investment Pvt. Ltd., 5 circumstances of the instant case that the AO did not consider this issue and simply allowed the deduction, we are satisfied that the assessment order turned out to be erroneous and prejudicial to the interest of revenue, rightly warranting interference at the hands of Pr. CIT u/s.263 of the Act. 5. In the result, the appeal is dismissed. Order pronounced in the Open Court on 11 th September, 2020. Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दनांक Dated : 11 th September, 2020 Satish आदेश आदेशआदेश आदेश क क क क ितिलिप ितिलिप ितिलिप ितिलिप अ ेिषत अ ेिषतअ ेिषत अ ेिषत/Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. यथ / The Respondent; 3. The Pr.CIT-1, Pune 4. 5. The ACIT, Range-1, Pune िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, पुणे “बी” / DR ‘B’, ITAT, Pune 6. गाड फाईल / Guard file आदेशानुसार आदेशानुसारआदेशानुसार आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune ITA No.1317/PUN/2017 Classic Citi Investment Pvt. Ltd., 6 Date 1. Draft dictated on 11-09-2020 Sr.PS 2. Draft placed before author 11-09-2020 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *
AI Insights
The case involves Classic Citi Investment Pvt. Ltd., which appealed against the order of the Pr. Commissioner of Income-tax under section 263 of the Income-tax Act, 1961. The original assessment for the year 2012-13 had allowed a deduction for a foreign exchange fluctuation loss claimed by the assessee, which was not examined by the Assessing Officer. The Pr. CIT found that this loss, amounting to Rs.6,23,43,841, was a notional loss resulting from the restatement of foreign currency borrowings and should not have been allowed as a deduction. The Tribunal dismissed the appeal, supporting the Pr. CIT's decision to set aside the assessment order and direct a re-examination of the issue.
