Shri Sunil Kumar Bhatia, New Delhi V. ACIT, New Delhi

ITA 1614/DEL/2010

• Counselvise Citation: 161420114 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 17-11-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 12-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRANJAN KAULI
• Assessee Lawyers: K R MANJANI
• Keywords: Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 1614(DEL)/2010 ASSESSMENT YEAR: 2000-01 SHRI SUNIL KUMAR BHATIA, AS SISTANT COMMISSIONER OF INCOME F-50, KOLHAPUR ROAD, VS. TAX , CENTRAL CIRCLE 17, NEAR KAMLA NAGAR, DELHI. NEW DELHI. PAN: AAFPB5064J (APPELLANT) (RESPON DENT) APPELLANT BY : SHRI K.R. MANJANI, ADVOCATE RESPONDENT BY: SH RI NIRANJAN KAULI, CIT, DR DATE OF HEARING : 17.11.2011 DATE OF PRONOUNCEMENT: 17.11.2011. ORDER PER K.G. BANSAL : AM THE ONLY GROUND TAKEN BY THE ASSESSEE IN THIS APP EAL IS TO THE EFFECT THAT THE LD. CIT(APPEALS) ERRED IN NOT ALLOWING T HE DEDUCTION OF RS. 1,87,486/- ON THE GROUND THAT THE ASSESSEE IS NO T ENGAGED IN BUSINESS. 2. THE CASE OF THE LD. COUNSEL FOR THE ASSESSEE B EFORE US IS THAT THE ASSESSEE HAS BEEN CARRYING ON THE BUSINESS OF EXP ORT OF HING FOR A LONG PERIOD. HOWEVER, IN THIS YEAR NO EXPORT WAS MAD E. IN RESPECT OF PURCHASES OF EARLIER YEAR, THE ASSESSEE HAD TO PAY AMOUNT OF RS. ITA NO. 1614(DEL)/2010 2 1,87,486/-, REPRESENTING ADDITIONAL LIABILITY ARISI NG ON ACCOUNT OF FLUCTUATION IN RATE OF FOREIGN EXCHANGE. THE ASSESSEE CARR IED ON THIS BUSINESS EVEN IN SUBSEQUENT YEARS. HOWEVER, THE LOWER AUTHO RITIES DISALLOWED THIS EXPENDITURE ON THE GROUNDS THAT THIS EXPENDITURE DOES NOT PERTAIN TO THIS YEAR AND NO BUSINESS OF HING HAS BEEN CARRIED ON I N THIS YEAR. HIS CASE IS THAT THE LIABILITY CRYSTALLIZED IN THIS YEAR O N ACTUAL PAYMENT. FURTHER, THIS YEAR WAS THE LULL PERIOD IN THE BUSINESS AS IT CONTINUED IN SUBSEQUENT YEARS ALSO. 3. IN REPLY, THE LD. DR REFERRED TO THE STATEM ENT OF INCOME WHICH SHOWS A DEDUCTION OF RS. 1,87,486/- ARISING ON AC COUNT OF IMPORT OF HING ON 31.03.1994 AGAINST WHICH THE AMOUNT WAS PAID O N 08.06.1999. IT IS HIS CASE THAT THE TRANSACTION OF PURCHASE DOES NOT P ERTAIN TO THIS YEAR AND AS SUCH NO SALE AND PURCHASE OF HING IS SHOWN IN T HIS YEAR. THEREFORE, IT IS ARGUED THAT THE AMOUNT CANNOT BE ALLOWED TO THE ASSESSEE IN THE PROCEEDINGS OF THIS YEAR. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. IT IS AN ADMITTED FACT THAT THE AS SESSEE HAD BEEN CARRYING ON THIS BUSINESS IN EARLIER YEARS AND ALSO CARRIED ON THIS BUSINESS IN ITA NO. 1614(DEL)/2010 3 SUBSEQUENT YEARS. THIS LEADS TO A CLEAR INFEREN CE THAT THE INSTANT YEAR WAS A LULL PERIOD IN THE BUSINESS AND IT IS NOT A CASE OF ABANDONMENT OF THE BUSINESS ALTOGETHER. IN SUCH A SITUATION, BUSINES S EXPENSES WILL HAVE TO BE ALLOWED IN COMPUTING THE TOTAL INCOME. THE FAC TS MENTIONED ABOVE ALSO SHOW THAT PAYMENT IN RESPECT OF STOCK-IN-TRADE PU RCHASED ON 31.03.1994 WAS MADE ON 08.06.1999 AT RS. 7,20,126/-. THE I NCREASE IN PRICE HAPPENED DUE TO FLUCTUATION IN RATE OF FOREIGN EXCHANGE. SINCE THE LOSS WAS INCURRED IN RESPECT OF STOCK-IN-TRADE AND IT GOT DETERMINED AT THE TIME OF PAYMENT IN THIS YEAR, WE ARE OF THE VIEW THAT TH E EXPENDITURE IS REVENUE EXPENDITURE AND IT IS ALLOWABLE IN THE COMPUTATIO N OF TOTAL INCOME FOR THIS YEAR. 5. IN THE RESULT, THE APPEAL IS ALLOWED. SD/- SD/- (RAJPAL YADAV) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA COPY OF THE ORDER FORWARDED TO:- 1. SHRI SUNIL KUMAR BHATIA, NEW DELHI. 2. ACIT, CENTRAL CIRCLE 17, NEW DELHI. 3. CIT 4. CIT(A) 5. THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.