Jyoti Limited, Baroda V. The CIT.-I, Baroda

ITA 1776/AHD/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0297 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-12-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 28-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K SRIDHAR CIRD R
• Keywords: Rectification of order; Difference of opinion; Change of opinion
• Section: 43B; 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD B BENCH BEFORE: SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, AC COUNTANT MEMBER JYOTI LIMITED NANUBHAI AMIN MARG, INDUSTRIAL AREA PO: CHEMICAL INDUSTRIES, BARODA (APPELLANT) PAN NO. AAACJ4909N VS. COMMISSIONER OF INCOME TAX-I AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA (RESPONDENT) REVENUE BY : SRI K. SRIDHAR, CIR-D.R. ASSESSEE BY : SRI S. N. SOPARKAR, SR. A.R. WITH MS. URVASHI SHODH AN DATE OF HEARING : 13-12-2012 DATE OF PRONOUNCEMENT : 15-02-2013 / ORDER PER : T.R. MEENA, ACCOUNTANT MEMBER:- THIS IS THE ASSESSEES APPEAL EMANATING FROM THE O RDER OF LD. CIT-I, BARODA DATED 31-03-2009 U/S 263 OF THE I.T. ACT. T HE LD. AO SCRUTINIZED THE CASE U/S 143(3) OF THE I.T. ACT AND COMPLETED T HE ASSESSMENT ON 31-10- I.T. A. NO. 1776/AHD/2009 A.Y.:-2004-05 I.T.A. NO.1776/AHD/2009 A.Y. 2004-05 PAGE NO JYOTI LIMITED VS. COMMISSIONER OF INCOME TAX 2 2006 WHEREIN THE GROSS ADDITIONS WERE MADE AT RS. 3 ,53,94,191/- AND REVISED LOSS CALCULATED AT RS. 2,59,31,768/- AGAINST RETUR N LOSS OF RS. 6,13,25,959/-. THE LD. A.O. HAD ALSO ALLOWED CARRIED FORWARD LOSSE S FOR THE YEAR UNDER CONSIDERATION AT RS. 2,59,31,768/-. 2. THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT ORDER PASSED U/S 263 IS INVALID AS ALL THE ISSUES HAVE BEEN CONSIDER ED BY THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDING. THE LD. CIT GAVE THE NOTICE U/S 263(1) OF THE I.T. ACT ON 17-06-2008. LD. COMMISSIONER OBSER VED THAT A SUM OF RS. 78,38,083/- PERTAINED TO EARLIER PREVIOUS YEAR TOWA RDS LOAN FROM GIIC AND CLAIMED AS DEDUCTION U/S 43 B OF THE I.T. ACT WAS N OT ADDED BACK AS PER AUDIT REPORT REMARKS IN COLUMN NO. 21(I)(C) OF THE FORM 3CD THAT THE INTEREST LIABILITY HAD ALREADY DEEMED TO HAVE BEEN PAID ON CONVERSION OF INTEREST LIABILITIES INTO FITL BY GIIC. THUS, THE AO HAS NOT DISALLOWED U/S 43 B OF I.T. ACT. THE LD. A.R. ARGUED THAT FULL AM OUNT HAD BEEN ADDED BACK IN COMPUTATION OF INCOME BY THE ASSESSEE. THE LD. CIT-DR FAIRLY ACCEPTED THE FACTS. WE HAVE VERIFIED THE FACT AND THIS INT EREST HAS ALREADY BEEN ADDED BACK BY THE APPELLANT IN COMPUTATION OF INCOME. TH US, TO THAT EXTENT THIS ORDER OF THE AO IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF JUSTICE. 3. THE LD. CIT OBSERVED THAT ON PERUSAL OF BALANCE SHEET LIABILITY OF A SUM OF RS. 8,93,685/- BEING INTEREST ACCRUED AT THE END OF THE YEAR WAS SHOWN UNPAID. SINCE LOAN ADVANCE AND THE INTEREST DUE THEREON WERE INTO TERM LOAN BY THE BANK AND FINANCIAL INSTITUTES, INT EREST WAS NOT ACTUALLY PAID AND HENCE WAS NOT ADMISSIBLE U/S 43B OF THE I.T. AC T. THE LD. COUNSEL FOR THE APPELLANT HAS DRAWN OUR ATTENTION ON QUERY RAIS ED BY THE A.O. AND REPLY SUBMITTED BY THE ASSESSEE WHEREIN THIS ASPECT HAD B EEN CONSIDERED BY THE I.T.A. NO.1776/AHD/2009 A.Y. 2004-05 PAGE NO JYOTI LIMITED VS. COMMISSIONER OF INCOME TAX 3 A.O. THE A.O. HAS NOT MADE ANY ADDITION AFTER CONS IDERING THE REPLY. THUS, IT IS CHANGE OF OPINION OF CIT. AT THE OUTSET LD. CIT-DR RELIED UPON THE ORDER OF CIT. 4. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED MATE RIAL ON RECORD. THE A.O. HAS ISSUED THE SHOW CAUSE NOTICE ON THIS ISSUE AND THE ASSESSEE FILED REPLY. THEREFORE, THE CIT ORDER U/S 263 ON THIS IS SUE IS TANTAMOUNT TO CHANGE OF OPINION WHICH IS NOT PERMITTED UNDER THE LAW AS HELD BY THE VARIOUS HIGH COURTS ON THIS ISSUE. 5. GROUND NO. 4 IS DIRECTING TO THE A.O. THAT RS. 6 ,38,91,300/- BEING RETENTION AMOUNT BILLED BUT NOT DUE HAD NOT ACCOUNT ED BY THE ASSESSEE WHICH HAS BEEN ACCEPTED BY THE COMMISSIONER OF INCOME-TA X BY PASSING THE RECTIFICATION ORDER AND ALLOWED THE ASSESSEES CLAI M. THUS, THE LD COUNSEL FOR THE ASSESSEE HAS NOT PRESSED THE ISSUE. 6. GROUND NO. 5 IS AGAINST DIRECTING THE ADDITION O F RS. 96,258/- BEING EXCHANGE RATE DIFFERENT ON OUTSTANDING AMOUNT AT TH E CLOSE OF THE YEAR. LD. CIT OBSERVED FOREIGN CURRENCY LOAN, LIABILITY AND A SSETS (OTHER THAN FIXED ASSETS) WERE RESTATED AT THE RATE OF PREVAILING AT THE YEAR END AND EXCHANGE RATE DIFFERENCE WAS CHARGED TO THE PROFIT AND LOSS ACCOUNT WHICH WAS NOT ACCORDING TO RATIO LAID DOWN IN THE CASE OF INDIAN OVERSEAS BANK LTD. 151 ITR 446 (MADRAS) AS NOTIONAL LIABILITY IS NOT PERMI SSIBLE. LEARNED COUNSEL FOR THE APPELLANT SUBMITTED THAT THIS HAS ALREADY B EEN VERIFIED BY THE A.O. VIDE HIS QUERY LETTER DATED 13 TH SEPTEMBER, 2007. AT THE OUTSET, THE LD. CIT- D.R. HAS OBJECTED THAT NO SPECIFIC INQUIRY WAS MADE BY THE A.O. THUS TO THAT EXTENT, THE ORDER OF THE A.O. IS PREJUDICIAL A ND ERRONEOUS TO THE INTEREST I.T.A. NO.1776/AHD/2009 A.Y. 2004-05 PAGE NO JYOTI LIMITED VS. COMMISSIONER OF INCOME TAX 4 OF REVENUE. LD. COUNSEL FOR THE ASSESSEE ARGUED TH AT THIS FLUCTUATION OF EXCHANGE LOSS IS ALLOWABLE BEING A REVENUE EXPENDIT URE RELIED IN THE CASE OF WOODWARD GOVERNOR PVT. LTD. VS. CIT 312 ITR 254(SC) AND DETAILS WERE ALSO GIVEN BEFORE THE AO, THEREFORE, THERE IS NO RE VENUE LOSS. WE HAVE GONE THROUGH FACTS AT PAGE NO 87 OF PAPER BOOK WHICH SHO WS THAT THE EXCHANGE RATE PERTAINED TO VARIOUS PURCHASES AS CLAIMED BY T HE APPELLANT ARE REVENUE IN NATURE. BY FOLLOWING ABOVE DECISION, WE DO NOT FIND ANY REASON TO UPHOLD THE ORDER OF CIT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (MUKUL KR. SHRAWAT) (T.R. MEENA) JUDICAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 15/02/2013 A.K. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A) 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ ( / ' ) ! , '#