RIIS TRADING INDIA (P) LTD., NEW DELHI V. DCIT, CIRCLE- 20(2), NEW DELHI

ITA 1799/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4647 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 14-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: NEHA MATHUR; DINESH KALRA
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 1799/DEL/2018 ASSESSMENT YEAR: 2014-15 RIIS TRADING INDIA (P) LTD. VS. DCIT, CIRCLE-20(2) B-7/107A, GROUND FLOOR, NEW DELHI SAFDARJUNG ENCLAVE EXTENSION, NEW DELHI (PAN: AAECR8314F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. DINESH KALRA, CA & MS. NEHA MATHUR, CA DEPARTMENT BY : SH. S.L. ANURAGI, SR. DR. ORDER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 24.1.2018 OF THE LD. CIT(A)-7, NEW DELHI RELATING TO ASSESSMENT YEAR 2014-15. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. 1. THAT THE ORDER OF THE LD. CIT(A), NEW DELHI CONFIRMING THE ADDITION OF RS. 35,23,309/- IN THE INCOME, BY NOT APPRECIATING THE VARIOUS FACTS OF THE CASE AS PER THE DETAILS, EXPLANATIONS AND DOCUMENTS PROVIDED BY THE ASSESSEE DURING 2 THE COURSE OF ASSESSMENT / APPELLATE PROCEEDINGS, IS AGAINST LAW AND FACTS OF THE CASE. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF AO IN DISALLOWING RS. 35,23,309/- U/S. 37 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION LOSS ON TRADE ADVANCE WITHOUT APPRECIATING THE VARIOUS FACTS AND EXPLANATIONS PROVIDED BY THE ASSESSEE. A) THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF AO WITHOUT APPRECIATING THE FACT THAT THE NATURE OF FOREIGN EXCHANGE LOSS CANNOT DEPEND UPON THE NATURE OF PURPOSE OF THE ADVANCE BUT ON THE ACTUAL UTILIZATION OF SUCH ADVANCE AS HELD BY THE APEX COURTS. B) THAT THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT THE ADVANCE WAS ULTIMATELY BEEN UTILIZED BY THE APPELLANT AS CIRCULATING CAPITAL IN ITS BUSINESS AND IS OF REVENUE NATURE. 3 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE E-FILED ITS RETURN OF INCOME ON 29.11.2014 DECLARING LOSS OF (-) RS.14,18,064/-. THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY, ORDER U/S. 143(3 ) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) WAS PASSED ON 21.11.2016 BY ASSESSING THE INCOME AT RS. 21,05,250/- AF TER DISALLOWANCE OF RS. 35,23,309/- ON ACCOUNT OF DISALL OWANCE OF FOREIGN EXCHANGE FLUCTUATION LOSS U/S. 37 OF THE AC T. AGAINST THE ASSESSMENT ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 24.1.2018 H AS DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED WIT H THE IMPUGNED ORDER DATED 24.1.2018, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSES SEE DRAW OUR ATTENTION TOWARDS THE ORDER PASSED BY THE REVEN UE AUTHORITY AND STATED THAT THE ISSUE NO. 2 IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ITAT, C BENCH, NEW DELHI DECISION DATED 14.5.2018, A COPY THEREOF IS ATTACHED IN THE PAPER BOOK FILED BY THE ASSESSEE AT PAGE NO. 22- 26 IN ITA NO. 2450/DEL/2016 AY 2012-13 IN ASSESSEES OWN CAS E VIDE ORDER DATED 14.5.2018. HENCE, HE REQUESTED TO ALLOW T HE 4 GROUND NO. 2 OF THE ASSESSEE BY FOLLOWING THE PREC EDENT IN ASSESSEES OWN CASE. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS O F THE AUTHORITIES BELOW. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS PAPER BOOK FILED BY THE ASSESSEE PARTICULARLY PAGE NO. 22-26 WHEREIN THE COPY OF DECISION OF ITAT DECIDED IN IT A NO. 2450/DEL/2016 AY 2012-13 IN ASSESSEES OWN CASE HA S BEEN ATTACHED. I FIND THAT SIMILAR ISSUE HAS BEEN DEALT A ND ADJUDICATED BY THE TRIBUNAL IN ASSESSEES OWN CASE WHEREIN THE TRIBUNAL VIDE PARA NO. 6 & 7 HAS HELD AS UNDER:- 6. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF RECORDS PLACED BEFORE US. IT IS OBSERVED THAT THE ISSUE IS COVERED BY DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA PVT. LTD. (SUPRA). LD. AO IN ASSESSMENT ORDER HAS ANALYSED FACTUAL BACKGROUND IN CASE OF WOODWARD GOVERNOR (SUPRA) AND STILL DISALLOWED CLAIM OF THE ASSESSEE, WHEN IT IS AN ADMITTED POSITION THAT AMOUNT RECEIVED 5 BY THE ASSESSEE WERE TRADE ADVANCES. LD. CIT(A) HAS ALSO FAILED TO APPRECIATE THAT FOR AY 2015-16, ASSESSEE EARNED GAINS OUT OF FOREIGN EXCHANGE FLUCTUATION, WHICH HAS BEEN TAXED AS INCOME IN THE HANDS OF ASSESSEE. IT IS ALSO OBSERVED FURTHER THAT MONEY RECEIVED BY ASSESSEE ON ACCOUNT OF SHARE APPLICATION HAS BEEN SPECIFICALLY MENTIONED IN FIRC AGAINST SUCH RECEIPTS. THUS, IN OUR VIEW SUCH VAGUE PRESUMPTION OF LD. AO OF THE AMOUNT RECEIVED TO BE IN THE NATURE OF SHARE CAPITAL WITHOUT ANY SUPPORT DOCUMENTARY EVIDENCES, CANNOT BE RELIED UPON. ACCORDINGLY, RESPECTFULLY FOLLOWING DECISION OF HONBLE S.C. IN THE CASE OF WOODWARD GOVERNNOR (SUPRA) WE ARE INCLINED TO ALLOW THE CLAIM OF THE ASSESSEE OF FOREIGN EXCHANGE FLUCTUATION LOSS EARNED DUE TO THE CONVERSION OF THE TRADE RECEIPTS. 7. IN THE RESULT APPEAL FILED BY ASSESSEE IS ALLOWED. 5.1 AFTER PERUSING THE AFORESAID FINDING OF THE TRI BUNAL IN ASSESSEES OWN CASE, I AM OF THE CONSIDERED VIEW THA T THE ISSUE NO. 2 IS SQUARELY COVERED BY THE AFORESAID FIN DING OF THE TRIBUNAL WHEREIN, THE DECISION OF THE HONBLE SUPRE ME COURT OF 6 INDIA IN THE CASE OF WOODWARD GOVERNOR (SUPRA) HAS BEEN FOLLOWED. HENCE, RESPECTFULLY FOLLOWING THE PRECEDE NTS AS AFORESAID, THE ADDITION IN DISPUTE IS DELETED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED ORDER PRONOUNCED ON 21/05/2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATED:21/05/2019 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR