Deputy Commissioner of Income Tax, Circle-6(1)(1), Bengaluru V. M/s. SLK Global BPO Services Private Limited, Bengaluru

ITA 1840/BANG/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2759 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-06-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 28-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K R VASUDEVAN
• Keywords: Tax effect

Judgement Text

ITA NO.1840/BANG/2018 M/S. SLK GLOBAL BPO SERVICES PVT. LTD., BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL ABENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.1840/BANG/2018 ASSESSMENT YEAR: 2012-13 DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE 6(1)(1) BANGALORE VS. M/S. SLK GLOBAL BPO SERVICES PVT. LTD. 7 TH & 8 TH FLOORS, N-1 BLOCK MANYATHA TECH PARK NAGAVARA BANGALORE 560 045 PAN NO :AABCC5793L APPELLANT RESPONDENT A PPELLANT BY : SRI KANNAN NARAYANAN, D.R. RESPONDENT BY : SHRI K.R. VASUDEVAN, A.R. DATE OF HEARING : 22.06.2021 DATE OF PRONOUNCEMENT : 23.06.2021 O R D E R PERB.R. BASKARAN, ACCOUNTANT MEMBER: THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE O RDER DATED 16.1.2018 PASSED BY LD. CIT(A)-6, BENGALURU AND IT RELATES TO THE ASSESSMENT YEAR 2012-13. THE SOLITARY ISSUE URGED IN THIS APPEAL RELATES TO ALLOWABILITY OF CLAIM OF PROVISION FOR ESTIMATED LOSS ON DERIVATIVES. 2. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXPORT OF DATA PROCES SING SERVICES AND OTHER INCIDENTAL SERVICES. THE A.O. NOTICED THAT T HE ASSESSEE HAS ITA NO.1840/BANG/2018 M/S. SLK GLOBAL BPO SERVICES PVT. LTD., BANGALORE PAGE 2 OF 4 CREATED A PROVISION FOR ESTIMATED LOSS ON DERIVATIV ES TO THE TUNE OF RS.2,21,21,000/- AND CLAIMED THE SAME AS DEDUCTION. THE A.O. TOOK THE VIEW THAT THE ABOVE SAID PROVISION IS A CO NTINGENT LIABILITY AND HENCE, IT IS NOT DEDUCTIBLE. IN THIS REGARD, H E PLACED HIS RELIANCE ON THE DECISION RENDERED BY HONBLE SUPREM E COURT IN THE CASE OF INDIAN MOLASSES COMPANY PVT. LTD. VS. CIT ( 1959) 37 ITR 66 AND ALSO THE DECISION RENDERED BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MICRO LINE LTD. THE A.O. ALSO PLACED RELIANCE ON THE CBDT INSTRUCTION NO.3/2010 DATED 23.3.2010, WHE REIN THE CBDT HAS EXPRESSED VIEW THAT MARKED TO MARKET LOANS ARE CONTINGENT IN NATURE. ACCORDINGLY, HE DISALLOWED T HE ABOVE SAID CLAIM OF RS.2,21,21,000/-. 3. THE LD. CIT(A) NOTICED THAT AN IDENTICAL CLAIM H AS BEEN ALLOWED IN THE HANDS OF THE ASSESSEE BY LD. CIT(A) FOR THE ASSESSMENT YEAR 2008-09. ACCORDINGLY, FOLLOWING TH E ORDER PASSED FOR ASSESSMENT YEAR 2008-09 BY LD. CIT(A), THE LD. CIT(A) ALLOWED THE CLAIM IN THIS YEAR ALSO. AGGRIEVED, THE REVENU E HAS FILED THIS APPEAL BEFORE US. 4. WE HEARD THE PARTIES AND PERUSED THE RECORD. FR OM THE PERUSAL OF ASSESSMENT ORDER, WE NOTICE THAT THE EXA CT NATURE OF CLAIM HAS NOT BEEN BROUGHT ON RECORD. EVEN IN THE PAPER BOOK FILED BY THE ASSESSEE, THE DETAILS OF LOSS I.E. WHETHER I T IS RELATED TO HEDGING TRANSACTIONS OR NOT; WHETHER THE CORRESPOND ING UNDERLYING ASSETS HAVE BEEN REVALUED OR NOT, HAVE NOT BEEN SPE LT OUT. THE LD. D.R. ALSO POINTED OUT FROM PAGE NO.11 OF THE PAPER BOOK THAT THE ASSESSEE HAS REVALUED THOSE DERIVATIVES, IN WHICH I T HAS INCURRED LOSS AND DID NOT REVALUE THE DERIVATIVES, IN WHICH THE ASSESSEE HAS MADE GAINS. THUS, WE NOTICE THAT THE FACTS RELATIN G TO THE CLAIM HAVE NOT BEEN BROUGHT OUT CORRECTLY EITHER BY THE A SSESSEE OF BY THE TAX AUTHORITIES. ITA NO.1840/BANG/2018 M/S. SLK GLOBAL BPO SERVICES PVT. LTD., BANGALORE PAGE 3 OF 4 5. WHEN A SPECIFIC QUESTION WAS PUT AS TO WHETHE R THE APPELLATE ORDER PASSED BY LD. CIT(A) FOR ASSESSMENT YEAR 2008 -09 HAVE BEEN AGITATED BEFORE ITAT OR NOT?, EITHER OF THE PARTIES COULD NOT FURNISH RELEVANT DETAILS. IT WAS SUBMITTED THAT THE APPEAL MIGHT NOT HAVE BEEN FILED ON ACCOUNT OF LOW TAX EFFECT. 6. BEFORE US, THE LD. D.R. PLACED HIS RELIANCE ON T HE DECISION RENDERED BY DELHI BENCH OF TRIBUNAL IN THE CASE OF BECHTEL INDIA PVT. LTD. (2017) 165 ITD 282. THE LD. A.R. ON THE CONTRARY PLACED HIS RELIANCE ON THE DECISION RENDERED BY COORDINATE BANGALORE BENCH OF TRIBUNAL IN THE CASE OF QUALITY ENGINEERIN G & SOFTWARE TECHNOLOGIES PVT. LTD. (2014) 52 TAXMANN.COM 515. 7. SINCE THE RELEVANT FACTS HAVE NOT BEEN EXAMINED, WE ARE OF THE VIEW THAT ENTIRE ISSUE NEEDS TO BE EXAMINED BY THE A.O. AFRESH BY CONSIDERING ALL THE RELEVANT DETAILS. HENCE, WE DECLINE TO COMMENT UPON THE CASE LAWS RELIED UPON BY BOTH PART IES. THE ASSESSEE MAY ADVANCE ALL ITS ARGUMENTS BEFORE THE A .O., WHO MAY CONSIDER THEM AND TAKE APPROPRIATE DECISION IN ACCO RDANCE WITH LAW. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JUNE, 2021. SD/- (N.V. VASUDEVAN) VICE PRESIDENT SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 23 RD JUNE, 2021. VG/SPS ITA NO.1840/BANG/2018 M/S. SLK GLOBAL BPO SERVICES PVT. LTD., BANGALORE PAGE 4 OF 4 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.