ACIT, Circle-9(1), V. S.M. Telesys Ltd.,

ITA 2206/DEL/2006

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52971 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-09-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 16-06-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Keywords: Additional evidence
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO.2206/DEL/2006 ASSESSMENT YEAR : 2001-02 ACIT, CIRCLE 9(1), R.NO.163, CR BUILDING,IP ESTATE, NEW DELHI . VS. M/S S.M. TELESYS LTD., A-51, SECTOR 8, NOIDA 201 301. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : MRS. ANUSHA KHURANA, SR.DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRECT ED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 14 TH MARCH, 2006. THE GROUNDS OF APPEAL READ AS UNDER:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, TH E CIT (A) ERRED IN DELETING THE ADDITION OF RS.217452/- MADE BY THE A.O. BY ADDING UNCONFIRMED BALANCE OC CREDIT BALANCE OF FOUND PARTIES I.E., INTERCITY CABLES (RS.17920), R.P. CONSTRU CTION (RS.131132),ADHAR COMMUNICATION (RS.24000) & MULTILIN E TELECOM (RS.44,400). (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) ERRED IN HOLDING THAT THE CREDIT BALANCE OF RS.2174 52 PERTAINING TO THE SAID FOUR PARTIES WERE OFFERED FOR TAX ATION IN NEXT YEAR AND THEREFORE THE SAME SHOULD NOT BE ADDED BA CK IN THE CURRENT YEAR WHEREAS THE ASSESSEE IS FOLLOWING MER CANTILE SYSTEM OF ACCOUNTANCY AND THE INCOME HAD TO BE OFFERED FOR TAXATION WHEN THE LIABILITY WAS CEASED TO EXIST I.E., IN THE CURRENT ASSTT. YEAR. (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) ERRED IN DELETING THE ADDITION OF RS.1448875/- MAD E BY THE ITA NO.2206/DEL/2006 2 A.O. BY ADDING UNCONFIRMED BALANCE OF CREDIT OF VITAL COMMUNICATIONS LTD. STATING THAT IT WAS RESULT OF GIVING WR ONG DEBIT WHEREAS THE ASSESSEES ACCOUNTS ARE AUDITED TWICE I.E., AS PER COMPANYS ACT AND AS PER SECTION 44AB OF INCOME T AX ACT AND NO SUCH DISCREPANCY WAS NOTICED IN THE AUDIT REPOR TS. (IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) ERRED IN DELETING THE ADDITION OF RS.14,48,875/- M ADE BY THE A.O. BY ADDING UNCONFIRMED BALANCE OF CREDIT OF VITAL COMMUNICATIONS LTD. STATING THAT THIS ENTRY BELONGS TO NICE LTD. (V) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, TH E CIT (A) ERRED IN DELETING THE ADDITION OF RS.14,48,875/- M ADE BY THE A.O. BY ACCEPTING THE ASSESSEES PLEA VIDE ITS LETTER DA TED 11.03.2004 THAT THIS ENTRY BELONGS TO SOME OTHER PARTY WHE REAS NICE LTD. HAD CONFIRMED ONLY ON 15.03.2004 VIDE ITS L ETTER DATED 15.03.2004. (VI) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) ERRED IN NOT APPRECIATING THE FACT THAT THE A.O. HAD SPECIFICALLY STATED IN THE REMAND REPORT THAT THE ASSESSEE DID NOT FURNISH THE LETTER DATED 15.03.2004 OF NICE LTD. WHEN THE ASSESSMENT WAS COMPLETED ON 19.03.2004 AND THE EXPLANA TION GIVEN BY THE ASSESSEE IN APPELLATE STAGE WAS AN AFTER TH OUGHT ACT. (VII) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) ERRED IN DELETING THE DISALLOWANCE OF RS.152480/- MADE BY THE A.O. ON ACCOUNT OF LOSS ON EXCHANGE FLUCTUATION. (VIII) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE CIT (A) ERRED IN NOT APPRECIATING THE FACT THAT THE MINISTRY OF LAW HAD CATEGORICALLY HELD THAT IMPACT OF EXCHANGE FLUCTUATIO N WOULD BE CONSIDERED ONLY AT THE TIME OF REPAYMENT AND NO INTERMEDIARY FLUCTUATION WOULD BE RELEVANT. 2. THE NOTICE OF HEARING WAS DIRECTED TO BE SERVED TH ROUGH DR AND THE SAID NOTICE HAS BEEN STATED TO BE SERVED AS PER LETT ER DATED 28 TH JUNE, 2011 REFERRED TO BY THE CONCERNED ASSESSING OFFIC ER TO SR. DR, THE COPY OF WHICH HAS BEEN PLACED ON RECORD. NONE W AS PRESENT ON BEHALF OF THE ASSESSEE. THEREFORE, WE PROCEEDED TO DECI DE THE PRESENT APPEAL. IT MAY ALSO BE MENTIONED HERE THAT THE ASSESSEE COMPANY HAS BEEN DESIGNATED TO BE A SICK COMPANY AS ON 31 ST MARCH, 2005 BY ORDER DATED 27 TH FEBRUARY, 2007 ISSUED BY BOARD OF INDUSTRIAL AND FINA NCIAL RECONSTRUCTION, THE COPY OF WHICH HAS BEEN PLACED ON RECORD. ITA NO.2206/DEL/2006 3 3. APROPOS GROUND NOS. 1 AND 2 WHICH RAISE A COMMON ISSU E REGARDING DELETION OF DISALLOWANCE OF ` 2,17,452 REL ATING TO THREE PARTIES MENTIONED IN GROUND NO.1. THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE IN PARA 1 OF THE ASSESSMENT ORDER. ACCORDING T O THE ASSESSING OFFICER AS PARTIES HAVING NOT BEEN PRODUCED FO R EXAMINATION, THE CREDITS BELONGING THERETO ARE UNEXPLAINED. IT W AS SUBMITTED BY THE ASSESSEE THAT THE AFOREMENTIONED AMOUNT OF CREDIT HAVE ALREADY BEEN WRITTEN BACK AS CREDIT BALANCE IN FINANCIAL YEAR 200 2-03 RELEVANT TO ASSESSMENT YEAR 2003-04 AND THEY HAVE BEEN OFFERED FOR TAXATION ALSO. THE ASSESSING OFFICER HAS REJECTED SUCH EXPLANATION OF THE ASSESSEE AND ADDED THE AFOREMENTIONED AMOUNT TO THE INC OME OF THE ASSESSEE. LEARNED CIT (A) HAS DISCUSSED THIS ISSUE IN PARA 2. 3 AND HAS NOTED THE FACT THAT THESE CREDITS RELATE TO GOODS AND SERVICES OBTAINED FROM THOSE PARTIES AND SUBSEQUENTLY THERE WAS DISPUTE REG ARDING QUALITY OF THE GOODS AND THE ASSESSEE HAD DENIED LIABILI TY TO PAY THE SAID AMOUNT TO THOSE PARTIES AND THESE AMOUNTS HAVE SPECI FICALLY BEEN WRITTEN BACK IN THE BOOKS OF THE ASSESSEE IN FINANCIAL Y EAR 2002-03 AND HAVE BEEN OFFERED FOR TAXATION AND SUCH FACT HAS BEEN CORROBORATED BY THE COPIES OF THE ACCOUNT OF THE FOUR PARTIES FOR THE SAID YEAR AS WELL AS THE DETAILS OF THE MISCELLANEOUS INCOME CREDITED TO PR OFIT & LOSS ACCOUNT. LD. CIT (A) HAS OBSERVED THAT SUCH TYPE OF D ISPUTES ARE NOT UNCOMMON AND THE CLAIM OF THE ASSESSEE WAS GENUINE. IF T HE SAME AMOUNT IS DISALLOWED FOR THE YEAR UNDER CONSIDERATION, THEN, IT WILL BE A DOUBLE DISALLOWANCE AND BEING SATISFIED BY THESE CONT ENTIONS, LD. CIT (A) HAS DELETED THE ADDITION. REVENUE IS AGGRIEVED A ND HAS FILED AFOREMENTIONED GROUNDS. 4. THE LEARNED DR RELIED UPON THE ASSESSMENT ORDER AND PLEADED THAT THE ASSESSEE COULD NOT PROVE THE EXISTENCE OF THE C REDITORS, THEREFORE, THE ASSESSING OFFICER WAS RIGHT IN MAKING THE DISALLOWANCE AND CIT (A) HAS WRONGLY DELETED THE SAME. ITA NO.2206/DEL/2006 4 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE L EARNED DR. WE HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS W ELL AS THE ORDER PASSED BY LD. CIT (A). IT HAS BEEN THE CONTENTI ON OF THE ASSESSEE THAT THESE AMOUNTS HAVE BEEN WRITTEN BACK IN FINANCIA L YEAR 2002-03. THE SAID AMOUNT HAS BEEN FOUND TO BE RELATING TO OBTA INMENT OF GOODS AND SERVICES FROM THE AFOREMENTIONED PARTIES AND THE E XISTENCE OF DISPUTE HAS ALSO BEEN FOUND ON THE BASIS OF MATERIAL MAD E AVAILABLE ON RECORD AND SUCH AMOUNT BEING NOT PAYABLE WAS ALSO WRIT TEN BACK. THEREFORE, WE FIND NO INFIRMITY IN THE DELETION OF DISALLOWANCE BY THE CIT (A). WE DECLINE TO INTERFERE AND GROUND NO.1 A ND 2 FILED BY THE REVENUE ARE DISMISSED. 6. GROUND NOS.3 TO 6 RAISE A COMMON ISSUE WHICH IS WITH REGARD TO DELETION OF ADDITION OF ` 14,48,875/- MADE IN RESPEC T OF CREDIT IN THE BOOKS OF THE ASSESSEE RELATING TO VITAL COMMUNICATION LT D. WHICH HAS BEEN HELD BY THE ASSESSING OFFICER AS UNCONFIRMED BALANC E. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER F OUND THAT M/S VITAL COMMUNICATION LTD. HAD SHOWN DEBIT B ALANCE OF THE ASSESSEE AT ` 5,52,582/- AS AGAINST ` 23,51,459/- SHOWN BY THE ASSESSEE. THUS, THERE WAS A DIFFERENCE OF ` 17,98,875/-. THE ASSESSEE WAS REQUIRED TO EXPLAIN THE DIFFERENCE AND TO SUBMIT THE COPY OF ACCOUNT. VIDE REPLY DATED 11 TH MARCH, 2005, THE ASSESSEE SUBMITTED THAT IN THE CASE OF VITAL COMMUNICATION LTD. BY MISTA KE A SALE OF ` 14,48,875/- WAS WRONGLY DEBITED IN THE ACCOUNT OF SOM E OTHER PARTY, THEREFORE, THE CREDIT BALANCE IS OF ` 9,02,584/-. TH E ASSESSING OFFICER DISBELIEVED THE EXPLANATION OF THE ASSESSEE ON THE GROUN D THAT THE NAME OF THE PARTY, COPY OF BILL AND OTHER DETAILS RE GARDING SALE WRONGLY DEBITED BY THE ASSESSEE IN THE ACCOUNT OF THE OTHER PAR TY HAVE NOT BEEN GIVEN. LEARNED CIT (A) HAS DISCUSSED THIS ISSUE IN PA RA 2.1 AND 2.2 OF HIS ORDER AND HAS DECIDED THIS ISSUE IN PARA 2.6 OF THE ORDER. IT MAY BE MENTIONED HERE THAT THE ASSESSEE HAD FILED SOME A DDITIONAL ITA NO.2206/DEL/2006 5 EVIDENCES WHICH WERE ADMITTED BY THE LEARNED CIT (A) AND REMAND REPORT WAS CALLED WHICH WAS SUBMITTED BY THE ASSESSING OFF ICER VIDE LETTER DATED 7 TH SEPTEMBER, 2004. FOR PROPER APPRECIATION OF THE FACTUAL ASPECT, IT WILL BE RELEVANT TO REPRODUCE PAR AS 2.2, 2.5 AND 2.6 OF THE ORDER OF THE CIT (A) WHICH HAS EXHAUSTIVELY DEALT WITH THIS ISSUE:- 2.2 I HAVE CONSIDERED THE SUBMISSIONS OF LD. AR, THE REPORT OF THE A.O. AND THE FACTS OF THE CASE. REGARDING THE ADDITI ONAL EVIDENCE SOUGHT TO BE ADDUCED IN RESPECT OF VITAL COMMU NICATIONS LTD./NETHERLANDS INDIA COMMUNICATION ENTERPRISES LTD. (N ICE), THE FACTS ARE THAT THE ASSESSEE HAD MISTAKENLY ENTERED THE CRE DIT BALANCE OF RS.14,48,875/- PAYABLE TO M/S VITAL COMMUN ICATION IN THE ACCOUNTS OF PARTY, I.E., M/S NICE LTD. CONFIRMATION FROM M/S NICE WAS NOT CALLED FOR AT THE ASSESSMENT STAGE AND WAS, THEREFORE, NOT PRODUCED. HOWEVER, THE SAME WAS SOUGHT TO BE INTROD UCED AT THE APPELLATE STAGE SINCE IT HAD A BEARING ON THE PROCEE DINGS. IN VIEW OF THE ABOVE, I AM SATISFIED THAT THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE A.O. THI S EVIDENCE, WHICH WAS RELEVANT TO THIS GROUND OF APPEAL. ACCORDIN GLY, THE ADDITIONAL EVIDENCE IS ADMITTED AND CONSIDERED ON MERI TS. 2.5. COMING TO THE ADDITION OF RS.17,98,878/- IN RESPE CT OF VITAL COMMUNICATION, IT IS SEEN THAT THIS AMOUNT REPRESENTS THE AGGREGATE OF TWO AMOUNTS AS UNDER: (I) PURCHASE RETURNS, ACCOUNTED FOR IN A.Y. 2002-03 RS. 3,50,000/- (II) AMOUNT WRONGLY CREDITED TO THE ACCOUNT OF RS.14,48,878 /- VITAL LTD. (ACTUALLY IT SHOULD HAVE BEEN CREDITED TO THE ACCOUNT OF M/S NICE LTD.) TOTAL RS.17,98,878/- REGARDING THE FIRST AMOUNT OF RS.3,50,000/- IT WAS SUBMITTED THAT CERTAIN GOODS PURCHASED FROM M/S VITAL COMMUNICATION DURING THE YEAR WERE FOUND TO BE NOT OF TH E REQUISITE STANDARD. THIS FACT WAS BROUGHT TO THE NOTICE OF THE SUPPLIER. THE SUPPLIER, I.E., M/S VITAL COMMUNICATIO N FINALLY AGREED NOT TO CHARGE FOR THE SUPPLY OF THE DEFECTIVE GOODS. A C REDIT NOTE WAS ISSUED BY THEM IN FAVOUR OF THE ASSESSEE ON 20.03 .01 I.E., WITHIN THE RELEVANT PREVIOUS YEAR. HOWEVER, THE ASSESS EE ACCOUNTED FOR THE SAME IN THE SUCCEEDING PREVIOUS YEAR AND INCLUDED IT IN ITS MISCELLANEOUS INCOME FOR THE A.Y. 2 002-03. IN THIS ITA NO.2206/DEL/2006 6 WAY THERE AROSE A DISCREPANCY IN THE CLOSING BALANCES AS APPEARING IN THE BOOKS OF THE ASSESSEE VIZ-A-VIZ, THE BOOKS OF M /S VITAL COMMUNICATION. HOWEVER, THE DISCREPANCY COULD BE REC ONCILED AS ABOVE. FROM A PERUSAL OF THE COPY OF ACCOUNTS OF THE ASSESSEE AS APPEARING IN THE BOOKS OF M/S VITAL COMMUNICATION AND FROM THE COPY OF THE INVOICE DATED 20.3.01 WHEREIN THE PURCHASE RETURN OF MINI COMPUTER AMOUNTING TO RS.3,50,000/- HAS BEEN ADJU STED, IT IS SEEN THAT M/S VITAL COMMUNICATION HAD ACKNOWLEDGED THE S ALES RETURN WITHIN THIS ASSTT. YEAR ITSELF. THE CREDIT WAS GIV EN ON 20.3.01. THE ASSESSEE FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING. THEREFORE, AS SOON AS THE OTHER PARTY HAD ACKNOWLEDGED THE ADJUSTME NT ENTRY, THE ASSESSEE OUGHT TO HAVE PASSED THE CORRESPONDING CRE DIT ENTRY IN ITS BOOKS FOR THE CURRENT ASSTT. YEAR. INSTEAD IT HAS CREDITED THIS AMOUNT IN THE SUBSEQUENT YEAR. THIS IS NOT IN ACCORDAN CE WITH THE PRESCRIBED ACCOUNTING PRACTICES. ACCORDINGLY, I AM O F THE OPINION THAT THIS AMOUNT OF RS.3,50,000/- HAS BEEN CORRECTLY BRO UGHT TO TAX IN THE CURRENT YEAR, ALTHOUGH FOR DIFFERENT REASONS. THE ADDITION OF THIS AMOUNT IS, THEREFORE, CONFIRMED. HOWEVER, THE A.O IS DIRECTED TO ALLOW REVERSAL OF THIS ENTRY IN THE SUBSEQUENT YEAR I .E., A.Y. 2002- 03. 2.6 THE ADDITION OF RS.14,48,875/- WAS MADE BY THE A. O AFTER REJECTING THE ASSESSEES EXPLANATION THAT THE DISCREPANCY IN THE BALANCES APPEARING IN THE ACCOUNTS OF VITAL COMMUNICATI ON AND THE ASSESSEE AROSE DUE TO AN ACCOUNTING ERROR WHEREBY THIS AMOUNT WAS CREDITED TO THE ACCOUNT OF THE SAID PARTY, I.E., M/S VITAL COMMUNICATION LTD. IN HER REMAND REPORT, THE A.O. HAS STATED THAT THIS EXPLANATION IS BASED ON AFTER THOUGHT. IT HAS FURTHE R BEEN ASSERTED THAT THE ASSESSEES PLEA THAT IT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE BEFORE THE A.O IS N OT MAINTAINABLE, SINCE THE LETTER REGARDING THE WRONG ENTRY WAS WRITTEN BY NICE LTD. ON 15.3.04 TO THE ASSESSEE COMPANY. THEN HOW WAS IT POSSIBLE BY THE ASSESSEE COMPANY TO STATE, IN ITS REPLY DATED 11.3.04 BEFORE THE A.O., THAT BY MISTAKE A SALE OF RS.14,48,878/- WAS WRONGLY DEBITED BY THE ASSESSEE IN THE HANDS OF SOME OTHER PARTY. TO THIS THE ASSESSEE HAS AVERRED THAT THE MISTAKE WAS DISCOVERED AFTER THE CLOSE OF THE FINANCIAL YEAR AND THE ENTRY WAS RECTIFIED. IT IS ONLY WHEN THE A.O. SOUGHT TO VERIFY THE ACCOUNT THAT M/S NICE LTD. WAS APPROACHED FOR FURNISHIN G THE CONFIRMATION, WHICH IT DID ON 15.3.04. ON CONSIDERATI ON OF THE FACTS, I AM OF THE OPINION THAT THE EXPLANATION OFFERED BY THE A SSESSEE IS PLAUSIBLE. MOREOVER, THIS VERSION HAS BEEN CONFIRME D BY M/S NICE LTD. EVIDENCE OF RECTIFICATION OF THE ERRONEOUS ENTRY H AS BEEN FILED. THE NET EFFECT OF THE ERRONEOUS ENTRY ON THE AGGREGATE OF SUNDRY CREDITORS WOULD HAVE BEEN NIL ALTHOUGH IN INDIVIDUAL ACCOUNTS THERE WAS A DISCREPANCY. IN ANY CASE, THE ADDITION HAS BEE N MADE ONLY ON ACCOUNT OF DISCREPANCY IN THE LEDGER ACCOUNT. NO C ASE HAS BEEN MADE OUT OR EVIDENCE COLLECTED BY THE A.O. TO SHOW THAT TH E DISCREPANCY WAS A REFLECTION OF UNACCOUNTED PURCHASES OR SALES OUTSIDE THE BOOKS. THE EXPLANATION REGARDING THE ENTRIE S HAS NOT BEEN SATISFACTORILY REBUTTED. HENCE, IN MY OPINION, THE ACTION OF THE ITA NO.2206/DEL/2006 7 A.O. IN ADDING BACK THE AMOUNT OF RS.14,48,878/- WAS NOT JUSTIFIED AND IS DIRECTED TO BE DELETED. 7. FROM THE ABOVE OBSERVATIONS OF CIT (A), IT CAN BE SEEN THAT THE ADDITION OF ` 14,48,875/ RELATED TO WRONG ENTRY MAD E IN THE ACCOUNT OF M/S VITAL COMMUNICATION LTD. AND THE OTHER PARTY INV OLVED WAS NICE LTD. AND ALL THE OTHER EVIDENCES WERE FILED BY THE A SSESSEE BEFORE CIT (A) WHICH WERE REFERRED TO THE ASSESSING OFFICER AND TH E REMAND REPORT HAS BEEN OBTAINED. THE DIFFERENCE HAS BEEN FOUND ONL Y DUE TO MISTAKE IN MAKING THE ENTRY WHICH WAS MADE IN ANOTHER ACCOUN T. IT IS FOR THAT REASON LEARNED CIT (A) HAS DELETED THE AFOREMENTIONED ADDITION. 8. IN THIS VIEW OF THE SITUATION, AFTER HEARING THE L EARNED DR, WHO RELIED UPON THE ASSESSMENT ORDER, WE ARE OF THE OPINION THAT LEARNED CIT (A) HAS RIGHTLY DELETED THE ADDITION AFTER VERIF ICATIONS OF DETAILS AND AFTER CONFRONTING THE ASSESSING OFFICER WITH THE REQUISI TE EVIDENCE WHICH WAS FILED AS AN ADDITIONAL EVIDENCE. THEREFORE , WE DECLINE TO INTERFERE IN THE DELETION. 9. GROUND NOS.7 AND 8 RELATES TO THE DISALLOWANCE MADE ON ACCOUNT OF LOSS ON FOREIGN EXCHANGE FLUCTUATION. THE ASSESSING O FFICER DISALLOWED THIS AMOUNT MAINLY ON THE GROUND THAT AUDI TORS HAVE STATED THAT THE FOREIGN CURRENCY TRANSACTIONS ARE RECORDED O N THE DATE OF TRANSACTION AND TRANSLATED AT THE PREVAILING RATE AT THE END OF THE YEAR. THUS, HE OBSERVED THAT THE EXPENDITURE IS BOOKED MAINL Y ON ACCRUAL BASIS AND NOT ON ACTUAL PAYMENT BASIS AND, THEREFORE, F OREIGN EXCHANGE FLUCTUATION LOSS IS NOT ACTUAL AND FICTITIOU S. LEARNED CIT (A) HAS DISCUSSED THIS ISSUE IN PARA 12 TO 12.2. HE HAS FOUND T HAT THE FOREIGN EXCHANGE FLUCTUATION LOSS ACCRUED TO THE ASSESSEE ON THE IMPORT OF PAGERS AND ITS COMPONENTS. FOLLOWING THE DE CISION OF ITAT IN THE CASE OF ONGC VS. DCIT 83 ITD 151 HE HAS ALLOWED TH E CLAIM OF THE ITA NO.2206/DEL/2006 8 ASSESSEE ON THE GROUND THAT THE LOSS CLAIMED BY THE ASSESSEE WAS NOT FICTITIOUS. 10. WE HAVE HEARD THE LEARNED DR ON THIS ISSUE WHO RE LIED UPON THE ASSESSMENT ORDER. IT MAY BE MENTIONED HERE THAT NOW TH IS ISSUE HAS BEEN SET AT REST BY THE DECISION OF HONBLE SUPREME CO URT IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA PVT. LTD. 312 ITR 254 (SC) WHEREIN IT HAS BEEN HELD THAT LOSS ON REVENUE ACCOUNT SUFFERED IN RESPECT OF FLUCTUATION OF FOREIGN EXCHANGE AS ON THE DATE OF BA LANCE SHEET IS AN ITEM OF EXPENDITURE U/S 37(1) OF THE INCOME TAX ACT. IT MAY BE MENTIONED HERE THAT IN PARA 12.2 LEARNED CIT (A) HA S FOUND THAT ALL THE SIX REQUIREMENTS LAID DOWN BY THE ITAT IN THE CASE OF ONGC VS. DCIT 83 ITD 151 TO HOLD THAT SUCH FOREIGN EXCHANGE LOSS IS A N ALLOWABLE DEDUCTION, HAVE BEEN FOUND TO BE FULFILLED IN THE A SSESSEES CASE. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (A) VIDE WHICH THE RELIEF ON THIS ISSUE HAS BEEN GIVEN. WE DISMISS THESE GROU NDS. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 30.09.20 11. SD/- SD/- [K.G. BANSAL] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 30.09.2011. DK ITA NO.2206/DEL/2006 9 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES