S.Arjun, CHENNAI V. ACIT Non Corporate Ward 20(1), CHENNAI

ITA 2220/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5111 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 24-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R V SREENIVASAN IRS
• Keywords: Depreciation; Bad and doubtful debts; Revised return; Capital expenditure
• Section: 37(1); 145; 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH : CHENNAI . , ! ' # ' $ . %& , ( * + [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBE R AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] ./I.T.A. NO.2220/CHNY/2018. / ASSESSMENT YEAR : 2010-2011. SHRI.S. ARJUN, NO.78, 1-B, RAHUL MANOR, CHAMIERS ROAD, R.A. PURAM, CHENNAI 600 028. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE WARD 20(1) CHENNAI 600 034 [PAN AAIPA 1965A] ( ,- / APPELLANT) ( ./,- /RESPONDENT) / APPELLANT BY : SHRI. SAROJ KUMAR PARIDA, ADVOCATE /RESPONDENT BY : SHRI. AR.V. SREENIVASAN, IRS, JCIT. /DATE OF HEARING : 22-10-2018 ! /DATE OF PRONOUNCEMENT : 23-10-2018 0 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER IN THIS APPEAL FILED BY THE ASSESSEE, WHICH IS DIRECTED AGAINST AN ORDER DATED 27.04.2018 OF LD. COMMISSION ER OF INCOME TAX (APPEALS)-14, CHENNAI, IT IS AGGRIEVED ON DISALLOW ANCE OF A CLAIM OF WRITE OFF OF ADVANCE. ITA NO.2220/CHNY /2018 :- 2 -: 2. ASSESSEE AN ACTOR HAD FILED HIS RETURN FOR THE IMPU GNED ASSESSMENT YEAR ON 14.10.2010 DECLARING AN INCOME O F A44,19,954/-. THE SAID RETURN WAS REVISED ON 14.0 3.2011, WHEREIN A CLAIM FOR BAD DEBT OF A1,60,22,144/- WAS MADE. I T SEEMS ASSESSEE FILED ONE MORE REVISED RETURN ON 28.09.201 1 REDUCING THE CLAIM FOR BAD DEBT TO A95,22,144/- FROM THE ORIGINA L AMOUNT OF A1,60,22,144/-. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, ASSESSEE WAS REQUIRED TO EXPLAIN THE BAD DEBT CLAIM ED BY IT. REPLY OF THE ASSESSEE WAS THAT HE HAD ADVANCED A SUM OF A 95,22,144/- TO ONE M/S. SREE RAAM FILMS (P) LTD. AS PER THE ASSES SEE, HE AND HIS WIFE WERE THE PROMOTERS AND DIRECTORS OF THIS COMPA NY. THIS COMPANY, AS PER THE ASSESSEE, WAS INTO PRODUCTION O F MOVIES AND HAD SUFFERED HUGE LOSSES. CONTENTION OF THE ASSESS EE WAS THAT THE FINANCIAL POSITION OF THE SAID COMPANY WAS VERY P RECARIOUS AND THERE WAS HARDLY ANY CHANCE TO GET BACK THE ADVANC E GIVEN TO IT. ACCORDING TO THE ASSESSEE, HE WAS THUS CONSTRAINED TO WRITE-OFF THE ADVANCE AS A BAD DEBT. 3. HOWEVER, LD. ASSESSING OFFICER WAS NOT IMPRESSED BY THE ABOVE REPLY. ACCORDING TO HIM, UNLESS THE DEBT WHI CH HAD BECOME BAD WAS TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE PREVIOUS YEAR OR AN EARLIER YEAR, THE CLAIM COULD NOT BE ALL OWED. AS PER THE LD. ITA NO.2220/CHNY /2018 :- 3 -: ASSESSING OFFICER, THERE WAS NO PROOF BROUGHT IN BY THE ASSESSEE TO SHOW THAT THE DEBT WAS ACTUALLY WRITTEN OFF BY H IM IN HIS BOOKS. THE CLAIM WAS DISALLOWED AND THE ASSESSMENT COMPLETED A CCORDINGLY. 4. ASSESSEES APPEAL BEFORE LD. COMMISSIONER OF INC OME TAX (APPEALS) DID NOT MEET WITH ANY SUCCESS. THOUGH TH E ASSESSEE PLEADED THAT HE WAS A LEADING ACTOR IN FILM INDUSTR Y, AND M/S. SREE RAM FILMS (P) LTD IN WHICH HE AND HIS WIFE WERE DI RECTORS, WERE ALSO IN A SIMILAR LINE OF PRODUCTION AND DISTRIBUTION OF MOVIES, AND THUS THE LOSS CLAIMED ON ACCOUNT OF ADVANCE GIVEN TO THE SAI D COMPANY WAS ALLOWABLE, THIS WAS NOT ACCEPTED BY THE LD. CIT(A). LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT ASSESSEE COULD NO T FURNISH REQUIRED DOCUMENTS TO PROVE THAT HE HAD SATISFIED THE COND ITIONS STIPULATED IN SECTION 36(2) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THUS, ACCORDING TO HIM, THE CLAIM OF BAD DEBTS WAS RIGH TLY DISALLOWED BY THE LD. ASSESSING OFFICER. 5. NOW BEFORE US, THE LD. AUTHORISED REPRESENTATIVE S TRONGLY ASSAILING THE ORDERS OF THE LOWER AUTHORITIES SUBMI TTED THAT ASSESSEE HAD SPECIFICALLY CLAIMED BEFORE THE LOWER AUTHORITI ES THAT THE CLAIM, ALTERNATIVELY HAD TO BE ALLOWED AS A BUSINESS LOSS . AS PER THE LD. AUTHORISED REPRESENTATIVE, THE ADVANCES HAVING BEI NG GIVEN TO A COMPANY WHICH WAS PURSUING THE SAME LINE OF ACTIVI TY AS THAT OF THE ITA NO.2220/CHNY /2018 :- 4 -: ASSESSEE, ONCE IT BECAME IRRECOVERABLE, IT HAD TO B E ALLOWED AS A BUSINESS LOSS. 6. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. AMONG THE VERY M ANY GROUNDS TAKEN BY THE ASSESSEE, ONE DOES SAY THAT THE CLAIM OUGHT HAVE BEEN ALLOWED AS A BUSINESS LOSS, IF IT COULD NOT BE CONSIDERED AS BAD DEBT. IT IS ADMITTED BY THE LD. ASSESSING OFFICER THAT ASSESSE E WAS A FILM ACTOR AND FILM PRODUCER. THE QUESTION WHETHER THE ADVANC ES GIVEN BY THE ASSESSEE TO M/S. SREE RAM FILMS (P) LTD WAS IN THE COURSE OF HIS BUSINESS AS A FILM ACTOR AND PRODUCER, HAS NOT BEEN VERIFIED BY ANY OF THE LOWER AUTHORITIES. THERE IS NOTHING ON RECORD T O SHOW WHAT WAS THE MAIN OBJECT OF M/S. SREE RAM FILMS (P) LTD. NON E OF THE LOWER AUTHORITIES HAD VERIFIED WHETHER ASSESSEE AND HIS W IFE WERE THE SOLE DIRECTORS AND PROMOTERS OF THE SAID COMPANY. NO DOU BT, THE CLAIM MIGHT NOT HAVE BEEN ALLOWABLE AS BAD DEBT. HOWEVER, WHETHER IT COULD BE CONSIDERED AS BUSINESS LOSS WAS NOT VERIFIED BY ANY OF THE LOWER AUTHORITIES. JUST BECAUSE, ASSESSEE DID NOT PREFER SUCH A CLAIM BEFORE THE LD. ASSESSING OFFICER, WOULD NOT MEAN THAT ASSE SSEE WAS PRECLUDED FROM PRESSING SUCH A CLAIM BEFORE THE APP ELLATE ITA NO.2220/CHNY /2018 :- 5 -: AUTHORITIES. HONBLE APEX COURT IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA P. LTD (2009) 312 ITR 254 HAD HELD THAT BUSINESS LOSS IF PROVED WAS AN ALLOWABLE CLAIM U/S.37(1) OF THE A CT. PARAS 12 TO 15 OF THE SAID JUDGMENT IS REPRODUCED HEREUNDER:- 12. WE QUOTE HEREINBELOW SECTION 28(I), SECTION 29, SECTION 37(1) AND SECTION 145 OF THE 1961 ACT, WHICH READ A S FOLLOWS : ' 28. PROFITS AND GAINS OF BUSINESS OR PROFESSION. THE FOLLOWING INCOME SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD ' PROFITS AND GAINS OF BUSINESS OR PROFESSION' : (I) THE PROFITS AND GAINS OF ANY BUSINESS OR PROFES SION WHICH WAS CARRIED ON BY THE ASSESSEE AT ANY TIME DURING THE PREVIOUS YEAR ;' '29. INCOME FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION, HOW COMPUTED.THE INCOME REFERRED TO IN SECTION 28 SHALL BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTIONS 30 TO 43D.' '37. GENERAL.(1) ANY EXPENDITURE (NOT BEING EXPENDITURE OF THE NATURE DESCRIBED IN SECTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE OR PERSONAL EXPENSES OF THE ASSESSEE), LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION SHALL BE ALLOWED IN COMPUTIN G THE INCOME CHARGEABLE UNDER THE HEAD ' PROFITS AND GAIN S OF BUSINESS OR PROFESSION' . EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HEREB Y DECLARED THAT ANY EXPENDITURE INCURRED BY AN ASSESS EE FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS OR PROFESSION AND NO DEDUCTION OR ALLOWANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDITURE.' (EMPHASIS SUPPLIED) ' 145. METHOD OF ACCOUNTING.(1) INCOME CHARGEABLE UNDER THE HEAD ' PROFITS AND GAINS OF BUSINESS OR PROFESSION' OR ' INCOME FROM OTHER SOURCES' SHALL, SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), BE ITA NO.2220/CHNY /2018 :- 6 -: COMPUTED IN ACCORDANCE WITH EITHER CASH OR MERCANTI LE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. (2) THE CENTRAL GOVERNMENT MAY NOTIFY IN THE OFFICI AL GAZETTE FROM TIME TO TIME ACCOUNTING STANDARDS TO B E FOLLOWED BY ANY CLASS OF ASSESSEES OR IN RESPECT OF ANY CLASS OF INCOME. (3) WHERE THE ASSESSING OFFICER IS NOT SATISFIED AB OUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WHERE THE METHOD OF ACCOUNTING PROVIDE D IN SUB-SECTION (1) OR ACCOUNTING STANDARDS AS NOTIF IED UNDER SUB-SECTION (2), HAVE NOT BEEN REGULARLY FOLL OWED BY THE ASSESSEE, THE ASSESSING OFFICER MAY MAKE AN ASSESS MENT IN THE MANNER PROVIDED IN SECTION 144.' 13. AS STATED ABOVE, ONE OF THE MAIN ARGUMENTS ADVA NCED BY THE LEARNED ADDITIONAL SOLICITOR GENERAL ON BEHALF OF THE DEPARTMENT BEFORE US WAS THAT THE WORD ' EXPENDITUR E' IN SECTION 37(1) CONNOTES ' WHAT IS PAID OUT' AND THAT WHICH HAS GONE IRRETRIEVABLY. IN THIS CONNECTION, HEAVY RELIA NCE WAS PLACED ON THE JUDGMENT OF THIS COURT IN THE CASE OF INDIAN MOLASSES COMPANY P. LTD. [1959] 37 ITR 66 . RELYING ON THE SAID JUDGMENT, IT WAS SOUGHT TO BE ARGUED THAT THE INCREASE IN LIA BILITY AT ANY POINT OF TIME PRIOR TO THE DATE OF PAYMENT CANNOT B E SAID TO HAVE GONE IRRETRIEVABLY AS IT CAN ALWAYS COME BACK. ACCORDING TO THE LEARNED COUNSEL, IN THE CASE OF INCREASE IN LIA BILITY DUE TO FOREIGN EXCHANGE FLUCTUATIONS, IF THERE IS A REVALU ATION OF THE RUPEE VIS-A-VIS FOREIGN EXCHANGE AT OR PRIOR TO THE POINT OF PAYMENT, THEN THERE WOULD BE NO QUESTION OF MONEY H AVING GONE IRRETRIEVABLY AND CONSEQUENTLY, THE REQUIREMEN T OF ' EXPENDITURE' IS NOT MET. CONSEQUENTLY, THE ADDITION AL LIABILITY ARISING ON ACCOUNT OF FLUCTUATION IN THE RATE OF FO REIGN EXCHANGE WAS MERELY A CONTINGENT/NOTIONAL LIABILITY WHICH DO ES NOT CRYSTALLIZE TILL PAYMENT. IN THAT CASE, THE SUPREME COURT WAS CONSIDERING THE MEANING OF THE EXPRESSION ' EXPENDI TURE INCURRED' WHILE DEALING WITH THE QUESTION AS TO WHE THER THERE WAS A DISTINCTION BETWEEN THE ACTUAL LIABILITY IN P RAESENTI AND A LIABILITY DE FUTURO. THE WORD ' EXPENDITURE' IS NOT DEFINED IN THE 1961 ACT. THE WORD ' EXPENDITURE' IS, THEREFORE, RE QUIRED TO BE UNDERSTOOD IN THE CONTEXT IN WHICH IT IS USED. SECT ION 37 ENJOINS THAT ANY EXPENDITURE NOT BEING EXPENDITURE OF THE N ATURE DESCRIBED IN SECTIONS 30 TO 36 LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS SHOULD BE ALLOWED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD ' PR OFITS AND GAINS OF BUSINESS' . IN SECTIONS 30 TO 36, THE EXPR ESSIONS ' EXPENSES INCURRED' AS WELL AS ' ALLOWANCES AND DEPR ECIATION' HAVE ALSO BEEN USED. FOR EXAMPLE, DEPRECIATION AND ALLOWANCES ARE DEALT WITH IN SECTION 32. THEREFORE, PARLIAMENT HAS USED THE EXPRESSION ' ANY EXPENDITURE' IN SECTION 37 TO COVE R BOTH. THEREFORE, THE EXPRESSION ' EXPENDITURE' AS USED IN SECTION 37 ITA NO.2220/CHNY /2018 :- 7 -: MAY, IN THE CIRCUMSTANCES OF A PARTICULAR CASE, COV ER AN AMOUNT WHICH IS REALLY A ' LOSS' EVEN THOUGH THE SAID AMOU NT HAS NOT GONE OUT FROM THE POCKET OF THE ASSESSEE. 14. IN THE CASE OF M. P. FINANCIAL CORPORATION V. C IT REPORTED IN [1987] 165 ITR 765 THE MADHYA PRADESH HIGH COURT HAS HELD THAT THE EXPRESSION ' EXPENDITURE' AS USED IN SECTION 37 MAY, IN THE CIRCUMSTANCES OF A PARTICULAR CASE, COVER AN AMOUNT WHICH IS A ' LOSS' EVEN THOUGH THE SAID AMOUNT HAS NOT GONE OUT FROM THE POCKET OF THE ASSESSEE. THIS VIEW OF THE MADHYA PRA DESH HIGH COURT HAS BEEN APPROVED BY THIS COURT IN THE CASE O F MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. V. CIT REPOR TED IN [1997] 225 ITR 802 . ACCORDING TO THE LAW AND PRACTICE OF INCOME TAX BY KANGA AND PALKHIVALA, SECTION 37(1) IS A RESIDUARY SECTION EXTENDING THE ALLOWANCE TO ITEMS OF BUSINESS EXPEND ITURE NOT COVERED BY SECTIONS 30 TO 36. THIS SECTION, ACCORDI NG TO THE LEARNED AUTHOR, COVERS CASES OF BUSINESS EXPENDITUR E ONLY, AND NOT OF BUSINESS LOSSES WHICH ARE, HOWEVER, DEDUCTIB LE ON ORDINARY PRINCIPLES OF COMMERCIAL ACCOUNTING. (SEE PAGE 617 OF THE EIGHTH EDITION). IT IS THIS PRINCIPLE WHICH ATT RACTS THE PROVISIONS OF SECTION 145. THAT SECTION RECOGNIZES THE RIGHTS OF A TRADER TO ADOPT EITHER THE CASH SYSTEM OR THE MERCA NTILE SYSTEM OF ACCOUNTING. THE QUANTUM OF ALLOWANCES PERMITTED TO BE DEDUCTED UNDER DIVERSE HEADS UNDER SECTIONS 30 TO 4 3C FROM THE INCOME, PROFITS AND GAINS OF A BUSINESS WOULD D IFFER ACCORDING TO THE SYSTEM ADOPTED. THIS IS MADE CLEAR BY DEFINING THE WORD ' PAID' IN SECTION 43(2), WHICH IS USED IN SEVERAL SECTIONS 30 TO 43C, AS MEANING ACTUALLY PAID OR INC URRED ACCORDING TO THE METHOD OF ACCOUNTING UPON THE BASI S ON WHICH PROFITS OR GAINS ARE COMPUTED UNDER SECTION 28/29. THAT IS WHY IN DECIDING THE QUESTION AS TO WHETHER THE WORD ' E XPENDITURE' IN SECTION 37(1) INCLUDES THE WORD ' LOSS' ONE HAS TO READ SECTION 37(1) WITH SECTION 28, SECTION 29 AND SECTI ON 145(1). ONE MORE PRINCIPLE NEEDS TO BE KEPT IN MIND. ACCOUN TS REGULARLY MAINTAINED IN THE COURSE OF BUSINESS ARE TO BE TAKE N AS CORRECT UNLESS THERE ARE STRONG AND SUFFICIENT REASONS TO I NDICATE THAT THEY ARE UNRELIABLE. ONE MORE ASPECT NEEDS TO BE HI GHLIGHTED. UNDER SECTION 28(I), ONE NEEDS TO DECIDE THE PROFIT S AND GAINS OF ANY BUSINESS WHICH IS CARRIED ON BY THE ASSESSEE DU RING THE PREVIOUS YEAR. THEREFORE, ONE HAS TO TAKE INTO ACCO UNT STOCK-IN- TRADE FOR DETERMINATION OF PROFITS. THE 1961 ACT MA KES NO PROVISION WITH REGARD TO VALUATION OF STOCK. BUT TH E ORDINARY PRINCIPLE OF COMMERCIAL ACCOUNTING REQUIRES THAT IN THE PROFIT AND LOSS ACCOUNT THE VALUE OF THE STOCK-IN-TRADE AT THE BEGINNING AND AT THE END OF THE YEAR SHOULD BE ENTERED AT COST OR MARKET PRICE, WHICHEVER IS THE LOWER. THIS IS HOW BUSINESS PROFIT S ARISING DURING THE YEAR NEED TO BE COMPUTED. THIS IS ONE MO RE REASON FOR READING SECTION 37(1) WITH SECTION 145. FOR VAL UING THE CLOSING STOCK AT THE END OF A PARTICULAR YEAR, THE VALUE PREVAILING ON THE LAST DATE IS RELEVANT. THIS IS BECAUSE PROFI TS/LOSS IS EMBEDDED IN THE CLOSING STOCK. WHILE ANTICIPATED LO SS IS TAKEN INTO ACCOUNT, ANTICIPATED PROFIT IN THE SHAPE OF AP PRECIATED VALUE ITA NO.2220/CHNY /2018 :- 8 -: OF THE CLOSING STOCK IS NOT BROUGHT INTO ACCOUNT, A S NO PRUDENT TRADER WOULD CARE TO SHOW INCREASED PROFITS BEFORE ACTUAL REALIZATION. THIS IS THE THEORY UNDERLYING THE RULE THAT CLOSING STOCK IS TO BE VALUED AT COST OR MARKET PRICE, WHIC HEVER IS THE LOWER. AS PROFITS FOR INCOME-TAX PURPOSES ARE TO BE COMPUTED IN ACCORDANCE WITH ORDINARY PRINCIPLES OF COMMERCIAL A CCOUNTING, UNLESS SUCH PRINCIPLES STAND SUPERSEDED OR MODIFIED BY LEGISLATIVE ENACTMENTS, UNREALIZED PROFITS IN THE S HAPE OF APPRECIATED VALUE OF GOODS REMAINING UNSOLD AT THE END OF THE ACCOUNTING YEAR AND CARRIED OVER TO THE FOLLOWING Y EAR' S ACCOUNT IN A CONTINUING BUSINESS ARE NOT BROUGHT TO THE CHA RGE AS A MATTER OF PRACTICE, THOUGH, AS STATED ABOVE, LOSS D UE TO FALL IN THE PRICE BELOW COST IS ALLOWED EVEN THOUGH SUCH LO SS HAS NOT BEEN REALIZED ACTUALLY. AT THIS STAGE, WE NEED TO E MPHASISE ONCE AGAIN THAT THE ABOVE SYSTEM OF COMMERCIAL ACCOUNTIN G CAN BE SUPERSEDED OR MODIFIED BY LEGISLATIVE ENACTMENT. TH IS IS WHERE SECTION 145(2) COMES INTO PLAY. UNDER THAT SECTION, THE CENTRAL GOVERNMENT IS EMPOWERED TO NOTIFY FROM TIME TO TIME THE ACCOUNTING STANDARDS TO BE FOLLOWED BY ANY CLASS OF ASSESSEES OR IN RESPECT OF ANY CLASS OF INCOME. ACCORDINGLY, UND ER SECTION 209 OF THE COMPANIES ACT, THE MERCANTILE SYSTEM OF ACCO UNTING IS MADE MANDATORY FOR COMPANIES. IN OTHER WORDS, AN AC COUNTING STANDARD WHICH IS CONTINUOUSLY ADOPTED BY AN ASSESS EE CAN BE SUPERSEDED OR MODIFIED BY LEGISLATIVE INTERVENTION. HOWEVER, BUT FOR SUCH INTERVENTION OR IN CASES FALLING UNDER SEC TION 145(3), THE METHOD OF ACCOUNTING UNDERTAKEN BY THE ASSESSEE CONTINUOUSLY IS SUPREME. IN THE PRESENT BATCH OF CA SES, THERE IS NO FINDING GIVEN BY THE ASSESSING OFFICER ON THE CO RRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE. EQUAL LY, THERE IS NO FINDING GIVEN BY THE ASSESSING OFFICER STATING T HAT THE ASSESSEE HAS NOT COMPLIED WITH THE ACCOUNTING STAND ARDS. 15. FOR THE REASONS GIVEN HEREINABOVE, WE HOLD THAT , IN THE PRESENT CASE, THE ' LOSS' SUFFERED BY THE ASSESSEE ON ACCOUNT OF THE EXCHANGE DIFFERENCE AS ON THE DATE OF THE BALAN CE-SHEET IS AN ITEM OF EXPENDITURE UNDER SECTION 37(1) OF THE 1 961 ACT. CONSIDERING ALL THESE, WE ARE OF THE OPINION THAT THE QUESTION WHETHER THE CLAIM COULD BE ALLOWED AS A BUSINESS LOSS REQU IRES A FRESH LOOK BY THE LD. ASSESSING OFFICER. WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND REMIT THE ISSUE BACK TO THE FILE OF TH E LD. ASSESSING OFFICER FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. ITA NO.2220/CHNY /2018 :- 9 -: 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON TUESDAY, THE 23RD DAY OF OC TOBER, 2018, AT CHENNAI. SD/- SD/- ( ' # ' $ . %& ) ( DUVVURU RL REDDY ) ( / JUDICIAL MEMBER ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED: 23RD OCTOBER, 2018. KV %& '()( / COPY TO: 1 . / APPELLANT 3. *+, / CIT(A) 5. (-. / / DR 2. / RESPONDENT 4. * / CIT 6. .01 / GF