ACIT 5(2)(1), MUMBAI V. KARP IMPEX PVT. LTD., MUMBAI

ITA 2567/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5643 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Keywords: Proportionate interest; Speculation loss
• Section: 143(3)

Judgement Text

ITA NO.2567/MUM/2016 KARP IMPEX LIMITED ASSESSMENT YEAR-2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. NO.2567/MUM/2016 ( ASSESSMENT YEAR:2010-11) ASSISTANT COMMISSIONER OF INCOME TAX 5(2)(1) ROOM NO.571, 5 TH FLOOR AAYKAR BHAVAN, M.K.ROAD MUMBAI-400 020 VS. KARP IMPEX LIMITED 1411, 14 TH FLOOR, PARSAD CHAMBERS TATA ROAD, OPERA HOUSE MUMBAI-400 0004 ! PAN/GIR NO. AABCK-1823-F ( ' APPELLANT ) : ( #$ ' RESPONDENT ) A SSESSEE BY : NONE RE VENUE BY : B.SRINIVAS, CIT(DR) %& DATE OF HEARING : 20/06/2018 '() & / DATE OF PRONOUNCEMENT : 04 /07/2018 O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2010-11 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-10 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-10/DCIT-5(2)/111/2014-15 DATED 23/12/2015 QUA CERTAIN RELIEF PROVIDED TO THE ASSESSEE. THE ASSESS MENT ITA NO.2567/MUM/2016 KARP IMPEX LIMITED ASSESSMENT YEAR-2010-11 2 FOR IMPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX-5(2), MUMBAI [AO] U/S 143(3) READ WITH SECTION 153C OF THE ACT, 1961 ON 24/03/2014 WHEREIN THE INCOME OF THE ASSESSEE HA S BEEN ASSESSED AT RS.20.08 CRORES AS AGAINST RETURNED INC OME OF RS.19.29 CRORES E-FILED BY THE ASSESSEE ON 11/10/2010. NONE HAS APPEARED FO R ASSESSEE DESPITE NOTICE AND NO ADJOURNMENT APPLICAT ION IS ON RECORD. LEFT WITH NO OPTION, WE PROCEED TO DISPOSE-OFF THE SAME ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING LD. DEPARTMENTAL REPRESENTATIVE SH. B.SRINIVAS, CIT(DR). THE HEAD OF EFFECTIVE GROUNDS RAISED BEFORE US READ AS UNDER:- (I) DISALLOWANCE OF PROPORTIONATE INTEREST (II) DISALLOWANCE ON LOSS ON CANCELLATION OF FORWAR D CONTRACTS 2. FACTS IN BRIEF ARE THAT DURING ASSESSMENT PROCEE DINGS, IT WAS NOTED THAT THE ASSESSEE REFLECTED CAPITAL WORK-IN-PROGRESS / ADVANCES FOR FIXED ASSETS AT RS.462.40 LACS WHICH REPRESENTED PURCHASE OF OFF ICE BY ASSESSEE AT BANDRA KURLA COMPLEX . THE LD. AO, FOLLOWING EARLIER YEARS, COMPUTED PROPORTIONATE DISALLOWANCE OF INTEREST U/S 36(I)(III) AGAINST THE SAME AT RS.19.49 LACS. THE SECOND ADDITION PERTAINS TO FOREIGN EXCHANGE DIFFERENCE LOSS ON FORWARD CONTRACTS AMOUNTING TO RS.59.52 LACS WHICH HAS BEEN TREATED AS SPECULATION LOSS FOR WANT OF COMPLETE DETAILS AND EXPLANATION. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 23/12/2 015 WHEREIN INTEREST DISALLOWANCE HAS BEEN DELETED BY FOLLOWING THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2006-07 & 20 07-08. A RELIEF OF RS.36.87 LACS HAS BEEN PROVIDED AGAINST EXCHANGE LOSS FOLLOWING THE ITA NO.2567/MUM/2016 KARP IMPEX LIMITED ASSESSMENT YEAR-2010-11 3 DECISION OF THIS TRIBUNAL RENDERED IN LONDON STAR DIAMOND COMPANY (I) LTD. ITA NO. 6169/M/2012 DATED 11/10/2013 . THE BALANCE EXCHANGE LOSS OF RS.22.65 LACS WHICH HAS ARISEN OUT OF PREMATURE FOREIGN EXCHANGE CONTRACTS HAS BEEN CONFIRMED BY LD. CIT(A). AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DR HAS CONTESTED THE STAND OF LD. FIRST APPELLATE AUTHORITY BY SUBMITTING THAT THE ASSESSEE FAILED TO SUPPLY A DEQUATE DETAILS OF THE LOSSES TO LD. AO AND THEREFORE, THE MATTER MAY BE R EMITTED BACK. 5. WE HAVE CONSIDERED THE CONTENTIONS AND PERUSED R ELEVANT MATERIAL ON RECORD. SO FAR AS THE INTEREST DISALLOWANCE U/S 36(I)(III) IS CONCERNED, WE FIND THAT LD. CIT(A) HAS PROVIDED THE RELIEF TO THE ASSESSEE BY FOLLOWING THE DECISION OF THIS TRIBUNAL FOR AYS 200 6-07 & 2007-08 WHEREIN IT HAS BEEN NOTED THAT THE ASSESSEE HAS SUF FICIENT OWN FUNDS TO MAKE THE INVESTMENTS. THE REVENUE IS UNABLE TO CONT ROVERT THESE FINDINGS AND ALSO COULD NOT POINT OUT ANY CHANGE IN FACTS OR CIRCUMSTANCES WHICH NECESSITATE US TO TAKE A DIFFER ENT VIEW IN THE MATTER. THEREFORE, WE SEE NO REASON TO INTERFERE WI TH THE ORDER OF LD. FIRST APPELLATE AUTHORITY IN THIS REGARD. 6. REGARDING HEDGING LOSSES, IT IS NOTED THAT THE A SSESSEE WAS ENGAGED IN EXPORT ACTIVITIES AND TO HEDGE THE CURRE NCY FLUCTUATIONS, IT HAS ENTERED INTO FOREIGN CURRENCY FORWARD CONTRACTS . THE LD. CIT(A) HAS CONSIDERED THE FACTUAL MATRIX AND NOTED THAT THE AG GREGATE LOSSES AROSE OUT OF CONCLUDED CONTRACTS AS WELL AS PRE-MATURED C ONTRACTS. THE RELIEF HAS BEEN PROVIDED TO THE ASSESSEE IN TERMS OF RULIN G OF THIS TRIBUNAL RENDERED IN LONDON STAR DIAMONDS COMPANY LIMITED [SUPRA]. THE REVENUE COULD NOT CONTROVERT THE FACTUAL MATRIX. FU RTHER, NO CONTRARY ITA NO.2567/MUM/2016 KARP IMPEX LIMITED ASSESSMENT YEAR-2010-11 4 DECISION, WHATSOEVER, HAS BEEN BROUGHT ON RECORD TO CONTEST THE STAND OF FIRST APPELLATE AUTHORITY. THEREFORE, CONSIDERIN G THE SAME, WE SEE NO REASON TO INTERFERE WITH THE STAND OF LD. FIRST APP ELLATE AUTHORITY IN THIS REGARD. 7. RESULTANTLY, THE REVENUES APPEAL STAND DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH JULY , 2018. SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER *% MUMBAI; DATED : 04 .07.2018. SR.PS:-THIRUMALESH ! COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. + / THE CIT(A) 4. + / CIT CONCERNED 5. , #&- -) *% / DR, ITAT, MUMBAI 6. ./0 % GUARD FILE ' / BY ORDER, # '$% (DY./ASSTT.REGISTRAR) *% / ITAT, MUMBAI