ACIT 16(3), MUMBAI V. C.J. EXPORTERS, MUMBAI

ITA 2612/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79321 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 05-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIKANT NAMDEO

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 2612/M/2013 ( / ASSESSMENT YEAR : 2009 - 2 0 10 ) ACIT - 16(3), R.NO.206, 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, MUMBAI - 400 007 / VS. C.J. EXPORTERS, 406, MEHTA CHAMBERS, 311 R.R. MOHAN RAI ROAD, MUMBAI 06. ./ PAN : AAAFC 0830 G ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SHRIKANT NAMDEO / RESPONDENT BY : NONE / DATE OF HEARING : 9.7.2014 / DATE OF PRONOUNCEMENT : 16 .7.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 5.4.2013 IS AGAINST THE ORDER OF CIT (A) - 27, MUMBAI DATED 28.1.2012 FOR THE ASSESSMENT YEAR 2009 - 20 10 . 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUND WHICH READ S AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN HOLDING THAT MARK - TO - MARKET LOSS OF RS. 1,06,90,750/ - ARISING ON RE - VALUATION OF FORWARD CONTRACT AGREEMENTS ON THE CLOSING DATE OF ACCOUNTING YEAR IS NOT A NOTIONAL LOSS AND THEREFORE ALLOWABLE. 3. DURING THE PROCEEDINGS BEFORE US, NOBODY HAS APPEARED TO REPRESENT ON BEHALF OF THE ASSESSEE. HOWEVER, LD DR ASSISTED US AND MENTIONED THAT THE ONLY ISSUE RAISED I N THE GROUND RELATES TO THE ALLOWABILITY OF MARK - TO - MARKET LOSS ON RE - VALUATION OF OUTSTANDING FORWARD CONTRACTS ON THE CLOSURE DATE OF THE ACCOUNTING YEAR ON NOTIONAL BASIS. FURTHER, LD DR MENTIONED THAT THE SAID ISSUE WAS ADJUDICATED BY THE CIT (A) AND GRANTED RELIEF IN FAVOUR OF THE ASSESSEE RELYING ON THE DECISION OF THE ITAT, MUMBAI IN THE CASE OF M/S. BHAVANI GEMS VS. ACIT CC - 35, IN ITA NO.2855/MUM/2010 DATED 30.3.2011 FOR THE ASSESSMENT YEAR 2006 - 2007, 2 WHEREIN THE SAID LOSS WAS ALLOWED AS BUSINESS LOSS AND IS HELD COVERED BY THE DECISION OF THE SPECIAL BENCH IN THE CASE OF DCIT VS. BANK OF BAHRAIN. 4. WE HAVE HEARD THE LD DR AND PERUSED THE ORDERS OF THE AO AS WELL AS THE CIT (A) AND FIND THAT THE CIT (A) HAS DISCUSSED THE ISSUE AT LENGTH VIDE PA RA 6 OF THE IMPUGNED ORDER. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, RELEVANT PORTION FROM THE SAID PARA 6 OF THE CIT (A)S ORDER IS REPRODUCED HERE UNDER. 6.....AT PRESENT, IT IS NOT THE AOS CASE THAT THE IMPUGNED TRANSACTION IS SPECULATIVE IN NAT URE. FURTHER, THE AFORESAID ISSUE OF ALLOWING THE LOSS ON ACCOUNT OF REVALUATION OF PENDING FORWARD CONTRACTS WAS CONSIDERED BY THE HONBLE ITAT MUMBAI BENCH IN THE CASE OF M/S. BHAVANI GEMS VS. ACIT CC - 35, IN ITA NO.2855/MUM/2010 DATED 30.3.2011 FOR THE AY 2006 - 2007 AND THE SAID LOSS WAS ALLOWED AS BUSINESS LOSS AND THE ISSUE WAS HELD TO BE COVERED BY SPECIAL BENCH DECISION IN THE CASE OF DCIT VS. BANK OF BAHRAIN. THEREFORE, IN MY CONSIDERED OPINION THE FACTS OF THE APPELLANTS CASE ARE FULLY COVERED BY THE ABOVE CITED DECISIONS OF THE HONBLE SUPREME COURT AND THE ITAT MUMBAI BENCH. ACCORDINGLY, I HOLD THAT THE LOSS INCURRED BY THE APPELLANT ON RESTATEMENT OF PENDING FORWARD CONTRACT AGREEMENTS AT THE YEAR - END IS AN ALLOWABLE BUSINESS LOSS. APPELLANT S UCCEEDS ON THIS GROUND. 5. FROM THE ABOVE, IT IS EVIDENT THAT THE MARK - TO - MARKET GAIN OR LOSS IS HELD AS ALLOWABLE GAIN OR LOSS AS THE CASE MAY BE. IN THE INSTANT CASE, LOSS OF RS. 1,06,90,750/ - ARISING ON RE - VALUATION OF FORWARD CONTRACT AGREEMENTS ON 31 ST MARCH, 2009 . THUS, THE ORDER OF THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND RAISED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JULY, 2014. S D/ - SD/ - (VIJAY PAL RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 16 .7.2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 3 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBA I