Income Tax Officer Ward-4(1)(1), Bangalore V. M/s Levis Strauss (India) Pvt Ltd , Bangalore

ITA 2815/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1359 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-06-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 10-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAMOD KU MAR SINGH
• Assessee Lawyers: SHREYA L

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V VASUDEVAN, VICE PRESIDNET AND SHRI B.R BASKARAN, ACCOUNTANT MEMBER ITA NO.2815/BANG/2018 ASSESSMENT YEAR : 2014-15 THE INCOME-TAX OFFICER, WARD-4(1)(1), BANGALORE. VS. M/S LEVIS STRAUSS (INDIA) PVT. LTD., NO.22, SJR CYBER, 7 TH FLOOR, LASKAR HOSUR ROAD, ADUGODI, BENGALURU. PAN AAACL 3092 Q. APPELLANT RESPONDENT APPELLANT BY : SHRI PRAMOD KUMAR SINGH. CIT RESPONDENT BY : SMT. SHREYA L, C.A DATE OF HEARING : 11.06.2019 DATE OF PRONOUNCEMENT : 14.06.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 12/7/2018 PASSED BY LD CIT(A)-4, BENGALURU AN D IT RELATES TO ASST. YEAR 2014-15. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD C IT(A) IN DIRECTING THE AO TO RE-EXAMINE THE ADDITION OF FORE IGN EXCHANGE LOSS OF RS.1189.39 LAKHS. ITA NO.2815/BANG/2018 PAGE 2 OF 6 3. THE FACTS RELATING TO THE ABOVE SAID ISSUE ARE S TATED IN BRIEF. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE C LAIMED FOREIGN EXCHANGE LOSS OF 1211.15 LAKHS IN THE PROFIT AND LO SS ACCOUNT. THE AO NOTICED THAT THE FOREIGN EXCHANGE LOSS STOOD AT 2400.54 LAKHS AND CALLED FOR THE DETAILS. THE ASSESSEE SUBMITTED THAT THE BREAKUP OF FOREIGN EXCHANGE LOSS AS UNDER:- ANNEXURE 10 BREAK UP OF FOREIGN EXCHANGE LOSS PARTICULARS AMOUNT (RS.) FOREIGN EXCHANGE (GAINS)/LOSSES 24,00,54,539 ON REVENUE TRANSACTIONS FOREIGN EXCHANGE (GAINS)/LOSSES (11,89,39,025) ON OF TRADE PAYABLES/RECEIVABLES TOTAL 12,11,15,514 4. THE AO NOTICED THAT THE LOSS CLAIMED BY THE ASSE SSEE INCLUDED FOREIGN EXCHANGE GAIN/LOSS OF 1189.39 LAKH S ON REINSTATEMENT OF TRADE PAYABLES/RECEIVABLES. THE AO TOOK THE VIEW THAT ALL FORWARD CONTRACTS HAVE NOT BEEN SETTLED DU RING THE YEAR AND THE ASSESSEE HAS CLAIMED THE LOSS ARISING RESTATEME NT OF TRADE PAYABLES/RECEIVABLES ON MARK TO MARKET VALUATION AT THE END OF ACCOUNTING YEAR. ACCORDINGLY HE TOOK THE VIEW THAT SUCH UNREALIZED LOSS IS A NOTIONAL ONE. ACCORDINGLY, BY FOLLOWING THE INSTRUCTION NO.17/2018 DATED 26/11/2018 ISSUED BY CBDT, THE AO ADDED THE SUM OF RS.1189.39 LAKHS, REFERRED ABOVE, TO THE TOT AL INCOME OF THE ASSESSEE. ITA NO.2815/BANG/2018 PAGE 3 OF 6 5. BEFORE THE LD CIT(A), THE ASSESSEE SUBMITTED THA T THE AMOUNT OF RS.1189.39 LAKHS ACTUALLY REPRESENTS FOREIGN EXC HANGE GAIN AND THE SAME HAS ALREADY BEEN REDUCED FROM THE FOREIGN EXCHANGE LOSS AND ACCORDINGLY NET LOSS OF RS.1211.15 LAKHS WAS CL AIMED AS DEDUCTION. ACCORDINGLY IT WAS SUBMITTED THAT THE A SSESSEE HAS ALREADY OFFERED THE ABOVE SAID AMOUNT AS ITS INCOME AND HENCE THE ADDITION MADE BY THE AO WOULD RESULT IN DOUBLE ASSE SSMENT OF THE SAME AMOUNT OF INCOME. THE LD CIT(A) CONSIDERED TH E EXPLANATIONS OF THE ASSESSEE AND ACCORDINGLY DIRECTED THE AO TO TAKE APPROPRIATE RECTIFICATION/CONSEQUENTIAL ACTION AFTER DUE VERIFI CATION OF THE CLAIM MADE BY THE ASSESSEE. THE REVENUE IS AGGRIEVED BY THE SAID DECISION OF LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE NOTICED THAT THE LD CIT(A) HAS DIRECTED THE AO T O TAKE APPROPRIATE RECTIFICATION/CONSEQUENTIAL ACTION AFTE R DUE VERIFICATION OF THE CLAIM MADE BY THE ASSESSEE. THUS, WE NOTICE THAT THE LD CIT(A) HAS NOT DECIDED THE ISSUE AND HAS DIRECTED T HE AO TO EXAMINE THE CLAIM OF THE ASSESSEE. ACCORDINGLY THE REVENUE SHOULD NOT HAVE ANY GRIEVANCE ON THE ORDER SO PASSED BY TH E LD CIT(A). 7. BEFORE US, THE LD A.R REITERATED CONTENTIONS MAD E BEFORE LD CIT(A). ON ASSIMILATION OF FACTS, WE FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE. AS RIGHTLY POINTED OUT BY LD AR, TH E ASSESSEE ITSELF HAS OFFERED THE AMOUNT OF RS.1211.15 LAKHS AS ITS I NCOME BY NETTING IT OFF AGAINST THE FOREIGN EXCHANGE LOSS. HENCE THE ACTION OF THE AO IN ASSESSING THE ABOVE SAID AMOUNT HAS RESUL TED IN DOUBLE ASSESSMENT. SINCE THE ASSESSEE HAS ALREADY DECLAR ED FOREIGN ITA NO.2815/BANG/2018 PAGE 4 OF 6 EXCHANGE GAIN OF RS.1189.39 LAKHS, THE QUESTION OF APPLYING CBDT INSTRUCTION (REFERRED SUPRA) DOES NOT ARISE. HOWEV ER, WE NOTICED THAT THE SUM OF RS.1189.39 LAKHS IS THE NET FIGURE ARRIVED ON REINSTATEMENT OF TRADE PAYABLES/RECEIVABLES, I.E., NET OF GAINS AND LOSS. HENCE, IT APPEARS THAT THE AO HAS FOLLOWED CBDT INSTRUCTION REFERRED ABOVE. WHEN IT WAS POINTED OUT TO LD A.R, SHE SUBMITTED THAT THE LOSS, IF ANY, AROSE ON RESTATEMENT OF TRAD E PAYABLES/RECEIVABLES IS ALLOWABLE AS DEDUCTION AS P ER THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF WO ODWARD GOVERNOR INDIA PVT. LTD., 312 ITR 254. 8. ON THE CONTRARY, THE LD D.R SUPPORTED THE OR DER PASSED BY THE AO. 9. WE HAVE EARLIER NOTICED THAT THE LD CIT(A) HAS ONLY RESTORED THE MATTER TO THE FILE OF THE AO. HENCE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER SO PASSED BY LD CIT(A). 10. IN THE RESULT, THE APPEAL FILED BY THE REVENU E IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JUNE, 2019. SD/ - (N.V VASUDEVAN) VICE PRESIDENT SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 14 TH JUNE, 2019. / VMS / ITA NO.2815/BANG/2018 PAGE 5 OF 6 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 A SST. REGISTRAR, ITAT, BANGALORE.