DCIT CEN CIR 8(3), MUMBAI V. WALCHAND INDUSTRIES LTD, MUMBAI

ITA 298/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2414 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 12-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK RIPOTE
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH , JUDICIAL MEMBER ITA NO. 298 /MUM/201 5 : (A.Y : 20 10 - 11 ) DCIT, CENTRAL CIRCLE - 8(3), MUMBAI (APPELLANT) VS. M/S. WALCHANDNAGAR INDUSTRIES LTD. 3, WALCHAND TERRACES, TARDEO ROAD, TARDEO, MUMBAI 400 034. PAN : AAACW0541M (RESPONDENT) ASSESSEE BY : MS. VASANTI PATEL REVENUE BY : SHRI DEEPAK RIPOTE DATE OF HEARING : 1 8 /0 7 /2016 DATE OF PRONOUNCEMENT : 22 /0 7 /2016 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 38 , MUMBAI DATED 18 . 09 .201 4 , PERTAINING TO THE ASSESSMENT YEAR 20 10 - 11 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 26.11.2012 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL: 1. WHETHER IN THE FAC TS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS.2,19,60,410/ - BEING MARKED TO MARKET LOSSES ON ACCOUNT OF EXCHANGE RATE FLUCTUATION WITHOUT APPRECIATING 2 M/S. WALCHANDNAGAR INDUSTRIES LTD. ITA NO. 298/MUM/2015 THE FACTS THAT THE SAID LOSS IS A NOTIONAL LOS S WHICH IS SPECULATIVE AND CONTINGENT IN NATURE. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE RESPONDENT - ASSESSEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956. THE ASSESSEE - COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE A ND SUPPLY OF PLANT AND MACHINERY FOR SUGAR PLANTS, BOILERS, POWER PLANTS AND ALSO EQUIPMENT FOR PETROCHEMICAL AND REFINING. IT IS ALSO ENGAGED IN THE ACTIVITY OF FABRICATING EQUIPMENT AGAINST ORDERS RECEIVED FROM NUCLEAR POWER CORPORATION OF INDIA LTD., B HABHA ATOMIC RESEARCH CENTRE AND VIKRAM SARABHAI SPACE CENTRE. FOR ASSESSMENT YEAR 2010 - 11, IT FILED A RETURN OF INCOME DECLARING TOTAL INCOME OF RS.26,02,10,825/ - , WHICH WAS SUBJECT TO SCRUTINY ASSESSMENT WHEREBY THE TOTAL INCOME HAS BEEN ASSESSED AT RS. 28,40,64,410/ - . ONE OF THE ADDITIONS MADE TO THE RETURNED INCOME WAS OF A SUM OF RS. 2,19,60,410/ - WHICH REPRESENTED MARKED TO MARKET LOSS ON ACCOUNT OF EXCHANGE RATE FLUCTUATION. NOTABLY, IN THE RETURN OF INCOME ASSESSEE HAD OFFERED NET GAIN OF RS.6,57,7 4,712/ - ON ACCOUNT OF EXCHANGE RATE FLUCTUATION WHICH INCLUDED A SUM OF RS.2,19,60,410/ - BEING MARKED TO MARKET LOSS ON EXCHANGE RATE FLUCTUATION. THE ASSESSING OFFICER DISALLOWED THE AFORESAID LOSS ON THE GROUND THAT IT WAS SPECULATIVE IN NATURE AND A ME RE NOTIONAL LOSS, WHICH HA D RESULTED IN REDUCTION OF BOOK PROFIT OF THE ASSESSEE - COMPANY. ON AN APPEAL FILED BY THE ASSESSEE, CIT(A) HAS SINCE SET - ASIDE THE ACTION OF THE ASSESSING OFFICER BY NOTICING THAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMEN T YEAR 2009 - 10 IN ITA NO. 3826/MUM/2013 DATED 21.8.2014 , BY RELYING ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT V. 3 M/S. WALCHANDNAGAR INDUSTRIES LTD. ITA NO. 298/MUM/2015 WOODWARD GOVERNOR INDIA PVT. LTD., 312 ITR 254 ( SC ), HAS SINCE ALLOWED THE CLAIM OF THE ASSESSEE. AGAINST SUCH A DECISION, R EVENUE IS IN APPEAL BEFORE US. 4. BEFORE US, IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE ORDER OF TRIBUNAL IN ASSESSEES CASE FOR ASSESSMENT YEAR 2009 - 10 DATED 21.8.2014 ( SUPRA ) CONTINUES TO HOLD THE FIELD AND AS A CONSEQUENCE WE DO NOT FIND ANY ERROR ON THE PART OF THE CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE ORDER OF CIT(A) IS HEREBY AFFIRMED IN VIEW OF THE AFORESAID PRECEDENT IN THE ASSESSEES O WN CASE. 5. RESULTANTLY, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 2 N D JULY, 2016. SD/ - SD/ - ( AMARJIT SINGH ) JUDICIAL MEMBER ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI, DATE : 2 2 N D JULY, 2016 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, I BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI