Gujarat JHM Hotels Ltd., Surat V. The Pr. CIT-1, Surat

ITA 301/SRT/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7231 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 20-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST IMPUGNED PASSED
• Keywords: Depreciation; Wrong claim; Assessment record
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER ITA NO.301/SRT/2018 ASSESSMENT YEAR: 2013-14 GUJARAT JHM HOTELS LTD., HOTEL GATEWAY, NR.BHARTI PARK, AMBACANIKETAN, ATHWALINES, SURAT 395 007. [PAN: AAACG 8562 E] VS. THE INCOME PRINCIPAL COMMISSIONER OF INCOME TAX, SURAT 1. (APPELLANT) (RESPONDENT) ORDER PER H.S. SIDHU, JM: THIS APPEAL FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER PASSED BY THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX, SURAT- 1, DATED 26.03.2018 PERTAINING TO ASSESSMENT YEAR 2013-14. 2. GROUND RAISED BY THE ASSESSEE READS AS UNDER: (1) THE PRINCIPAL COMMISSIONER OF INCOME-TAX WAS NOT JUSTIFIED IN ASSUMING JURISDICTION U/S.263 WITHOUT SATISFYING CONDITIONS. (2) THE APPELLANT SUBMITS THAT THE PRINCIPAL COMMISSIONER OF INCOME-TAX OUGHT NOT TO HAVE INVOKED PROVISIONS OF SECTION 263 ON THE VERY SAME POINT ON WHICH THE ASSESSING OFFICER HAD MADE INQUIRY AND TAKEN POSITION. (3) THE APPELLANT FURTHER SUBMITS THAT THE PRINCIPAL COMMISSIONER OF INCOME- TAX DID NOT APPRECIATE THE SETTLED POSITION OF LAW WHERE PROCEEDINGS U/S.263 DO NOT STAND TO SUSTAIN IF PRINCIPAL COMMISSIONER OF INCOME-TAX OPTS TO TAKE DIFFERENT VIEW IN THE SAME MATTER. ASSESSEE BY SHRI HIREN R. VEPARI CA DEPARTMENT BY SHRI PRASENJEET SINGH CIT-DR DATE OF HEARING 17.07.2019 DATE OF PRONOUNCEMENT 19.07.2019 (4) ON MERITS, THE APPELLANT SUBMITS THAT THE LEARNED PR. CIT WAS MISDIRECTED TO HOLD FOREIGN CURRENCY FLUCTUATION ON LOAN AS CAPITAL LOSS PARTICULARLY WHEN THE RESULTANT NET FOREIGN EXCHANGE LOSS OF RS.2,21,32,403 WAS REVENUE IN NATURE AND WAS A JUSTIFIABLE CLAIM. (5) THE LEARNED PR. CIT WAS DRIVEN BY EXTRANEOUS CONSIDERATION IN NOT DROPPING THE PROCEEDINGS U/S.263. (6) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR VARY ANY OF THE GROUNDS OF APPEAL. 3. THE LD.PR.CIT, SURAT-1 PERUSED THE ASSESSMENT RECORD OF THE ASSESSEE AND FOUND THAT ASSESSEE COMPANY HAS DEBITED AN AMOUNT OF RS.221.32 LAKHS ON ACCOUNT OF EXCHANGE DIFFERENCE VIZ., ON ACCOUNT OF LOSS ON REVALUATION OF FOREIGN CURRENCY LOAN AND ALSO FOUND THAT THE LOSS ON ACCOUNT OF IN FLUCTUATION IN EXCHANGE REPRESENTS CALCULATED BY THE ASSESSEE ON REVALUATION OF FOREIGN CURRENCY LOAN IS IN THE CAPITAL NATURE. THE SAID LOSS OF RS.221.32 LAKHS WAS THEREFORE REQUIRED TO BE CAPITALIZE INSTEAD OF CAPITALIZING THE SAME. THE ASSESSEE HAS CLAIMED IT AS A REVENUE LOSS. THE LOSS CLAIMED OF RS.221.32 LAKHS WAS SO DISALLOWED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE LD.PR.CIT, SURAT-1 ISSUED A SHOW CAUSE NOTICE DATED 20.03.2018 PROVIDING THE OPPORTUNITY TO THE ASSESSEE FOR CALLING ITS EXPLANATION AS WELL AS TO ADDUCE ANY EVIDENCE AND PROVIDE THE OPPORTUNITY TO THE ASSESSEE ON HEARING FOR 22.03.2018 BY ISSUING A NOTICE U/S.263 OF THE INCOME TAX ACT. 4. IN RESPONSE TO THE SAME, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED AND FILED REPLY DATED 22.03.2018 BY STATING THAT THE ASSESSING OFFICER HAS ALREADY TAKEN THE POSITION BY ACQUIRING THIS PARTICULAR ASPECT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND BEING SATISFIED ON THIS SCORE HAS ALLOWED THE CLAIM TO THE ASSESSEE. THE REPLY OF THE ASSESSEE WAS CONSIDERED BY THE LD.PR.CIT, SURAT-1 AND NOT FOUND SATISFACTORY AND LASTLY ON THE BASIS OF VARIOUS DECISIONS RENDERED BY THE HON'BLE HIGH COURTS THE LD.PR.CIT, SURAT-1 OBSERVED THAT THERE IS NO FOREIGN TRADE OR TRANSACTION MADE BY THE ASSESSEE REGARDING WHICH IT HAS TO MAKE ANY OUTSTANDING PAYMENT IN FOREIGN EXCHANGE, THE LIABILITY WITH RESPECT TO IT WOULD FLUCTUATE ALONG WITH THE FLUCTUATION IN EXCHANGE RATES. IN THE END, HE HAS HELD THAT THE ASSESSING OFFICER HAS NOT THOROUGHLY EXAMINED THE ISSUE IN DISPUTE AND WRONGLY ALLOWED THE CLAIM OF THE ASSESSEE AND EXCHANGE RATE FLUCTUATION IS REQUIRED TO BE TREATED AS CAPITAL LOSS AND FINALLY, HE HAS HELD THAT THE WRONG CLAIM OF LOSS OF RS.2,21,32,403/- ON REVALUATION OF LOAN SHOULD HAVE BEEN DISALLOWED BY THE ASSESSING OFFICER SINCE NO SUCH DISALLOWANCE HAS BEEN MADE THE ASSESSMENT ORDER U/S.143(3) DATED 11.03.2016 IN THE CASE OF ASSESSEE FOR A.Y. 2013- 14 IS FOUND ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND DIRECTED THE ASSESSING OFFICER TO RE-COMPUTE AND DETERMINE THE CORRECT TOTAL INCOME OF THE ASSESSEE AFTER MAKING DISALLOWANCES OF THE WRONG CLAIM AND PASSED THE IMPUGNED ORDER U/S.263 OF THE ACT AGAINST WHICH THE ASSESSEE HAS FILED THE PRESENT APPEAL. 5. AT THE TIME OF HEARING, THE LD.COUNSEL FOR THE ASSESSEE FILED A WRITTEN SUBMISSIONS ALONG WITH VARIOUS CASE LAWS AS WELL AS A VERY BIG PAPER BOOK CONTAINING PAGE 1 TO 209 IN WHICH HE HAS ATTACHED VARIOUS DOCUMENTARY EVIDENCES AND THE CASE LAWS SUPPORTING HIS ARGUMENT. FOR THE SAKE OF CONVENIENCE, WRITTEN SUBMISSIONS FILED BY THE LD.COUNSEL FOR THE ASSESSEE IS REPRODUCED AS UNDER : MAY IT PLEASE YOUR HONOURS: (1) THE PRINCIPAL CIT HAD ASSUMED JURISDICTION PRIMARILY ON ACCOUNT OF RS.2,21,32,403 BEING LOSS ON REVALUATION OF FOREIGN CURRENCY LOAN CLAIMED BY THE ASSESSEE (PAGE NO,45-46 OF THE PAPER BOOK). (2) AS WAS GIVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS 263 PROCEEDINGS, THE APPELLANT GAVE COMPLETE PROFILE OF HOW IT HAD CLAIMED LOSS OF RS.2,21,32,403 (PAGE NO.42). THE ASSESSEE CLAIMS THAT AFTER VERIFYING ALL THE DETAILS, THE AO HAD TAKEN POSITION TO ALLOW THE CLAIM AND THAT THE POSITION SO TAKEN WAS NOT ERRONEOUS BASED ON THE FOLLOWING. A. PRIMARILY, THE NET LOSS HAS FOUR LIMBS; TABLE A PARTICULARS RESULT AMOUNT I REVALUATION OF OUTSTANDING FOREIGN CURRENCY LOAN AS AT 31-3- 2013 GAIN 18,63,269 II REVALUATION OF THE VALUE OF FORWARD CONTRACTS AGAINST THE OUTSTANDING LOAN LOSS (34,47,657) III AMORTIZATION OF PREMIUM ON THE POSITION OF THE FORWARD CONTRACT TAKEN DURING THE YEAR (FROM THE DATE OF CONTRACT TILL 31-3-2013) LOSS (1,55,13,014) IV AMORTIZATION OF PREMIUM ON THE POSITION OF THE FORWARD CONTRACT ROLLED OVER FROM THE PREVIOUS YEAR (FROM THE DATE OF CONTRACT TILL 31-3-2013) LOSS (1,55,13,014) V LOSS ON EEFC ACCOUNT LOSS (285) TOTAL (2,2 1,3 2,4 03) B. ALL THE ABOVE ARE DEALT WITH AS UNDER. I. REVALUATION OF OUTSTANDING FOREIGN CURRENCY LOAN AS AT 31- 3-2013: RS. 18,63,269 IS NOTHING BUT THE GAIN ON OUTSTANDING POSITION OF SECURED LOANS. THIS BEING FAVOURABLE TO THE REVENUE CANNOT BE REGARDED AS ERRONEOUS. IT SHOWS THE LACK OF INQUIRY BY THE PR. CIT. II. REVALUATION OF VALUE OF FORWARD CONTRACTS AGAINST THE OUTSTANDING LOAN: WHEN THE CHART GIVEN ON PAGE NO.42 OF THE PAPER BOOK IS SEEN (CHART AGAIN ATTACHED AS PAGE NO.1), ONE FINDS THAT THIS LOSS HAS OCCURRED TO THE EXTENT OF RS. 34,47,657. NATURE OF LOSS IS NOTHING BUT RESTATING THE VALUE OF FORWARD CONTRACTS AT THE YEAREND I.E. 31-3-2013. WHEN THE ASSESSEE FINDS THAT RUPEE WOULD POTENTIALLY DEPRECIATE AND IT COULD RESULT IN PAYING HIGHER RUPEES IN RELATION TO THE USD, THE ASSESSEE HAD ENTERED INTO THE FORWARD CONTRACT TO HEDGE THE POSITION OF FOREIGN CURRENCY LOANS. ONCE THE FORWARD CONTRACT IS ENTERED WITH THE BANK, THE ASSESSEE GETS BOUND BY THE RATE AT WHICH IT WOULD BE PURCHASING DOLLARS FROM THE BANK. THE ASSESSEE DOES NOT HAVE CHOICE ANY FURTHER. NOW, RUPEE COULD APPRECIATE OR DEPRECIATE FROM THE CONTRACTED RATE UNDER THE FORWARD CONTRACT. IF THE RUPEE APPRECIATES THEN THERE WOULD BE LOSS TO THE ASSESSEE AS IT ENTERED INTO A CONTRACT AT A RATE HIGHER THAN THE RATE AT WHICH USD COULD HAVE BEEN BOUGHT. CONVERSELY, IF THE RUPEE DEPRECIATES THEN THERE WOULD BE GAIN TO THE ASSESSEE AS IT ENTERED INTO A CONTRACT AT A RATE LOWER THAN THE RATE AT WHICH USD COULD HAVE BEEN BOUGHT. SUCH CONTRACTS SPREAD OVER MORE THAN ONE FINANCIAL YEAR, REQUIRING ADJUSTMENT TO THE SPOT RATE AT THE INCEPTION OF THE CONTRACT WITH THE CLOSING RATE AS IT 31- 3-2013. THEREFORE, WHEN ONE LOOKS AT THE PAGE NO.1, ALL THAT THE ASSESSEE HAS DONE IS TO RECAST THE VALUE OF FORWARD CONTRACTS SUBSISTING AS ON 31-3-2013 BY TAKING DIFFERENCE IN THE RATE OF SPOT RATE AT THE INCEPTION OF THE CONTRACT WITH THE CLOSING RATE AT THE YEAR-END. THEREFORE, THE LOSS OF RS. 34,47,657 ARISING AS A RESULT OF EXCHANGE DIFFERENCE ON CONVERSION OF OUTSTANDING VALUE OF FORWARD CONTRACTS ON CUT-OFF IS ALLOWABLE EXPENDITURE. ALSO, AS PER PARAGRAPH 38 OF THE ACCENTING STANDARD ON EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES, THE ACCOUNTING STANDARD CLEARLY REQUIRES THAT PREMIUM ARISING AT THE INCEPTION OF THE FORWARD EXCHANGE CONTRACT SHOULD BE AMORTIZED OVER THE LIFE OF THE CONTRACT. THE RELEVANT TEXT OF THE STANDS IS REPRODUCED BELOW. 38. A GAIN OR LOSS ON A FORWARD EXCHANGE CONTRACT TO WHICH PARAGRAPH 36 DOES NOT APPLY SHOULD BE COMPUTED BY MULTIPLYING THE FOREIGN CURRENCY AMOUNT OF THE FORWARD EXCHANGE CONTRACT BY THE DIFFERENCE BETWEEN THE FORWARD RATE AVAILABLE AT THE REPORTING DATE FOR THE REMAINING MATURITY OF THE CONTRACT AND THE CONTRACTED FORWARD RATE (OR THE FORWARD RATE LAST USED TO MEASURE A GAIN OR LOSS ON THAT CONTRACT FOR AN EARLIER PERIOD). THE GAIN OR LOSS SO COMPUTED SHOULD BE RECOGNIZED IN THE STATEMENT OF PROFIT AND LOSS FOR THE PERIOD. THE PREMIUM OR DISCOUNT ON THE FORWARD EXCHANGE CONTRACT IS NOT RECOGNIZED SEPARATELY. THE LOSS BEING EXCLUSIVELY BEING REVENUE IN NATURE SINCE IT IS TO SAFEGUARD THE POTENTIAL LOSS IS ALLOWABLE AS EXPENDITURE. THAT SAID, THE POSITION TAKEN BY THE AO IS NOT ERRONEOUS SO AS TO INVOKE SECTION 263. THAT APART, THE APPELLANT RELIES ON THE DECISION OF HIGH COURT OF BOMBAY IN CASE OF CITIBANK N.A. (66- TAXMANN.COM 373) (PAGE NO.1 TO 3). III. AMORTIZATION OF PREMIUM ON THE POSITION OF THE FORWARD CONTRACT TAKEN DURING THE YEAR (FROM THE DATE OF CONTRACT TILL 31-3-2013) WHEN THE CHART GIVEN ON PAGE NO.42 OF THE PAPER BOOK IS SEEN (CHART AGAIN ATTACHED AS PAGE NO.1), ONE FINDS THAT THIS LOSS HAS OCCURRED TO THE EXTENT OF RS.1,55,13,014. NATURE OF LOSS IS NOTHING BUT TO ENTER INTO THE FORWARD CONTRACTS TO PURELY HEDGE THE FLUCTUATION IN THE FOREIGN CURRENCY LOAN. AS YOU MAY NOTICEN FROM THE CHART GIVEN AT CHART A , THE RUPEE DURING THE ENTIRE FINANCIAL YEAR FROM 1-4-2012 TO 31 ST MARCH, 2013 DEPRECIATED FROM RS.51.1565 TO RS.54.3893 AGAINST THE US $ SHOWING A TOTAL FALL OF 6.32%. WITH THE POSITION OF FOREIGN CURRENCY OF US $ 63,26,200 (REFER PAGE 1), HAD THE APPELLANT NOT HEDGED THE POSITION BY ENTERING INTO FORWARD CONTRACTS, THE OUTSTANDING LIABILITY ON ACCOUNT OF FOREIGN CURRENCY LOANS WOULD HAVE RESULTED IN A TOTAL LOSS OF RS.2,04,51,339 AS AT 31 ST MARCH, 2013 ON ACCOUNT OF FOREIGN CURRENCY FLUCTUATION. THEREFORE, THE LOSS OF RS.1,55,13,014 ARISING AS A RESULT OF PREMIUM AMORTIZATION IS NOTHING BUT THE PREMIUM PAID BY THE APPELLANT TO SAFEGUARD AGAINST THE POSSIBLE LOSS. IT IS NOTHING BUT SORT OF COST OF INSURANCE TO ENSURE THAT THE APPELLANT DOES NOT INCUR HUGE LOSS AS A RESULT OF RUPEE DEPRECIATION AGAINST THE US$. ALSO, AS PER PARAGRAPH 36 OF THE ACCOUNTING STANDARD ON 'EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES', THE ACCOUNTING STANDARD CLEARLY REQUIRES THAT PREMIUM ARISING AT THE INCEPTION OF THE FORWARD EXCHANGE CONTRACT SHOULD B AMORTIZED OVER THE LIFE OF THE CONTRACT. THE RELEVANT TEXT OF THE STANDS IS REPRODUCED BELOW. 36. AN ENTERPRISE MAY ENTER INTO A FORWARD EXCHANGE CONTRACT OR ANOTHER FINANCIAL INSTRUMENT THAT IS IN SUBSTANCE A FORWARD EXCHANGE CONTRACT, WHICH IS NOT INTENDED FOR TRADING OR SPECULATION PURPOSES, TO ESTABLISH THE AMOUNT OF THE REPORTING CURRENCY REQUIRED OR AVAILABLE AT THE SETTLEMENT DATE OF A TRANSACTION. THE PREMIUM OR DISCOUNT ARISING AT THE INCEPTION OF SUCH A FORWARD EXCHANGE CONTRACT SHOULD BE AMORTIZED AS EXPENSES OR INCOME OVER THE LIFE OF THE CONTRACT EXCHANGE DIFFERENCES ON SUCH A CONTRACT SHOULD BE RECOGNIZED IN THE STATEMENT OF PROFIT AND LOSS IN THE REPORTING PERIOD IN WHICH THE EXCHANGE RATES CHANGE. ANY PROFIT OR LOSS ARISING ON CANCELLATION OR RENEWAL OF SUCH A FORWARD EXCHANGE CONTRACT SHOULD BE RECOGNIZED AS INCOME OR AS EXPENSE FOR THE PERIOD THE LOSS BEING EXCLUSIVELY BEING REVENUE IN NATURE SINCE IT IS TO SAFEGUARD THE POTENTIAL LOSS IS ALLOWABLE AS EXPENDITURE. THAT SAID, THE POSITION TAKEN BY THE AO IS NOT ERRONEOUS SO AS TO INVOKE SECTION 263. THAT APART, THE APPELLANT RELIES ON THE DECISION OF HIGH COURT OF BOMBAY IN CASE OF BOMBAY IN CASE OF CITIBANK N.A. (66-TAXMANN.COM 373) (PAGE NO.1 TO 3) CHART A IV. AMORTIZATION OF PREMIUM ON THE POSITION OF THE FORWARD CONTRACT ROLLED OVER FROM THE PREVIOUS YEAR (FROM THE DATE OF CONTRACT TILL 31-3-2013) THE THIRD LIMB ONE CAN FIND IN THE ATTACHED CHART IS A LOSS ON PREMIUM AMORTIZATION OF RS.50,34,717 ATTRIBUTABLE TO THE F.Y.2012-13 IN RESPECT OF FORWARD CONTRACTS WHICH HAD INCEPTION DURING F.Y.2011-12 AND WHICH ROLLED OVER AND MATURED DURING F.Y.2012- 13, ON THE ANALOGY OF WHAT IS DISCUSSED IN CLAUSE III. , THE PREMIUM AMORTIZATION IS ALLOWABLE AS EXPENDITURE V. LOSS ON EEFC ACCOUNT I. LOSS ON EEFC (EXCHANGE EARNERS' FOREIGN CURRENCY) ACCOUNT IS NOTHING BUT LOSS ARISING AS A RESULT OF FLUCTUATION IN FOREIGN EXCHANGE IN THE CURRENT ACCOUNT MAINTAINED BY THE ASSESSEE. II. III. THIS IS NOTHING BUT ADJUSTMENT MADE AT THE YEAREND ON ACCOUNT OF FOREIGN CURRENCY FLUCTUATION AS PER RULE 115 OF THE INCOME-TAX RULES, 1962 RESPONSE TO THE SUBMISSION OF THE DR: A. A SUBMISSION HAS BEEN GIVEN BY THE LEARNED DR DURING THE COURSE OF HEARING ON 11-1 -2019. THE SAME IS DEALT WITH AS UNDER. I. IN PARAGRAPH 1) AND PARAGRAPH 2), THE SCOPE OF SECTION 263 IS DISCUSSED. II. IN PARAGRAPH 3), IT IS SUBMITTED THAT EXPLANATION 2 WAS INSERTED TO SECTION 263 VIDE FINANCE BILL 2015 WITH EFFECT FROM 1 ST JUNE, 2015 AND AS PER THE DECISION OF HON'BLE ITAT, MUMBAI IN CASE OF CROMPTON GREAVES LTD., THE PROVISION IS APPLICABLE RETROSPECTIVELY. III. NOW IT WOULD BE IMPORTANT TO SEE THAT EVEN IF EXPLANATION 2 BECOMES APPLICABLE TO WHAT EXTENT THE SAME WOULD APPLY TO THE CASE OF THE APPELLANT. THE EXPLANATION DEEMS CERTAIN ORDERS TO BE ERRONEOUS IN SO FAR AS THEY ARE PREJUDICIAL TO THE INTEREST OF THE REVENUE. TABLE B CLAUSE OF EXPLANATION 2 TEXT OF THE CLAUSE WHY IT DOES NOT APPLY TO THE APPELLANT (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE. IT IS NOT A CASE WHERE THE AO HAD NOT MADE INQUIRY OR VERIFICATION. IN THE MATTER, REFERENCE IS INVITED TO PAGE 38 TO 44 OF PAPER BOOK PAGE 31 TO 37 OF PAPER BOOK PAGE 23 AND 29 AND 8 OF PAPER BOOK. THE ABOVE WOULD CLEARLY DEMONSTRATE THAT THERE WAS PROPER INQUIRY (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM. AS GIVEN IN RESPONSE TO CLAUSE (A) ABOVE, THERE WAS PROPER INQUIRY AND ONLY THEREAFTER AO HAD ALLOWED THE RELIEF/DEDUCTION. (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119; OR NOT APPLICABLE (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JURISDICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE NO SUCH REFERENCE HAS BEEN BROUGHT IN NOTICE INVOKING SECTION 263 (PAGE NO.45 AND 46 OF THE PAPER BOOK) ASSESSEE OR ANY OTHER PERSON. IV. GIVEN THE ABOVE, THE AMENDMENT DOES NOT COME TO THE RESCUE OF THE DEPARTMENT. V. IN PARAGRAPH 4) AND 4.1), THE DR HAS REFERRED TO THE SUPREME COURT CASE IN CASE OF CIT V/S. AMITABH BACHCHAN. IN THAT CASE, THE RATIO SETTLED BY THE HON'BLE SUPREME COURT WAS ON THAT INCOMPLETE INVESTIGATION WHERE INQUIRY WAS NOT COMPLETED WOULD TANTAMOUNT TO AN ORDER BEING HELD AS PREJUDICIAL TO THE INTEREST OF REVENUE. VI. IN PARAGRAPH 5), THE DR HAS QUOTED TWO CASES OF RAMPAYARI DEVI SARAOGI AND TARA DEVI AGARWAL WHERE THE HON'BLE SUPREME COURT HAVE HELD THAT FAILURE OF THE AO TO MAKE INQUIRIES WOULD RENDER THE ASSESSMENT ORDER ERRONEOUS. THE DR HAS ALSO QUOTED GEE VEE ENTERPRISES DELHI HIGH COURT AS WELL AS DUGGAL & CO., PUSHPA DEVI AND SMT. RAMBHA DEVI WHERE 263 WOULD SUSTAIN IF THE AO HAD NOT MADE IN INQUIRY. THE DR HAS ALSO CITED RAMASWAMI CHETTTIAR WHERE THE AO HAD FAILED TO MAKE INQUIRY ON PARTICULAR ITEM, AND THUS 263 COULD STAND. VII. IN CASE OF THE APPELLANT, CLEARLY, AS STATED IN RESPONSE TO CLAUSE (A) IN TABLE B, THERE WAS COMPLETE INVESTIGATION AS WELL AS INQUIRY. VIII. IN PARAGRAPH 7), THE DR STATES THAT THE CASE WAS CITED BY THE APPELLANT ARE DISTINGUISHABLE. BUT IT IS NOT SPELT HOW? IX. IN PARAGRAPH 8), THE DR STATES THAT SECTION 263 IS FOR THE PURPOSE OF SETTING RIGHT DISTORTIONS AND PREJUDICES TO THE REVENUE. AS CLEARLY EXPLAINED IN PARAGRAPH (2) ABOVE, THERE WAS NO DISTORTION. THE APPELLANT HAD MADE AN OPEN CLAIM, WHICH IS BACKED BY LAW AND ACCOUNTING STANDARDS. THE CLAIM WAS VERIFIED BY THE AO AND ACCEPTED. 6. THE LD.DEPARTMENTAL REPRESENTATIVE(DR) STRONGLY OPPOSED THE WRITTEN ARGUMENT FILED BY THE LD.COUNSEL FOR THE ASSESSEE AS WELL AS THE CITATIONS CITED BY HIM IN THE SHAPE OF PAPER BOOK. THE LD.DR RELIED UPON THE ORDER PASSED BY THE LD.PR.CIT, SURAT-1 PASSED U/S.263 OF THE INCOME TAX ACT, 1961. HE STATED THAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY WHILE ACCEPTING THE CLAIM OF ASSESSEE. THEREFORE, THE LD.PR.CIT, SURAT-1 HAS RIGHTLY APPLIED THE SECTION 263 OF THE ACT, BECAUSE THE ORDER OF THE ASSESSING OFFICER IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE REQUESTED THAT THE APPEAL FILED BY THE ASSESSEE MAY BE DISMISSED. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD, ESPECIALLY THE ORDER PASSED BY THE LD.PR.CIT, SURAT-1 U/S.263 OF THE INCOME TAX ACT, 1961 ALONG WITH THE WRITTEN SUBMISSIONS FILED BY THE LD.COUNSEL FOR THE ASSESSEE AS WELL AS THE VARIOUS CITATIONS AND DOCUMENTARY EVIDENCES FILED IN THE SHAPE OF PAPER BOOK. IN THE CASE OF ASSESSEE, THE LD.PR.CIT HAS ASSUMED THE JURISDICTION ON ACCOUNT OF RS.2,21,32,403/- BEING LOSS ON REVALUATION FOREIGN CURRENCY LOAN CLAIMED BY THE ASSESSEE. 7.1 WE HAVE PERUSED THE ASSESSMENT ORDER AS WELL AS THE ORDER PASSED U/S.263 OF THE INCOME TAX ACT, 1961. WE ALSO PERUSED THE PAGE 42 OF THE PAPER BOOK THAT IS A COMPLETE PROFILE OF HOW IT HAD CLAIMED LOSS OF AMOUNT IN DISPUTE. THE ASSESSING OFFICER HAS EXAMINED THIS COMPLETE PROFILE FILED BY THE ASSESSEE BEFORE HIM AND TAKEN A VIEW FOR ALLOWING THE CLAIM AFTER VERIFYING ALL THE DETAILS. NOW, THE ASSESSING OFFICER HAS TAKEN A POSITIVE VIEW IN FAVOUR OF THE ASSESSEE WHICH DOES NOT MEAN THAT VIEW IS A ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ALSO DOES NOT MEAN THAT THE ASSESSING OFFICER HAS NOT DONE ANY ENQUIRY BEFORE ALLOWING THE CLAIM OF THE ASSESSEE. THE LOSS EXCLUSIVELY BEING REVENUE IN NATURE, SINCE IT IS TO SAFEGUARD THE POTENTIAL LOSS IS ALLOWABLE AS EXPENDITURE. THEREFORE, THE VIEW TAKEN BY THE ASSESSING OFFICER IS NOT ERRONEOUS. 8. THE LD.COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE ORDER OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION) VS. CITY BANK N.A. [2016] 66 TAXMANN.COM 373 (BOMBAY). THE LD.COUNSEL FOR THE ASSESSEE ALSO DRAW THE ATTENTION TOWARDS THE ASSESSMENT ORDER AS WELL AS TO THE REPLY GIVEN BY THE ASSESSEE. IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSING OFFICER, AND THE REPLY THERETO BY THE ASSESSEE ALONG WITH ALL THE DOCUMENTARY EVIDENCES ON THE ISSUE IN DISPUTE, HE STATED THAT THE ASSESSEE HAS FILED ALL THE DOCUMENTARY EVIDENCES SUPPORTING THE CLAIM OF THE ASSESSEE AND THE ASSESSING OFFICER HAS INVESTIGATED THE SAME AND ACCEPTED THE CLAIM OF THE ASSESSEE AND AFTER SATISFYING THE PROPOSITION OF LOSS OF THE ASSESSEE AND TAKEN A ONE POSSIBLE VIEW, THIS IS NOT CONTRARY TO THE LAW AND FACTS OF THE FILE. THE LD.PR.CIT, SURAT- 1 HAS TAKEN DIFFERENT VIEW IN THE MATTER WHICH IT CANNOT BE SUSTAINED IN VIEW OF THE LIST OF DECISION GIVEN FROM PAGE 55 TO 209. 9. AFTER CONSIDERING THE SUBMISSION FILED BY THE LD.COUNSEL FOR THE ASSESSEE ALONG WITH THE DOCUMENTARY EVIDENCE FILED BY HIM TO SUPPORT THE CLAIM OF THE ASSESSEE AS WELL AS THE ORDER OF THE ASSESSING OFFICER ON WHICH THE LD.PR.CIT HAS APPLIED U/S.263 OF THE INCOME TAX ACT, 1961, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER HAS EXAMINED ALL THE DETAILS FILED BY THE ASSESSEE AND FULLY SATISFIED ON THE PROPOSITION OF LOSS OF THE ASSESSEE AND ALLOWED THE SAME AND TAKEN THE ONE POSSIBLE VIEW. THEREFORE, THE LD.PR.CIT, SURAT-1 HAS TAKEN A DIFFERENT VIEW IN THE IN THE MATTER BY PASSING THE IMPUGNED ORDER DATED 26.03.2018 U/S.263 OF THE INCOME TAX ACT, 1961 WHICH IS NOT SUSTAINABLE IN THE EYE OF LAW. THEREFORE, WE CANCEL THE IMPUGNED ORDER PASSED BY THE LD.PR.CIT, SURAT-1 BY ACCEPTING THE APPEAL FILED BY THE ASSESSEE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 19-07-2019. SD/- SD/- (O.P. MEENA) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19/07/2019 / GANGADHARA RAO.S COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. PR.CIT 4. CIT(A) 5. DR / / TRUE COPY / / / / TRUE COPY / / ASST. REGISTRAR, ITAT, SURAT