DCIT CIR 6(1), MUMBAI V. JIP FASHION & RESTAURATNS INDIA P.LTD, MUMBAI

ITA 3546/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3720 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 07-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 19-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL J BE NCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER / I .TA NO. 3546/MUM/2014 ( / ASSESSMENT YEAR: 2009-10 THE DCIT. CIR.6(1), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. JIP FASHION & RESTAURANTS INDIA PVT. LTD., 404, PALM SPRING, LINK ROAD, MALAD (W), MUMBAI-400 064 ./ ./ PAN/GIR NO. AABCJ 7149K ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI ASHISH HELIWAL / RESPONDENT BY: NONE / DATE OF HEARING :07.03.2016 ! / DATE OF PRONOUNCEMENT :29.04.2016 / O R D E R PER C.N. PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE LD. CIT(A)-14, MUMBAI DATED 13.03.2014 PERTAINING TO A SSESSMENT YEAR 2009-10. 2. INSPITE OF ISSUE OF NOTICE, NONE APPEARED ON BEH ALF OF THE ASSESSEE NOR FILED ANY ADJOURNMENT PETITION, THEREF ORE, WE PROCEED TO DISPOSE OF THE APPEAL ON MERIT. ITA NO. 3546/M/14 2 3. THE FIRST ISSUE IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF LOSS C LAIMED BY THE ASSESSEE ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION RATE WITHOUT APPRECIATING THE FACT THAT SUCH LOSS WAS ONLY A NOT IONAL LOSS AS THE LIABILITY HAS NOT BEEN DISCHARGED/SETTLED DURING TH E YEAR. 4. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THE LOSS ARISING ON FOREIGN EXCHANGE FLUCTUATION IS ONLY CON TINGENT IN NATURE AS NO PAYMENT IS MADE BY THE ASSESSEE AND IT IS ONL Y A REVALUATION ON THE CLOSER OF THE ACCOUNTING YEAR AND THEREFORE HE SUBMITS THAT THE LIABILITY DID NOT CRYSTALLIZE DURING THE PREVIOUS Y EAR RELEVANT TO THE ASSESSMENT YEAR. HE SUPPORTS THE ORDER OF THE ASSE SSING OFFICER IN DISALLOWING THE FOREIGN EXCHANGE FLUCTUATION LOSS. 5. WE HAVE PERUSED THE ASSESSMENT ORDER AND THE ORD ER OF THE LD. CIT(A). THE LD. CIT(A) FOLLOWING THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF CIT VS WOODWARD GOVERNOR (312 ITR 254) HELD THAT FOREIGN EXCHANGE FLUCTUATION IS ON REVENUE ACC OUNT AND IS AN ALLOWABLE EXPENDITURE. AS THE LD. CIT(A) BY FOLLO WING THE HONBLE SUPREME COURT DECISION HELD THAT THE FOREIGN EXCHAN GE FLUCTUATION IS ON REVENUE ACCOUNT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER AND HIS CONCLUSION. THIS GROUND OF THE REVENUE IS DISMISSED . 6. THE SECOND ISSUE IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF ROYALTY PA YMENT ACCEPTING THE CLAIM OF THE ASSESSEE THAT THE DETAILS OF SUCH PAYMENTS WERE SUBMITTED BEFORE THE ASSESSING OFFICER DURING ASSES SMENT PROCEEDINGS WHEN IN REALITY DETAILS OF ROYALTY PAYM ENTS AND TDS ITA NO. 3546/M/14 3 THEREUPON WAS NOT FILED BEFORE THE ASSESSING OFFICE R AS ALLEGED BEFORE THE CIT(A). 7. SIMILARLY THE LAST GROUND RAISED BY THE REVENUE IS THAT THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF INTEREST ON OVERDRAFT AND TER M LOAN AMOUNTING TO RS. 80,49,206/- ACCEPTING THE CLAIM OF THE ASSES SEE THAT THE DETAILS OF SUCH PAYMENTS WERE SUBMITTED BEFORE THE ASSESSIN G OFFICER DURING THE ASSESSMENT PROCEEDINGS WHEN IN REALITY DETAILS OF INTEREST ON OVERDRAFT AND TERM LOAN AMOUNTING TO RS. 80,49,206 /- ACCEPTING THE CLAIM OF THE ASSESSEE THAT THE DETAILS OF SUCH PAYM ENTS WERE SUBMITTED BEFORE THE ASSESSING OFFICER DURING ASSES SMENT PROCEEDINGS WHEN IN REALITY DETAILS OF INTEREST ON OVERDRAFT AND TERM LOAN WERE NOT FILED BEFORE THE ASSESSING OFFICER. 8. IN BOTH THESE GROUNDS, THE REVENUE ALSO CONTENDE D THAT LD. CIT(A) HAS ADMITTED THE FRESH EVIDENCE CONTRAVENING THE PROVISIONS OF RULE 46A WITHOUT GIVING AN OPPORTUNITY TO THE AS SESSING OFFICER FOR EXAMINING THE ADDITIONAL EVIDENCES . 9. THE LD. DR SUBMITS THAT THE LD. CIT(A) HAS NEVER CALLED FOR THE REMAND REPORT ALSO. THE LD. DR SUBMITS THAT BOTH T HESE ISSUES MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FO R FRESH ADJUDICATION. 10. WE HAVE PERUSED THE ORDER OF THE LD. CIT(A) AND FIND THAT THE CIT(A) DELETED THE DISALLOWANCE U/S. 40(A)(IA) IN R ESPECT OF ROYALTY PAID TO PAPA JOHN INTERNATIONAL INC. HE ALSO GAV E A FINDING THAT THE ASSESSEE HAS MADE THESE SUBMISSIONS BEFORE THE ASSE SSING OFFICER ON ITA NO. 3546/M/14 4 30.9.2011 AND FURTHER HELD THAT PAYMENT OF ROYALTY IS FOUND IN ORDER. IN THE CASE OF INTEREST ON OVERDRAFT AND TERM LOAN, THE LD. CIT(A) OBSERVED THAT THE ASSESSING OFFICER MADE THE DISALL OWANCE FOR WANT OF FURNISHING OF DETAILS BY THE ASSESSEE. IN THE COURSE OF PROCEEDINGS BEFORE HIM, IT APPEARS THAT DETAILS WERE CALLED FOR FROM THE ASSESSEE AND FOUND BY THE CIT(A) THAT INTEREST PAID TO BANK ON OVERDRAFT AND TERM LOAN IS IN ORDER AS IT WAS PAID FOR THE PURPOS E OF BUSINESS. WE ALSO FIND THAT THE LD. CIT(A) HAS NOT GIVEN ANY REA SONS IN HOLDING THAT INTEREST PAID WAS FOR THE PURPOSE OF BUSINESS. THE ORDER IS VERY CRYPTIC ON BOTH ISSUES. THEREFORE, IN THE INTEREST OF JUSTICE, WE RESTORE BOTH THESE ISSUES TO THE FILE OF THE ASSESS ING OFFICER --WHO SHALL DECIDE AFRESH IN ACCORDANCE WITH LAW AFTER PR OVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2016. SD/- SD/- (ASHWANI TANEJA) (C.N. PRASAD ) / ACCOUNTANT MEMBER $ % /JUDICIAL MEMBER MUMBAI; ( DATED : 29 TH APRIL, 2016 . % . ./ RJ , SR. PS ITA NO. 3546/M/14 5 !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+ ,%%-. , -.! , / DR, ITAT, MUMBAI 6. , /01 / GUARD FILE. / BY ORDER, *% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI