DCIT, New Delhi V. M/s. Interra Systems India (P.) Ltd., New Delhi

ITA 3751/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8136 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-07-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 23-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEELA CHOPRA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO. 3751/DEL/2008 FINANCIAL YEAR : 2004-05 DCIT, CIRCLE 11 (1), NEW DELHI. VS. M/S INTERRA SYSTEMS INDIA (P) LTD., GK I, NEW DELHI. PAN: AAACE7150L (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SMT. SHEELA CHOPRA, SR. DR O R D E R PER I.P. BANSAL, JUDICIAL MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE CONSOLIDATED ORDER OF THE CIT (A) DATED 22 ND SEPTEMBER, 2008 FOR ASSESSMENT YEAR 2004-05. GROUNDS OF APPEAL READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT (A) HAS ERRED IN DELETING THE DISAL LOWANCE ON ACCOUNT OF FOREIGN EXCHANGE RATE FLUCTUATION OF RS .8,46,850/- 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARIN G. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND EXPORT THEREOF. DURING THE YEAR TH E ASSESSEE HAS DEBITED A SUM OF RS.8,46,850/- ON ACCOUNT OF FOREIGN EXCHANG E LOSS IN THE PROFIT & LOSS ITA NO.3751/DEL/2008 2 ACCOUNT. THE ASSESSEE WAS REQUIRED TO EXPLAIN AS T O WHY THE SAID LOSS WILL NOT BE DISALLOWED ON ACCOUNT OF IT BEING NOTIONAL. TH E ASSESSEE SUBMITTED THAT ENTRIES MADE IN THE BOOKS OF ACCOUNT ARE ON THE BAS IS OF ACCOUNTING STANDARDS WHICH ARE MANDATORY. HOWEVER, THE ASSESSING OFFICE R DID NOT ACCEPT THIS SUBMISSION OF THE ASSESSEE AND ON THE BASIS OF DECI SION OF ITAT IN THE CASE OF ONGC LTD. VS. ADDL. CIT 69 ITD 69 HE HELD THAT SUCH LOSS COULD NOT BE ALLOWED. 3. CONSEQUENTLY, IN APPEAL BEFORE THE CIT(A), THE S UBMISSIONS MADE BEFORE THE ASSESSING OFFICER WERE REITERATED. THE LD. CIT (A) FOLLOWING THE DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF ONGC VS. DCIT 83 ITD 51 GRANTED THE RELIEF TO THE ASSESSEE AGAINST WHICH THE REVENUE IS AGGRIEVED, HENCE, IN APPEAL. 4. NOTICE OF HEARING WAS SENT TO THE ASSESSEE. HOW EVER, NONE WAS PRESENT ON BEHALF OF THE ASSESSEE AND NOTICE HAS BEEN RECEI VED BACK WITH THE REMARK THAT ADDRESS IS INCOMPLETE. AS THE ISSUE RAISED B Y THE REVENUE IN THE PRESENT APPEAL IS COVERED BY THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA PVT. LTD., 294 ITR 451 , WE PROCEEDED TO DECIDE THIS APPEAL EX PARTE QUA THE ASSESSEE. 5. LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFI CER. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LD. DR IN THE LIGHT OF THE MATERIAL PLACED ON RECORD. THE ASSESSING OFFICER WH ILE DECIDING THE ISSUE AGAINST THE ASSESSEE HAS RELIED ON THE DECISION OF DIVISION BENCH WHICH LATER ON WAS REVERSED BY THE SPECIAL BENCH (SUPRA). THE DECISIO N OF SPECIAL BENCH HAS NOW BEEN APPROVED BY THE HON'BLE JURISDICTIONAL HIGH CO URT VIDE THE AFOREMENTIONED DECISION IN THE CASE OF CIT VS. WOODWARD GOVERNOR I NDIA PVT. LTD. (SUPRA) WHEREIN IT HAS BEEN HELD THAT INCREASE IN LIABILITY IN THE REVENUE ACCOUNT AS A RESULT OF FLUCTUATION IN THE RATE OF FOREIGN EXCHAN GE IS NOT NOTIONAL OR CONTINGENT AND, THEREFORE, THE SAME IS ALLOWABLE AS DEDUCTION. ITA NO.3751/DEL/2008 3 7. IT MAY BE POINTED OUT HERE THAT IT IS NOT EVEN T HE CASE OF ASSESSING OFFICER THAT THE LOSS BORNE BY THE ASSESSEE IS ON CAPITAL A CCOUNT. THEREFORE, WE HAVE CONSIDERED THIS CASE ONLY ON ACCOUNT OF LOSS SUFFER ED BY THE ASSESSEE OF BEING REVENUE IN NATURE. WITH THESE REMARKS WE DISMISS THE APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. . 9. THE ORDER PRONOUNCED IN THE OPEN COURT ON 02.07. 2009. [B.C. MEENA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 02.07.2009. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES