DCIT Circle 14 (1), V. Perfetti Van Melle India (P) Ltd,

ITA 3803/DEL/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3765 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-06-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 07-09-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKAR
• Keywords: Bad and doubtful debts
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 3803/DEL/2007 ASSESSMENT YEAR: 2003-04 DCIT, CIRCLE 14(1), NEW DELHI. VS. M/S PERFETTI VAN MELLE INDIA P. LTD., 62, DEFENCE COLONY, NEW DELHI. AACCP7242C (APPELLANT) (RESPONDENT) APPELLANT BY : J.P. CHANDRAKAR, SR. DR RESPONDENT BY: NONE O R D E R PER I.P. BANSAL, J.M. THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST THE ORDER OF CIT(A) DATED 25.06.06 FOR A.Y. 2003-04. G ROUNDS OF APPEAL READ AS UNDER: - 1. LD. CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN FOLLOWING LOSS OF RS. 8,18,097/- ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION ON REINSTATEMENT OF TRADING AS SET LIABILITIES DISALLOWED BY AO WHILE COMPUTING TAXABLE INCOME NOR MAL PROVISIONS OF ACT AND ALSO COMPUTING BOOK PROFIT U/ S 115JB OF INCOME TAX ACT. 2. THE APPELLANT CRAVES TO BE ALLOWED TO AMEND, DEL ETE OR ADD ANY OTHER GROUNDS OF APPEAL DURING THE COURSE OF HEARIN G OF THIS APPEAL. 2 ITA NO. 3803/DEL/2007 2. THE ONLY QUESTION ARISES IN THE PRESENT APPEAL I S REGARDING REDUCTION OF FOREIGN EXCHANGE FLUCTUATION LOSS OF R S. 8,18,097/- WHILE COMPUTING THE NORMAL INCOME AS WELL AS WHILE COMPUT ING THE BOOK PROFIT UNDER THE PROVISIONS OF SEC. 115JB OF THE INCOME TA X ACT, 1961. 3. THE NOTICE OF HEARING WAS SENT TO ASSESSEE. HOW EVER, NONE WAS PRESENT ON THE FIXED DATE OF HEARING. AS THE ISSUE SEEMS TO BE COVERED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASES OF CIT VS. HEIDRICK & STRUGGLES IND. PVT. LTD. 180 TAXMAN 169 (DEL.) WE PROCEED TO DECIDE THE PRESENT APPEAL EX-PARTE TO QUA THE ASSES SEE. 4. LD. DR RELIED ON THE ORDER OF AO. 5. AFTER HEARING LD. DR, WE FOUND THAT IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA PVT. LTD. 294 ITR 451 (DEL. ) IT HAS BEEN HELD THAT LOSS ACCRUED TO THE ASSESSEE ON ACCOUNT OF FOR EIGN EXCHANGE FLUCTUATION ON REINSTATEMENT OF TRADING ASSET LIABI LITIES IS ON REVENUE ACCOUNT. SIMILARLY, ACCORDING TO THE AFOREMENTIONE D DECISION IN THE CASE OF CIT VS. HEIDRICK STRUGGLE P. LTD. (SUPRA) SUCH L OSS IS DEDUCTIBLE WHILE COMPUTING BOOK PROFIT UNDER THE PROVISIONS OF SEC. 115JB. THE RELEVANT OBSERVATIONS OF THEIR LORDSHIPS OF DELHI HIGH COURT FROM THE AFOREMENTIONED DECISION ARE REPRODUCED BELOW: - 5. THIS APPEAL IS DIRECTED AGAINST THE ORDER DATE D 6.7.07 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL IN ITA NO. 1533/DEL/04 RELATING TO THE A.Y. 2001-02. THE REVE NUE HAS PROPOSED THE FOLLOWING QUESTIONS: - 3 ITA NO. 3803/DEL/2007 (A) WHETHER ITAT WAS CORRECT IN LAW IN ALLOWING LOS S OF RS. 18,48,351/- INCURRED BY THE ASSESSEE ON ACCOUNT OF FOREIGN EXCHANGE RATE FLUCTUATION, TREATING THE SAM E AS REVENUE LOSS? (B) WHETHER ITAT WAS CORRECT IN LAW IN ALLOWING LOS S TO THE ASSESSEE IGNORING THE FACT THAT THE SAID LOSS WAS NOTIONAL AND CONTINGENT AS HAD NOT ACCRUED DURING T HE YEAR? (C) WHETHER ITAT WAS CORRECT IN LAW IN DELETING THE ADDITION OF RS. 18,48,351/- BEING FOREIGN EXCHANGE FLUCTUATI ON LOSS, MADE BY THE AO TO THE NET PROFIT, WHILE COMPU TING BOOK PROFIT U/S 115JB OF THE ACT? (D) WHETHER ITAT WAS CORRECT IN LAW IN DELETING THE ADDITION OF RS. 1,26,360/- MADE BY THE AO TO THE NET PROFIT ON ACCOUNT OF PROVISION FOR BAD & DOUBTFUL DEBTS INVOK ING THE PROVISIONS OF EXPLANATION TO SEC. 115JB(2) OF T HE I.T. ACT? (E) WHETHER ITAT WAS CORRECT IN LAW IN HOLDING THAT THE PROVISION TOWARDS BAD & DOUBTFUL DEBT CANNOT BE SAI D TO BE THE PROVISION FOR LIABILITY AND THEREFORE, COULD NOT BE ASSESSEE TO THE BOOK PROFIT UNDER SECTION 115JB(2) OF THE ACT? WE, HOWEVER, NOTE THAT QUESTIONS (A) TO (E) AS PROP OSED BY THE REVENUE WOULD HAVE TO BE ANSWERED AGAINST THE R EVENUE IN VIEW OF THE DECISION OF THIS COURT IN THE CASE O F CIT VS. WOODWARD GOVERNOR INDIA (P) LTD. [2007] 294 ITR 451 . FURTHERMORE, QUESTIONS (D) AND (E) WHICH HAVE BEEN PROPOSED BY THE REVENUE ARE ALSO COVERED BY THE SUP REME COURT IN THE CASE OF CIT VS. HCL COMNET SYSTEMS & SERVICES LTD., (2008) 305 ITR 409. SINCE THE QUEST IONS PROPOSED BY THE REVENUE ALREADY STAND ANSWERED AND COVERED BY THE AFORESAID DECISION, NO SUBSTANTIAL Q UESTION OF LAW ARISES FOR OUR CONSIDERATION. THIS APPEAL IS CONSEQUENTLY DISMISSED. 4 ITA NO. 3803/DEL/2007 6. IN THIS VIEW OF THE SITUATION, WE FOUND NO MERIT IN THE GROUND TAKEN BY THE REVENUE AS THE ORDER OF LD. CIT(A) ON THIS I SSUE IS IN ACCORDANCE WITH AFOREMENTIONED DECISIONS OF HONBLE DELHI HIGH COURT. THEREFORE, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 07.06.201 0 (SHAMIM YAHYA) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR