Nikunj Jajodia, New Delhi V. ITO, Ward- 52(5), New Delhi

ITA 441/DEL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9120 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 22-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: V K JAIN; ASHWANI SETH
• Keywords: Business income; Principle of natural justice; Set aside
• Section: 142(1); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.441/DEL/2019 ASSESSMENT YEAR: 2015-16 NIKUNJ JAJODIA, 108, ANSAL BHAWAN, 16, KG MARG, NEW DELHI. PAN: AHLPJ7716J VS. ITO, WARD-52(5), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.K. JAIN, ADVOCATE & SHRI ASHWANI SETH, CA REVENUE BY : SHRI S.L. ANURAGI, SR.DR DATE OF HEARING : 02.07.2019 DATE OF PRONOUNCEMENT : 08.07.2019 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 22.11.2018 OF THE CIT(A)-18, NEW DELHI, RELATING TO ASSESSMENT YEAR 2015-16. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 31 ST AUGUST, 2015 DECLARING TOTAL INCOME OF RS.9,58,800 /-. THE CASE WAS SELECTED FOR LIMITED SCRUTINY. ACCORDINGL Y, STATUTORY NOTICES U/S 143(2) OF THE ACT AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESS EE. THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTED THAT TH E ASSESSEE HAS EARNED INCOME FROM ITA NO.441/DEL/2019 2 INVESTMENT IN INDIA AND ABROAD. HE NOTED THAT THE INCOME ARISING FROM INVESTMENT IN INDIA HAS BEEN CLAIMED AS EXEMPT WHILE FOREIGN INCO ME HAS BEEN DECLARED AS INCOME FROM OTHER SOURCES AND OFFERED FOR TAXATION. HE N OTED THAT DURING THE F.Y. 2013-14 I.E., ON 4 TH MARCH, 2014, A SUM OF RS.47,19,951/- (USD 75000 @ 62.91) WAS SENT FROM INDIA TO ANZ BANK, SINGAPORE. DURING THE F.Y. 2014 -15 I.E., 27 TH MAY, 2014, THE ASSESSEE REPATRIATED THE REMITTANCE SENT IN MARCH, 2014 BACK TO INDIA AND RECEIVED BACK USD 75000 WHICH IS EQUIVALENT TO RS.43,95,525/ -. THUS, THE ASSESSEE SUFFERED A LOSS OF RS.3,22,725/- WHICH WAS CLAIMED BY THE ASSE SSEE IN THE PROFIT & LOSS ACCOUNT. THE ASSESSING OFFICER, THEREFORE, CONFRONTED THE SA ME TO THE ASSESSEE. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND OBSE RVING THAT THE ASSESSEE IS NOT DOING BUSINESS IN SHARE TRADING AND THE TOTAL INCOME ARIS ES FROM INVESTMENT AND SECURITIES IN INDIA AND ABROAD, THEREFORE, THE LOSS CLAIMED U/S 3 7(1) IS NOT AN ALLOWABLE EXPENDITURE. HE ACCORDINGLY MADE ADDITION OF RS.3,22,725/- TO TH E TOTAL INCOME OF THE ASSESSEE. 3. IN APPEAL, THE LD. CIT(A) UPHELD THE ACTION OF T HE ASSESSING OFFICER. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS:- 1). THE ORDER PASSED BY THE LD. CIT(A) IS BAD IN L AW, WRONG ON FACTS AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2). THAT THE CIT-(A) HAS ERRED IN CONFIRMING FOREIG N EXCHANGE DIFFERENCE (LOSS OF RS 3,22,725/-) UNDER LIMITED SCRUTINY IN S PITE OF THE FACT THAT THERE WAS NO SUCH ISSUE IN LIMITED SCRUTINY AND WRONGLY HEL D THAT LOSS ARISING FROM FOREIGN TRANSACTIONS HAS DIRECT NEXUS WITH THE ISSUES ON WHICH THE CASE WAS SELECTED FOR LIMITED SCRUTINY AND THEREFORE NO PRIO R APPROVAL WAS REQUIRED. 3 A). THAT THE CIT-(A) HAS ERRED IN LAW AND ON FACT S OF THE CASE IN CONFIRMING LOSS ON FOREIGN EXCHANGE RATE DIFFERENCE , AMOUNTING TO RS 3,22,725/- ITA NO.441/DEL/2019 3 CLAIMED BY THE APPELLANT U/S 37(1) OF THE INCOME TA X ACT, 1961 HOLDING THAT THERE IS NO BUSINESS INCOME / ACTIVITY AND THE APPE LLANT COULD NOT ESTABLISH THAT AMOUNT HAS BEEN ACTUALLY USED FOR INVESTMENTS. B). THAT THE CIT-(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONCLUDING THAT THE SAID LOSS IS NOT ALLOWABLE, AS THE APPELLANT HAS FAILED TO ESTABLISH THE NEXUS BETWEEN THE LOSS AND THE SOURCE OF ANY INCOME, WHEN IN FACT THE FOREIGN EXCHANGE RATE DIFFERENCE LOSS IS ALLOWA BLE, AS IT RELATES TO THE INVESTMENT ACTIVITY OF THE APPELLANT AND IS OTHERWI SE ALLOWABLE U/S 57(1) OF THE INCOME TAX ACT, 1961, AS THE INCOME IS TAXABLE UNDE R HEAD INCOME FROM OTHER SOURCES DULY ACCEPTED BY THE LD. A.O. IN THE ASSESS MENT ORDER. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, MO DIFY OR FOREGO ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 5. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. I HAVE ALSO CONSI DERED THE VARIOUS DECISIONS CITED BEFORE US. A PERUSAL OF THE COMPUTATION OF INCOME FILED BY THE ASSESSEE AS PLACED AT PAGES 1-2 OF THE PAPER BOOK SHOWS THAT THE ASSESSEE HAS SHOWN DIVIDEND INCOME FROM FOREIGN INVESTMENTS AT RS.10,00,060/-. IT IS THE S UBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT WHEN THE DIVIDEND INCOME FROM FOREIG N INVESTMENT HAS BEEN SHOWN AS INCOME IN THE PROFIT & LOSS ACCOUNT, THE CORRESPOND ING LOSS OF RATE DIFFERENCE WHICH IS DEBITED IN THE PROFIT & LOSS ACCOUNT SHOULD NOT HAVE BEEN DISALLOWED. I FIND MERIT IN THE ABOVE ARGUMENT OF THE LD. COUNSEL FOR THE AS SESSEE. ADMITTEDLY, THE ASSESSEE DERIVES INCOME FROM THE INVESTMENT IN INDIA AND ABR OAD. THE INCOME THAT HAS ACCRUED TO THE ASSESSEE FROM INVESTMENT ABROAD HAS BEEN OFF ERED TO TAX AND THERE IS NO DISPUTE IN THE SAME. THEREFORE, WHEN THERE IS LOSS ON FORE IGN EXCHANGE FLUCTUATION WHICH IS RELATED TO THE FINANCIAL/INVESTMENT ACTIVITY CARRIE D ON BY THE ASSESSEE, THE SAME, IN MY OPINION, IS AN ALLOWABLE EXPENDITURE. I, THEREFORE , SET ASIDE THE ORDER OF THE CIT(A) ITA NO.441/DEL/2019 4 AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDI TION. THE VARIOUS DECISIONS RELIED ON BY THE LD.CIT(A) ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AND ARE DISTINGUISHABLE . THE GROUNDS RAISED BY THE ASSESS EE ARE ACCORDINGLY ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASS ESSEE IS ALLOWED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 0 8.07.2019. SD/- ( R.K. PANDA) ACCOUNTANT MEMFBE R DATED: 08 TH JULY, 2019 DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI