ITO, New Delhi V. M/s. D P Communication Systems Pvt. Ltd., New Delhi

ITA 5212/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4877 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 23-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN KUMAR YADAV SENIOR
• Keywords: Business income; Capital receipt
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.5212/DEL./2014 (ASSESSMENT YEAR : 2010-11) INCOME-TAX OFFICER, VS. M/S. D.P. COMMUNICATION SYS TEMS WARD 10 (3), PVT. LTD., NEW DELHI. G 29, LAJPAT NAGAR I, NEW DELHI 110 024. (PAN : AABCD9234F) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI ARUN KUMAR YADAV, SENIOR DR DATE OF HEARING : 28.08.2017 DATE OF ORDER : 30.08.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, INCOME-TAX OFFICER, WARD 10 (3), NEW DEL HI (HEREINAFTER REFERRED TO AS THE REVENUE), BY FILI NG THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 18.07.2014 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)- XIII, NEW DELHI, FOR THE ASSESSMENT YEAR 2010-11 ON THE GROUN DS INTER ALIA THAT :- ITA NO.5212/DEL./2014 2 I. ON THE FACTS OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO U/S 115JB OF THE ACT HOLDING THAT EXCHANGE FLUCTUATION IS A NOTIONAL GAIN AND CANNOT BE TAXED AS INCOME UNDER THE PROVISIONS OF SECTION 115JB OF THE ACT. II. ON THE FACTS OF THE CASE THE LD. CIT(A) HAS IGNORED THE FACT THAT ASSESSEE HAD MADE PROFIT ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION AND HAVE CREDITED THE SAME TO THE PROFIT AND LOSS ACCOUNT BU T SOUGHT IT TO BE EXCLUDED FROM THE BOOK PROFIT. III. ON THE FACTS OF THE CASE THE LD. CIT(A} HAS ERRED IN DELETING THE ADDITION THAT THERE WERE ONLY TWO HEADS OF INCOME SHOWN IN THE PROFIT AND LOSS ACCOUNT I.E. INTEREST RECEIPT AND FLUCTUATION GAIN AND AGAINST BOTH THESE HEADS, CERTAIN EXPENSES WERE CLAIMED IN THE P&L ACCOUNT. IV. ON THE FACTS OF THE CASE THE LD. CIT(A} HAS ERRED IN DELETING THE ADDITION THAT, AS PROVIDED IN SECTION 115JB (2), THE EXCLUSION OF EXCHANGE FLUCTUATION CLAIMED BY THE ASSESSEE IS NOT TENABLE AS PER SPECIFIC PROVISIONS OF SECTION 115JB OF THE ACT . 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE COMPANY BY SHOWI NG RECEIPT OF RS.1,26,06,297/- DECLARED PROFIT OF RS.1,15,05,383/ - DURING THE YEAR UNDER ASSESSMENT. ASSESSING OFFICER NOTICED THAT T HE ASSESSEE HAS WORKED OUT TAX ON NORMAL BUSINESS INCOME WHEREAS TA X UNDER ITA NO.5212/DEL./2014 3 SECTION 115JB OF THE INCOME-TAX ACT, 1961 (FOR SHOR T THE ACT) ON THE INCOME OF RS.1,15,05,383/- IS REQUIRED TO BE HI GHER. FINDING THE EXPLANATION FURNISHED BY THE ASSESSEE COMPANY N OT TENABLE, AO ASSESSED THE INCOME U/S 115JB OF THE ACT AT PROFIT AS WORKED OUT IN THE PROFIT & LOSS ACCOUNT. 3. ASSESSEE COMPANY CARRIED THE MATTER BEFORE THE L D. CIT (A) BY WAY OF AN APPEAL WHO HAS ALLOWED THE APPEAL. FE ELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBU NAL BY WAY OF CHALLENGING THE IMPUGNED ORDER PASSED BY LD. CIT (A ). 4. ASSESSEE HAS NOT PREFERRED TO PUT IN APPEARANCE DESPITE ISSUANCE OF THE NOTICE OF 21.06.2017 AND 28.08.2017 AND CONSEQUENTLY, WE PROCEEDED TO DECIDE THE PRESENT AP PEAL WITH THE ASSISTANCE OF THE LD. SENIOR DR AS WELL AS ON THE B ASIS OF DOCUMENTS AVAILABLE ON THE FILE. 5. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E FOR THE REVENUE TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. UNDISPUTEDLY, THE ASSESSEE COMPANY HAS NO BUSINE SS AND ONLY BOOK PROFIT HAS BEEN DISCLOSED AT RS.1,15,05,3 83/-. IT IS ALSO NOT IN DISPUTE THAT AS PER WORKING OF THE BOOK PROF IT, AN AMOUNT OF RS.90,85,113/- WAS REDUCED FROM THE BOOK PROFIT PER TAINING TO ITA NO.5212/DEL./2014 4 FOREIGN EXCHANGE FLUCTUATION DUE TO RESTATEMENT OF LOAN AT THE YEAR END. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE C OMPANY HAS NOT EARNED NAY INCOME RATHER IT IS ONLY A NOTIONAL INCO ME IN THE CAPITAL FIELD. 7. IN THE BACKDROP OF THE AFORESAID UNDISPUTED FACT S, THE ONLY QUESTION ARISES FOR DETERMINATION IN THIS CASE IS : - AS TO WHETHER NOTIONAL INCOME IS REQUIRED TO BE TAXED UNDER THE PROVISIONS OF SECTION 115JB OF THE ACT OR UNDER THE NORMAL PROVISIONS OF THE ACT? 8. IT IS A CATEGORIC CASE OF THE ASSESSEE THAT IT H AS CREDITED AN AMOUNT OF RS.90,85,113/- IN THE PROFIT AND LOSS ACC OUNT BEING THE DIFFERENCE OF LOAN PAYABLE AS PER BOOKS OF ACCOUNT AND THE AMOUNT RESTATED AND CALCULATED AT THE MARKET RATE OF DOLLA RS AS ON 31.03.2010 IS NOT A CAPITAL RECEIPT NOR ANY REAL IN COME. ASSESSEE INCLUDED AN AMOUNT OF RS.90,85,113/- WHILE COMPUTIN G THE BOOK PROFIT U/S 115JB OF THE ACT. WHEN THE NOTIONAL GAI N ON FLUCTUATION IN FOREIGN EXCHANGE IS NOT DISPUTED BY THE REVENUE, THE SAME IS NOT AN INCOME TAXABLE U/S 115JB OF THE ACT. MOREOVER, WHEN THE NOTIONAL INCOME DOES NOT REALLY FORM PART OF INCOME IN THE HANDS OF THE ASSESSEE COMPANY, THE SAME CANNOT BE PART OF TH E PROFIT REFLECTING THE REAL RESULTS IN THE PROFIT & LOSS AC COUNT. SO, WE ARE ITA NO.5212/DEL./2014 5 OF THE CONSIDERED VIEW THAT THE LD. CIT (A) HAS EXA MINED THE ISSUE THREADBARE AND HAS RIGHTLY ALLOWED THE APPEAL. 9. SO, FINDING NO ILLEGALITY OR PERVERSITY IN THE F INDINGS RETURNED BY THE LD. CIT (A), PRESENT APPEAL FILED BY THE REV ENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2017. SD/- SD/- (B.P. JAIN) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 30 TH DAY OF AUGUST, 2017 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.