M/s. Paramount Communications Ltd., New Delhi V. DCIT, New Delhi

ITA 5395/DEL/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7343 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 17-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Depreciation; Revenue expenditure
• Section: 13

Judgement Text

1 ITA NO. 5395/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI R. K. PANDA ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 5395/DEL/2016 (A.Y 2012-13) (THROUGH VIDEO CONFER ENCING) PARAMOUNT COMMUNICATIONS LTD. C-125, PARAMOUNT HOUSE, NARAINA INDUSTRIAL AREA, PHASE- 1 NEW DELHI AAACP0969Q (APPELLANT) VS DCIT CIRCLE-19(2) NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 26/09/2016 PASSED BY CIT(A)-12, NEW DELHI FOR ASSESSMENT YE AR 2012-13. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS)-12, NEW DELHI [BRIEFLY THE CIT(A)] HAS ERRED IN DISALLOWING DEPRECIATION OF RS. 1,15,6 5,043/- ATTRIBUTABLE TO CAPITALIZATION OF EXCHANGE RATE FLUCTUATIONS LOSS I N RESPECT OF INDIGENOUS ASSETS PURCHASED IN INDIA. 1.1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE ASS ESSEE HAS TAKEN CONSISTENT STAND IN ALL ASSESSMENT YEARS IN CASE OF EXCHANGE R ATE FLUCTUATION LOSS OR APPELLANT BY SH. SATYAM SETHI, ADV & SH. A. T PANDA, ADV RESPONDENT BY SH. SHIV SWAROOP SINGH, SR. DR DATE OF HEARING 29.07.2021 DATE OF PRONOUNCEMENT 18.08.2021 2 ITA NO. 5395/DEL/2016 GAIN. IN CASE OF EXCHANGE GAIN WRITTEN DOWN VALUE O F INDIGENOUS ASSETS WAS REDUCED AND IN CASE OF EXCHANGE LOSS WRITTEN DOWN V ALUE WAS INCREASED. 1.2 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER HAS ERRED IN NOT APPRECIATING THA T THE ADVERSE FINDING RECORDED IN THE EARLIER YEARS ON THIS ISSUE HAS NOT BEEN ACCEPTED BY THE APPELLANT AND THAT THE REVISED WORKING OF DEPRECIAT ION WAS FILED BECAUSE THE SAME WAS REQUIRED BY THE ASSESSING OFFICER. 3. THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING OF CABLES. THE RETURN OF INCOME IN THIS CASE WAS FILED BY THE ASSESSEE O N 24/9/2012, DECLARING LOSS OF RS. 43,75,44,247/- AND SUBSEQUENTLY RETURN OF IN COME WAS REVISED AT A LOSS OF RS. 29,79,17,511/-. THE ASSESSING OFFICER MADE ADDITION/DISALLOWANCE OF EXCESSIVE DEPRECIATION TO THE EXTENT OF RS. 1,15,65 ,043/- AND DISALLOWANCE ON ACCOUNT OF PF/ESI U/S 2(24) (10) READ WITH SECTION 36(1)(V) TO THE EXTENT OF 13, 07, 549/- VIDE ORDER DATED 11/2/2016. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL O F THE ASSESSEE. 5. THE LD. AR SUBMITTED THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10 AND 2010-11 HAS ALLOWED DEP RECIATION ON ENHANCED LIABILITY ON EXCHANGE RATE FLUCTUATIONS VIDE ORDER DATED 15/6/2021 IN ITA NO. 767/DEL/2014 AND ITA NO. 1378 & 2288/DEL/2017. 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE TRIBUNAL IN ASSESSEES OWN CASE IN AS SESSMENT YEAR 2009-10 & 2010-11 HAS HELD AS UNDER:- 24. SINCE, THE ASSESSEE IN THE INSTANT CASE HAS A TTRIBUTED THE INCREASED LIABILITY OF RS.12,65,54,992/- TO THE COS T OF THE ASSETS AND THE DEPRECIATION WAS ALLOWED, THEREFORE, ALTHOUGH THE A SSESSEE HAS A GOOD CASE TO ARGUE THAT EXCHANGE FLUCTUATION LOSS ATTRIB UTABLE TO DEPRECIABLE ASSETS ACQUIRED IN INDIA IS AN ALLOWABLE REVENUE EX PENDITURE, HOWEVER, IT WOULD REQUIRE TEDIOUS EXERCISE OF MODIFYING ASSESSM ENTS FOR NUMBER OF 3 ITA NO. 5395/DEL/2016 YEAR. THEREFORE, WE HOLD THAT THE ASSESSEE IS ENTI TLED TO DEPRECIATION ON EXCHANGE LOSS AND THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE FOR AY 2009-10 BECOMES IN-FRUCTUOUS. IT IS HELD IN THE CA SE OF CIT V. INDUSTRIAL FINANCE CORP OF INDIA LTD. (2009) 185 TAXMAN 296, T HAT REVENUE EXPENDITURE (LOSS) IS ALLOWABLE IN THE YEAR IN WHIC H IT IS INCURRED BUT WHERE THE ASSESSEE HAS SPREAD IT OVER, THE COURT WOULD AL LOW THE BENEFIT. WE FIND MERIT IN THE ARGUMENT OF THE LEARNED COUNSEL F OR THE ASSESSEE THAT IT CANNOT BE HELD THAT NEITHER DEPRECIATION ON ENHANCE D COST DUE TO EXCHANGE FLUCTUATION IS TO BE ALLOWED NOR THE LOSS ITSELF WA S TO BE ALLOWED MORE SO BECAUSE CLAIM TO THIS EFFECT WAS RAISED BOTH BEFORE THE ASSESSING OFFICER AS WELL AS THE CIT(A). ACCORDINGLY, GROUND NO.3 RA ISED BY THE ASSESSEE IS ALLOWED AND ADDITIONAL GROUND BEING INFRUCTUOUS IS DISMISSED. THE FACTS IN THE PRESENT ASSESSMENT YEAR I.E. 2012- 13 ARE ALSO IDENTICAL AND NO DISTINGUISHING FACTS WERE POINTED OUT BY THE LD. DR . THE ASSESSEE HAS ATTRIBUTED THE LIABILITY IN THE PRESENT ASSESSMENT YEAR TO THE FIXED ASSETS WHICH WERE ACQUIRED IN INDIA OUT OF FOREIGN CURRENCY LOAN . SINCE THE FIXED ASSET WAS ACQUIRED BY UTILIZING FOREIGN CURRENCY LOAN AND ON ACCOUNT OF CURRENCY FLUCTUATION, THE LOAN LIABILITY WAS ADDED TO THE FI XED ASSETS. THUS, THE ASSESSEE IS ENTITLED TO DEPRECIATION ON EXCHANGE LOSS. THER EFORE, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE DEPRECIATION ATTRIBUTABLE TO C APITALIZATION OF EXCHANGE RATE FLUCTUATION LOSS. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18TH DA Y OF AUGUST, 2021. SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED : 18/08/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4 ITA NO. 5395/DEL/2016 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI