Bumi Hiway (India) Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 5575/DEL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3421 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 15-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SD KAPILA ADV SHRI RR MAURYA
• Section: 37(1)

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 5871/DEL/2013 (ASSESSMENT YEAR: 2009 - 10 ) ACIT, CIRCLE - 3(1), NEW DELHI VS. BUMI HIWAY (INDIA) PVT. LTD, A - 1/292, PANKHA ROAD, JANAKPURI, NEW DELHI PAN:AABCB5995M (APPELLANT) (RESPONDENT) ITA NO. 5575 /DEL/2013 (ASSESSMENT YEAR: 2009 - 10) BUMI HIWAY (INDIA) PVT. LTD, A - 1/292, PANKHA ROAD, JANAKPURI, NEW DELHI PAN:AABCB5995M ACIT, CIRCLE - 3(1), NEW DELHI (APPELLANT) (RESPONDENT) REVENUE BY : SHRI RAJEEV KUMAR, SR. DR ASSESSEE BY: SHRI SD KAPILA, ADV SHRI RR MAURYA, ADV DATE OF HEARING 20/11 /2017 DATE OF PRONOUNCEMENT 1 5 / 02 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THESE ARE THE APPEALS FILED BY THE PARTIES AGAINST THE ORDER OF THE LD CIT(A) - VI, NEW DELHI DATED 08.08.2013 FOR THE ASSESSMENT YEAR 2009 - 10. THE REVENUE HAS CHALLENGED THE DELETION OF PARTIAL DISALLOWANCE OF FOREIGN EXCHANGE FLUCTUATION LOSS ON LOANS AND ASSESSEE HAS CHALLENGED THE UPHOLDING OF DISALLOWANCE ON ACCOUNT OF INTEREST OF WORKING CAPITAL LOSS AND FOREIGN EXCHANGE FLUCTUATION LOSS. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - THE DCIT, CIRCLE - 3(1), NEW DELHI IS HEREBY DIRECTED TO FILE APPEAL IN THE ABOVE MENTIONED CASE BEFORE THE ITAT, NEW DELHI ON THE FOLLOWING GROUNDS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION LOSS ON LOANS TO RS. 66426625/ - OUT OF TOTAL DISALLOWANCE PAGE | 2 OF RS. 132853251/ - WHEN IT WAS UNDISPUTED THAT THE LOAN AND CONSEQUENTLY, EXPENSES WE RE CAPITAL IN NATURE AND HENCE, LIABLE TO BE ADDED AS A WHOLE. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - VI, NEW DELHI (HEREIN AFTER REFERRED TO AS THE LD CIT (APPEAL)) ERRED IN UPHOLDING DISALLOWANCE MADE BY THE ASSESSING OFFICER TOWARDS INTEREST ON WORKING CAPITAL LOAN OF RS 2,21,07,527 AND FOREIGN EXCHANGE FLUCTUATION LOSS OF RS 6 , 64 ,2 6 , 626. 1. THAT THE LD CIT (APPEAL) ERRED IN LAW IN UPHOLDING THE 50% OF DISALLOWANCE MADE BY THE ASSESSING OFFICER TOWARDS INTEREST ON WORKING CAPITAL LOAN OF RS 2,21,07,527 WITHOUT APPLYING HIS MIND TO THE MERITS OF THE CASE, AND ON AD - HOC BASIS AS NOT BEING INCURRED WHOLLY AND EXCLUSIVEL Y FOR THE PURPOSE OF BUSINESS OF DIE APPELLANT. 2. A) THAT THE LD CIT (APPEAL) ERRED IN LAW IN UPHOLDING THE 50% OF DISALLOWANCE MADE BY THE ASSESSING OFFICER TOWARDS FOREIGN EXCHANGE LOSS OF RS 6,64,26,626 WITHOUT APPLYING HIS MIND TO THE MERITS OF THE C ASE, AND ON AD - HOC BASIS AS NOT BEING INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE APPELLANT. B) THAT THE LD CIT (APPEAL) FAILED TO APPRECIATE THAT THE GAIN ON REVALUATION OF FOREIGN EXCHANGE OF SIMILAR BASIS HAS BEEN TAXED AS INCOME IN EARLIER YEARS BY THE APPELLANT FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND IN ACCORDANCE WITH THE ACCOUNTING POLICY PRESCRIBED IN ACCOUNTING STANDARD 11 - ACCOUNTING FOR THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES. 4. COMING TO THE APPEAL OF THE A SSESSEE IN ITA NO. 5575/DEL/2013 WHICH HAS NOT BEEN SIGNED BY THE PERSON WHO IS AUTHORIZED TO SIGN THE APPEAL OF THE ASSESSEE. IN VIEW OF THIS AS THIS APPEAL IS DEFECTIVE APPEAL SAME IS DISMISSED WITHOUT ADJUDICATING THE ISSUE ON THE MERITS OF THE CASE. IT IS ALSO TO BE NOTED THAT DESPITE THE ASSESSEE FIELDING THIS APPEAL IN 2013 HAS NOT GET IT SIGNED PROPERLY BY THE PERSON WHO IS AUTHORIZED TO SIGN TO RETURN OF INCOME. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSED WITH A LIBERTY TO ASSESSEE TO FILE MIS CELLANEOUS APPLICATION AS AND WHEN THE FORM OF APPEAL IS PROPERLY SIGNED AND FILED IN ACCORDANCE WITH THE LAW. 5. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSED. 6. COMING TO THE GROUND OF THE APPEAL OF THE REVENUE WHEREIN THE DISALLOWANCE OF FOREIGN EXCHAN GE LOSS RESTRICTED FROM RS. 132853251/ - TO RS. 66426625/ - IS CONTESTED STATING THAT EXPENSES WERE CAPITAL IN NATURE AND HENCE REQUIRED TO BE DISALLOWED. PAGE | 3 7. THE LD DR RELIED ON THE ORDER OF THE LD AO AND THE LD AR RELIED ON THE ORDER OF THE LD CIT(A). 8. WE HAV E CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THE LD AO HAS DISALLOWED THE LOSS ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION STATING THAT THESE EXPENDITURE HAVE NOT BEEN INCURRED BY THE ASSESSEE FOR THE PURPOSES OF THE BUSINESS. 9. THE LD CIT( A) ALLOWED THE CLAIM OF THE ASSESSEE @50% OF SUCH CLAIM HOLDING THAT ASSESSEE HAS INCURRED SUCH FOREIGN EXCHANGE LOSS ON ACCOUNT OF LOAN FOR THE PURPOSES OF THE BUSINESS. HE FURTHER HELD THAT REVALUATION OF THE FOREIGN EXCHANGE LIABILITY IS IN ACCORDANCE W ITH ACCOUNTING STANDARD 11 ISSUED BY ICAI AND THE LD ASSESSING OFFICER HAS ALLOWED 50% BANK CHARGES U/S 37(1) OF THE INCOME TAX ACT. HENCE, FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN CIT VS. WOODWARD GOVERNANCE INDIA PVT. LTD 312 ITR 254 HE AL LOWED THE CLAIM OF THE ASSESSEE TO THE EXTENT OF 50%. HE FURTHER HELD THAT LOOKING TO THE FACTS ON RECORD AND THE TRUE NATURE OF TRANSACTIONS IT CANNOT BE SAID THAT THE ENTIRE SUM EXPENDED BY THE ASSESSEE ARE WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSI NESS. THE LD AUTHORISED REPRESENTATIVE ALSO COULD NOT SHOW THAT THE WHOLE FUNDS HAVE BEEN USED FOR THE BUSINESS PURPOSES. NO SUCH DETAILS WERE MENTIONED BEFORE TH E LD AO OR BEFORE THE LD CIT(A). WHILE DISALLOWING THE BANK CHARGES TO THE EXTENT OF 50% VIDE PARA NO. 5.3 OF THE ORDER HE HAS ALSO MENTIONED THAT THE REASONS FOR THE CONFIRMATION OF DISALLOWANCE IS ABSENCE OF COMPLETE DETAILS PROVIDED BEFORE THE LD AO. THE LD DR ALSO COULD NOT SHOW US ANY REASON THAT WHY SUCH FLUCTUATION IS CAPITAL IN NATURE. IN VIEW OF THIS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) IN ALLOWING 50% FOREIGN EXCHANGE LOSSES HOLDING THAT THEY ARE INCURRED FOR THE PURPOSES OF THE BUSINESS. IN THE RESULT APPEAL OF THE REVENUE RAISING THE SOLITARY GROUND IS DISMISSED. 10. IN THE RESULT APPEAL OF THE ASSESSEE AND REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 5 / 02 / 2018 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER PAGE | 4 DATED: 1 5 / 02 / 2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI