RESOURCE REALTY P.LTD, MUMBAI V. DCIT CIR 8(3), MUMBAI

ITA 5782/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8356 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 17-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 15-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAURABH K R AI
• Assessee Lawyers: VIRAG SHAH
• Keywords: Business expenditure; Revised return; Revenue expenditure; Capital expenditure
• Section: 143(3); 14A

Judgement Text

ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 1 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, M UMBAI BEFORE SHRI R.C.SHARMA , AM AND SHRI RAVISH SOOD, JM ITA NO. 5782/MUM/2014 ( / ASSESSMENT YEAR:2011 - 12) RESOURCE REALTY P. LTD 4 TH FLOOR, HDIL TOWER, ANANT KANEKAR MARG, BANDRA (E), MUMBAII - 400 703 / VS. DCIT - CIRCLE 8(3), R. NO. 204, AAYKAR BHAWAN M.K ROAD, MUMBAI 400 020 ./ ./ PAN NO. AAECR0433R ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : SHRI VIRAG SHAH, A.R / RESPONDENT BY : SHRI SAURABH K. RAI, D.R / DATE OF HEARING : 08.09.2017 / DATE OF PRONOUNCEMENT : 06 .12.2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 18, MUMBAI, DATED 22.07.2014 WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) OF THE ACT, 1961 (FOR SHORT ACT), DATED 31.10.2013. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: - ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 2 THE HONBLE C OMMISSIONER OF INCOME - TAX (A) - 18, MUMBAI [CIT(A)] HAS ERRED IN LAW AND IN FACTS BY CONFIRMING THE HUGE ADDITION/DISALLOWANCE OF R S . 2,20,40,663/ - AS AGAINST THE RETURNED INCOME OF RS. 42,88,500/ - ON FOLLOWING GROUNDS. 1. T H E LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS BY CONFIRMING THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS. 2,17,00,000/ - INCURRED AND CLAIMED AGAINST THE INTEREST INCOME OF RS. 2,64,72,556/ - BY HOLDING THAT SUCH INTEREST EXPENDITURE OF RS. 2,17,00, 000/ - HAS NEITHER BEEN DEDUCTED TO THE PROFIT & LOSS ACCOUNT NOR PROVIDED IN THE BALANCE SHEET AS LIABILITY AND THEREFORE NOT ALLOWABLE EXPENDITURE UNDER SECTION 57(III) OF THE ACT. 2. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS BY CONFIRMING THE DISALLOWA NCE OF FOREIGN EXCHANGE LOSS OF RS. 3,40,000/ - WHICH HAD BEEN INCURRED ON ACCOUNT OF LOANS AND ADVANCES GIVEN TO THE GROUP COMPANY AND SAME CANNOT BE CLAIMED AS REVENUE EXPENDITURE. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE WHO IS EN GAGED IN THE BUSINESS OF BUILDING AND CONSTRUCTION ACTIVITY HAD E - FILED ITS RETURN OF INCOME ON 28 .09.201 1 , DECLARING TOTAL INCOME AT RS. 42,88,500 / - . THE RETURN OF INCOME WAS REVISED BY THE ASSESSEE DECLARING THE SAME INCOME, HOWEVER, THE CREDIT OF TDS WAS REVISED FROM RS. 25,19,527/ - CLAIMED IN THE ORIGINAL RETURN TO RS. 26.05,582/ - IN THE REVISED RETURN. THE CASE OF THE ASSESSEE WAS THEREAFTER SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2). 3. THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A .O OBSERVED THAT THE ASSESSEE HAD SHOWN AGGREGATE INTEREST OF RS. 2,64,72,556/ - , COMPRISING OF INTEREST OF RS. 12,73,888/ - FROM WADHWAN INTERNATIONAL INVESTMENT LTD AND RS. 2,51,98,668/ - ON FIXED DEPOSIT WITH ICICI BANK LTD. , MUMBAI. TH AT AS AGAINST THE AF ORESAID INTEREST INCOME OF RS. 2,64,72,556/ - THE ASSESSEE HAD CLAIMED DEDUCTION OF INTEREST OF RS. 2,17,00,000/ - . 4. TH E FACTS LEADING TO THE CLAIM OF THE AMOUNT OF RS. 2,17,00,000/ - AS A DEDUCTION AGAINST THE INTEREST INCOME OF RS. 2,64,72,556/ - , ARE AS UNDER: ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 3 (A). THE ASSESSEE HAD DURING THE F.Y. 2008 - 09 RAISED FUNDS BY WAY OF ISSUE OF EQUITY SHARE CAPITAL OF RS. 70 CRORES AND BORROWED UNSECURED LOANS OF RS. 29.75 CRORES FROM VARIOUS PARTIES, BIFURCATED DETAILS AS REGARDS WHICH IS TABULATED AS UNDER: PARTICULARS AMOUNT AMOUNT EQUITY CAPITAL - DHEERAJ WADHAWAN 41,61,00,000 - ARUNA WADHAWAN 28,39,00,000 70,00,00,000 UNSECURED LOANS - ROOFTOP INFRAPROJECTS PVT. LTD. 14,00,00,000 - MERCURY REALTY PVT. LTD. 11,00,00,000 - WADHAWAN HOLDINGS PVT. LTD. 4,72,22,465 - SCARLET REALTORS PVT. LTD. 2,29,000 29,74,51,465 TOTAL FUND RAISED DURING F.Y. 2008 - 09 99,74,51,465 (B). THAT FROM THE AFORESAID TOTAL FUNDS OF RS. 99.75 CRORES (APROX), THE ASSESSEE MADE AN INVESTMENT OF RS. 99.63 CRORES FOR PURCHASE OF 28 LAC EQUITY SHARES OF HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. (FOR SHORT HDIL). THAT AS PER THE NON DISPOSABLE UNDERTAKING WITH ICICI BANK LTD., THE SHARES OF HDIL WERE PLEDGED BY THE ASSESSEE AS SECURITY AGAINST THE GUARANTEE WHICH WAS GIVEN FOR THE LOAN FACILITY OBTAINED BY THE GROUP COMPANY OF THE ASSESSEE, VIZ. WADHAWAN INTERNATIONAL INVESTMENT LTD. (FOR SHORT WIIL). (C). THAT ON BEING CALLED UPON BY THE BANK TO REGULARIZE THE MARGIN MONEY AND KEEPING IN VIEW THE HEAVY DEVALUATION OF MARKET PRICE OF THE SHARES OF HDIL, THE ASSESSEE SO LD THE ENTIRE LOT OF 28 LAC SHARES OF HDIL ON 22.10.2010 FOR A CONSIDERATIO N OF RS. 74,97,81,133.94. THE ENTIRE SALE PROCEEDS OF RS. 74.98 CRORES ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 4 (APROX) WAS PARKED IN FORM OF FIXED DEPOSITS WITH ICICI BANK LTD. (D). TH E LOSS OF RS. 24,28,91,466/ - SUFFERED BY THE ASSESSEE ON SALE OF SHARES OF HDIL WAS N OT CLAIMED BY IT AS A LO NG TERM CAPITAL LOSS (FOR SHORT LTCL), BUT HAVING BEEN INCURRED TO MEET THE PRESSING DEMAND OF THE BANK IN RESPECT OF THE LIABILITY OF THE GROUP COMPANY, VIZ. M/S WADHAWAN INTERNATIONAL INVESTMENTS LTD., THE SAID AMOUNT WAS DEBITED BY THE ASSESSEE TO THE ACCOUNT OF THE GROUP COMPANY AND WAS CLAIMED AS RECEIVABLE FROM THE LATTER. 5. THE ASSESSEE IN THE BACKDROP OF THE AFORESAID FACTS SUBMITTED BEFORE THE A.O THAT THE LOAN OF RS. 14 CRORE S WHICH WAS RAISED BY IT FROM M/S ROOFTOP INFRAPROJECTS PVT. L TD. AND INVESTED IN EQUITY SHARES OF HDIL, WAS AFTER THE SALE OF THE SHARES PARKED IN THE FORM OF FIXED DEPOSIT WITH ICICI BANK LTD, MUMBAI. IT WAS THUS SUBMITTED BY THE ASSESSEE THAT AS THE LOAN OF RS. 14 CRORES RECEIVED FROM M/S ROOFTOP INFRAPROJECTS PVT . LTD. WAS UTILISED FOR EXECUTING THE FIXED DEPOSIT WITH ICICI BANK LTD., THEREFORE, THE INTEREST OF RS. 2,17,00,000/ - ON THE SAID BORROWED FUNDS WAS RIGHTLY CLAIMED AS DEDUCTION AGAINST THE INTEREST INCOME OF RS. 2,64,72,556/ - RECEIVED ON THE FIXED DEPOSI TS WITH ICICI BANK LTD. 6. THE A.O AFTER DELIBERATING ON THE EXPLANATION OF THE ASSESSEE, HOWEVER DID NOT FIND FAVOUR WITH THE SAME, BY OBSERVING AS UNDER: (I). THAT THOUGH THE ASSESSEE HAD RAISED THE LOAN OF RS. 14 CRORE FROM M/S ROOFTOP INFRAPROJECTS PV T. LTD. IN THE F.Y. 2008 - 09, HOWEVER , A PERUSAL OF THE LATTERS ACCOUNT REVEALED THAT NO INTEREST WAS PAID OR PROVIDED FOR ON THE SAID LOAN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY. THUS, THE A.O OBSERVED THAT AS T HE INTEREST OF RS. 2.10 CRORE ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 5 WAS NE ITHER CLAIMED AS DEDUCTION BY THE ASSESSEE IN ITS RETURN OF INCOME, NOR DEBITED TO THE P ROFIT & LOSS A/C OR SHOWN IN THE BALANCE SHEET AS AN OUTSTANDING LIABILITY , THEREFORE, NO EXPENDITURE TOWARDS INTEREST ON THE SAID LOAN AMOUNT HAD ACCRUED FOR PAYME NT DURING THE YEAR UNDER CONSIDERATION . (II). THAT AS THE LOAN RAISED BY THE ASSESSEE FROM M/S ROOFTOP INFRAPROJECTS PVT. LTD IN THE F.Y. 2008 - 09 WAS UTILISED FOR PURCHASING OF SHARES OF HDIL, WHICH WERE PLEDGED AS SECURITY FOR THE LOAN AVAILED BY THE GROU P COMPANY OF THE ASSESSEE, VIZ. M/S WADHAWAN INTERNATIONAL INVESTMENT PVT. LTD, THEREFORE, AS THE INTEREST EXPENDITURE ON THE AFORESAID FUNDS RAISED BY THE ASSESSEE WERE NOT LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING O F INTEREST INCOME ON THE FIXED DEPOSITS WITH ICICI BANK LTD . , THUS , THE SAME COULD NOT BE ALLOWED AS A DEDUCTION UNDER SEC. 57(III) OF THE ACT. (III). THAT AS SALE OF THE SHARES OF HDIL INVOLVED A LTCL OF RS. 24.28 CRORE , WHICH WAS COVERED BY THE PROVISION S OF SEC. 10(38), THEREFORE, THE EXPENDITURE INCURRED BY THE ASSESSEE WAS NOT ALLOWABLE AS A DEDUCTION UNDER SEC. 14A . (IV). THAT THE LOSS OF RS. 24,28,91,466/ - ON THE SALE OF SHARES OF HDIL WAS NOT CLAIMED BY THE ASSESSEE AS A LTCL, BUT HOWEVER, WAS SHOWN AS RECOVERABLE FROM THE GROUP COMPANY, VIZ. M/S WADHWAN INTERNATIONAL INVESTMENTS LTD. (WIIL), ON WHICH NO INTEREST WAS CHAR GED BY THE ASSESSEE. (V).THAT THE LOAN OF RS. 14 CRORE RAISED BY THE ASSESSEE FROM M/S ROOFTOP INFRAPROJECTS PVT. LTD WAS UTILIZED FOR PURCHASE OF SHARES OF HDIL, WHICH THEREAFTER WERE PLEDGED AS SECURITY FOR THE LOAN RAISED BY ITS GROUP COMPANY, VIZ. M/S WADHWAN INTERNATIONAL INVESTMENTS LTD., ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 6 THEREFORE, IT COULD SAFELY BE CONCLUDED THAT AS THE LOAN FUNDS RAISED BY THE ASSESSEE WERE NEVER UTILIZED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE, BUT WERE USED FOR MAKING LONG TERM INVESTMENTS FOR THE BENEF IT OF ITS SISTER CONCERN , THUS THE SAME WAS NOT ALLOWABLE AS A BUSINESS EXPENDITURE. (VI) . TH AT AS THE ASSESSEE WHO WAS ENGAGED IN THE BUSINESS OF BUILDING AND CONSTRUCTION, HAD DURING THE YEAR UNDER CONSIDERATION NOT CARRIED OUT ANY BUSINESS ACTIVITY, TH EREFORE, EVEN IF THE INTEREST EXPENDITURE OF RS. 2.17 CRORE WAS FOUND TO HAVE BEEN LEGITIMATELY INCURRED AND ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF THE ASSESSEE , THE SAME COULD ONLY BE CAPITALIZED TOWARDS THE INVESTMENT COST OF THE SHARES OF HDIL. (VII) . THAT THOUGH THE ASSESSEE WAS A COMPANY, WHICH WAS REQUIRED TO MAINTAIN ITS BOOKS OF ACCOUNT UNDER THE MERCANTILE SYSTEM OF ACCOUNTING, HOWEVER NO EXPENDITURE OF RS. 2.17 CRORE TOWARDS INTEREST WAS ACCOUNTED FOR IN THE BOOKS OF ACCOUNT FOR THE YEAR UNDER CONSIDERATION, THEREFORE, IT COULD B E CONCLUDED THAT NO SUCH EXPENDITURE WAS INCURRED BY THE ASSESSEE. IT WAS FURTHER OBSERVED BY THE A.O THAT NO SUCH INTEREST WAS PAID BY THE ASSESSEE EVEN IN THE A.YS 2009 - 10 AND 2010 - 11. 7. THE A.O IN THE BACKDROP OF HI S AFORESAID OBSERVATION S , AFTER TAKING SUPPORT OF CERTAIN JUDICIAL PRONOUNCEMENTS D ISALLOWED THE CLAIM RAISED BY THE ASSESSEE FOR DEDUCTION OF INTEREST EXPENDITURE OF RS. 2.17 CRORE , AND MADE AN ADDITION OF THE SAME TO THE RETURNED INCOME OF THE ASSESSEE. 8. THE A.O FURTHER OBSERVED THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS. 3,40,001/ - UNDER THE HEAD EXCHANGE FLUCTUATION LOSS . THE ASSESSEE EXPLAINING THE NATURE OF THE SAID EXPENDITURE SUBMITTED BEFORE THE A.O THAT IT HAD GIVEN A FOREIGN CURRENCY LOAN OF $ ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 7 6,80,509/ - TO ITS GROUP COMPANY, VIZ. M/S WADHWAN INTERNATIONAL INVESTMENTS LTD. , WHICH HOWEVER WAS ACCOUNTED IN THE REPORTING CURRENCY I.E INDIAN RUPEE, BY APPLYING THE EXCHANGE RATES BETWEEN INDIAN RUPEE AND DOLLAR AS ON THE DATE OF TRANSACTION. TH E ASSESSEE SUBMITTED THAT AS PER THE ACCOUNTING STANDARD - 11 (AS - 11) - ACCOUNTING FOR THE EFFECT OF CHANGES IN THE FOREIGN EXCHANGE RATES ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA, AT EACH BALANCE SHEET DATE THE FOREIGN CURRENCY MONETARY IT EM WAS TO REPORTED USING THE C LOSING RATE, AS THE EXCHANGE DIFFERENCE ARISING ON THE SETTLEMENT OF SUCH MONETARY ITEMS AT THE RATE DIFFERENT FROM THOSE AT WHICH THEY WERE INITIALLY RECORDED DURING THE PERIOD OR REPORTED IN PREVIOUS FINANCIAL FINANCIAL STAT EMENTS , WERE TO BE RECOGNIZED AS INCOME OR EXPENSES IN THE PERIOD IN WHICH THEY HAD ARISE N . THUS, THE ASSESSEE TAKING SUPPORT OF AS - 11 SUBMITTED THAT THE REPORTING OF THE AFORESAID FOREIGN CURRENCY LOAN TRANSACTION IN THE REPORTING CURRENCY, I.E INDIAN RUPEE, REVEALED THAT AS PER THE C LOSING RATE AS ON 31.03.2011, THERE WAS A LOSS OF RS. 3,40,001/ - WHICH WAS DEBITED IN THE PROFIT & LOSS ACCOUNT. 9. THE AFORESAID EXPLANATION OF THE ASSESSEE DID NOT FIN D FAVOUR WITH THE A.O , WHO BEING OF THE VIEW TH AT THE LOSS WAS INCURRED BY THE ASSESSEE ON CAPITAL ACCOUNT, I.E IN RESPECT OF A L OAN/ADVANCE GIVEN TO A GROUP COMPANY, THEREFORE, THE SAME COULD NOT BE HELD AS A REVENUE EXPENDITURE. THE A.O ON THE BASIS OF HIS AFORESAID OBSERVATIONS DISALLOWED THE EXCHAN GE FLUCTUATION LOSS OF RS. 3,40,001/ - AND ADDED BACK THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 10. AGGRIEVED, THE ASSESSEE ASSAILED THE ORDER PASSED BY THE A.O BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING AT LENGTH ON THE SUBMISSIONS OF THE ASSESSE E IN THE BACKDROP OF THE OBSERVATIONS OF THE A.O, WAS PERSUADED TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE A.O ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 8 AS REGARDS DISALLOWANCE OF THE INTEREST OF RS. 2,17,00,000/ - THE CIT(A) FURTHER OBSERVED THAT THE ASSESSEE HAD EVEN BEFORE HIM FAILED TO PLACE ON RECORD ANY EVIDENCE WHICH COULD PROVE THAT THE INTEREST EXPENDITURE WAS DIRECTLY INCURRED FOR EARNING THE INTEREST INCOME AS PER THE PROVISIONS OF SEC. 57(III) OF THE ACT. T H E CIT(A) FURTHER OBSERVED THAT THE ASSESSEE HAD ALSO FAILED TO GIVE ANY COMMEN TS ON THE ISSUE THAT NOW WHEN THE INTEREST EXPENDITURE WAS NEITHER DEBITED IN THE PROFIT & LOSS A/C, NOR SHOWN IN THE BALANCE SHEET AS A LIABILITY, THEN, HOW THE SAME COULD BE CLAIMED AS AN EXPENDITURE WHEN IT WAS NOT REFLECTED IN THE BOOKS OF ACCOUNT AS PER THE ACCOUNTING STANDARDS. THUS, THE CIT(A) CONCLUDED THAT AS THE ASSESSEE HAD FAILED TO PROVE THE EXISTENCE OF DIRECT NEXUS BETWEEN THE INCURRING OF THE INTEREST EXPENDITURE OF RS. 2,17,00,000/ - AND THE EARNING OF INTEREST ON THE FIXED DEPOSITS, AS REQUIRED UNDER SEC. 57(III), THEREFORE, THE DISALLOWANCE MADE BY THE A.O OF R S . 2,17,00,000/ - WAS LIABLE TO BE UPHELD. 11. THE CIT(A) FURTHER DELIBERATING ON THE LOSS OF RS. 3,40,001/ - WHICH WAS CLAIMED BY THE ASSESSEE UNDER THE HEAD EXCHANGE FLUCTUATION LOSS, BUT WAS DISALLOWED BY THE A.O, THEREIN OBSERVED THAT THE SAME HAD ARISEN TO THE ASSESSEE ON ACCOUNT OF AN ADVANCE GIVEN TO ITS GROUP COMPANY, THUS, THE SAME BEING ON CAPITAL ACCOUNT WAS NOT ALLOWABLE AS A REVENUE EXPENDITURE. THE CIT(A) AFTER GIVIN G A THOUGHTFUL CONSIDERATION TO THE SUBMISSIONS OF THE ASSESSEE, IN THE BACKDROP OF THE FACTS AVAILABLE ON RECORD, THEREIN DID NOT FIND FAVOUR WITH THE SAME AND UPHELD THE ORDER OF THE A.O IN RESPECT OF THE ISSUE UNDER CONSIDERATION. 12. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A), HAD CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORISED REPRESENTATIVE (FOR SHORT A.R) ADVERTING TO THE DISALLOWANCE OF THE ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 9 INTEREST EXPENDITURE OF RS. 2,17,00,000/ - BY THE A.O, WHICH THER EAFTER HAD BEEN UPHELD BY THE CIT(A), THEREIN TOOK US THROUGH THE RELEVANT PAGES WHERE THE OBSERVATIONS OF THE CIT(A) WERE RECORDED. THE LD. A.R SUBMITTED THAT THE LOWER AUTHORITIES BY FAILING TO APPRECIATE THE FACTS OF THE CASE IN THE RIGHT PERSPECTIVE, H AD THUS WRONGLY DISALLOWED THE CLAIM OF THE INTEREST EXPENDITURE OF RS. 2,17,00,000/ - INCURRED BY THE ASSESSEE ON THE LOAN OF RS. 14 CRORE RAISED FROM M/S ROOFTOP INFRAPROJECTS PVT. LTD. THE LD. A.R SUBMITTED THAT AS THE AFORESAID LOAN FUNDS OF RS. 14 CROR E RAISED BY THE ASSESSEE WERE UTILISED FOR PURCHASING THE FIXED DEPOSITS WITH THE ICICI BANK LTD. , THEREFORE, THE ASSESSEE HAD RIGHTLY CLAIMED THE DEDUCTION OF THE INTEREST EXPENDITURE OF RS. 2,17,00,000/ - , AS AGAINST THE INTEREST INCOME OF 2,64,72,556/ - R ECEIVED ON THE AMOUNTS WHICH WERE PARKED WITH TH E BANK BY WAY OF FIXED DEPOSITS. THE LD. A.R IN ORDER TO DRIVE HOME HIS AFORESAID CONTENTION, THEREIN SUBMITTED THAT THE VERACITY OF ITS CLAIM COULD BE GATHERED FROM THE VERY FACT THAT THE INTEREST OF RS. 2,1 7,00,000/ - WAS OFFERED FOR TAX BY M/S ROOFTOP INFRAPROJECTS PVT. LTD, AS ITS INCOME FOR THE YEAR UNDER CONSIDERATION , VIZ. A.Y. 2011 - 12. THE LD. A.R IN ORDER TO FORTIFY HIS AFORESAID CONTENTION, THEREIN TOOK US THROUGH THE COPY OF THE RETURN OF INCOME O F M/S ROOFTOP INFRAPROJECTS PRIVATE LIMITED FOR THE YEAR UNDER CONSIDERATION, VIZ. A.Y. 2011 - 12 ( PAGE 40 - 45 ) OF HIS PAPER BOOK (FOR SHORT APB) , WHICH REVEALED THAT THE INTEREST INCOME OF RS. 2,17,00,000/ - WAS INCLUDED BY THE SAID CONCERN WHILE COMPUTIN G ITS INCOME FOR THE YEAR UNDER CONSIDERATION . THE LD. A.R SUBMITTED THAT THE LOAN AMOUNT OF RS. 14 CRORE WHICH WAS RECEIVED BY THE ASSESSEE FROM M/S ROOFTOP INFRAPROJECTS PVT. LTD. IN THE F.Y. 2008 - 09 WAS INVESTED IN EQUITY SHARES OF HDIL . THE LD. A.R SUB MITTED THAT THE AMOUNT RECEIVED BY THE ASSESSEE ON THE SALE OF THE SHARES WAS PARKED IN THE FORM OF FIXED DEPOSITS WITH ICICI BANK LTD. THE LD. A.R IN ORDER TO SUPPORT HIS ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 10 AFORESAID CONTENTION, THEREIN DREW OUR ATTENTION TO THE CONTRACT NOTE OF ICICI SEC URITIES AND THE COPY OF THE S TATEMENT OF THE BANK ACCOUNT OF THE ASSESSEE WITH ICICI BANK LTD., ( PAGE 36 - 3 8 OF APB) , WHICH REVEALED THAT THE SALE PROCEEDS OF RS. 74,97,81,133.94 RECEIVED BY THE ASSESSEE ON THE SALE OF SHARES OF HDIL WERE THEREAFTER PARKED IN THE FORM OF FIXED DEPOSITS WITH ICICI BANK LTD. THE LD. A.R TO BUTTRESS HIS AFORESAID CONTENTION RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF ATIR TEXTILE INDUSTRIES (P) LTD. VS. DEPUTY COMMISSIONER OF INCOME - TAX (2015) 230 TAXMAN 104 (GUJARAT). THE LD. A.R IN ORDER TO DISLODGE THE OBSERVATIONS OF THE LOWER AUTHORITIES THAT AS THE ASSESSEE HAD UTILIZED THE LOAN FUNDS NOT FOR ITS OWN BUSINESS, BUT FOR THE BUSINESS OF HIS G ROUP COMPANY, THEREIN RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF S.A BUILDERS LTD. VS. CIT (2007) 288 ITR 1 (SC) . THE LD. A.R FURTHER TO DRIVE HOME HIS CONTENTION THAT THE EXCHANGE FLUCTUATION LOSS OF RS. 3,40,001/ - WAS RIGHTL Y CLAIMED BY THE ASSESSEE IN ITS RETURN OF INCOME, THEREIN RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA (PVT) LTD. (2009) 179 TAXMAN 326 (SC) . PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED O N THE ORDERS OF THE LOWER AUTHORITIES. 13. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT OUR INDULGENCE IN THE PRESENT CASE IS SOUGHT FOR ADJUDICATION OF TWO ISSUES, VIZ. (I). THE VAL IDITY OF THE CLAIM OF THE ASSESSEE AS REGARDS ALLOWABILITY OF INTEREST EXPENDITURE OF RS. 2,17,00,000/ - ; AND (II). THE ALLOWABILITY OF THE EXCHANGE CLAIM LOSS OF RS. 3,40,001/ - RAISED BY THE ASSESSEE. 14. WE SHALL FIRST ADVERT TO THE ISSUE PERTAINING TO THE INTEREST EXPENDITURE OF RS. 2,17,00,000/ - WHICH WAS CLAIMED BY THE ASSESSEE ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 11 IN ITS RETURN OF INCOME AS A DEDUCTION AGAINST THE INTEREST INCOME OF RS. 2,64,72,556/ - RECEIVED ON THE FIXED DEPOSITS HELD WITH ICICI BANK LTD., MUMBAI . WE FIND THAT THE ASSE SSEE HAD RAISED A LOAN OF RS. 14 CRORES FROM M/S ROOFTOP INFRAPROJECTS PVT. LTD., WHICH AS OBSERVED BY US HEREINABOVE , WAS UTILIZED FOR PURCHASE OF 28 LAC SHARES OF HDIL. THAT AS PER THE NON DISPOSABLE UNDERTAKING WITH ICICI BANK LTD., THE SHARES OF HDIL W ERE PLEDGED BY THE ASSESSEE AS SECURITY AGAINST THE GUARANTEE GIVEN BY THE ASSESSEE FOR A LOAN FACILITY OBTAINED BY ITS GROUP COMPANY, VIZ. WADHAWAN INTERNATIONAL INVESTMENT LTD. THAT ON BEING CALLED UPON BY THE BANK TO REGULARIZE THE MARGIN MONEY, AS WELL AS KEEPING IN VIEW THE HEAVY DEVALUATION IN THE MARKET PRICE OF THE SHARES OF HDIL, THE ASSESSEE SOLD THE ENTIRE LOT OF 28 LAC SHARES OF HDIL ON 22.10.2010 FOR A CONSIDERATION OF RS. 74.98 CRORES (APROX) . THE SALE PROCEEDS OF THE SHARES WERE PARKED IN FOR M OF FIXED DEPOSITS WITH ICICI BANK LTD. THE ASSESSEE HAD CLAIMED THAT AS THE AMOUNT OF RS. 14 CRORE RAISED BY THE ASSESSEE AS A LOAN FROM M/S ROOFTOP INFRAPROJECTS PVT. LTD IN THE F .Y. 2008 - 09, WAS PARKED IN THE FORM OF FIXED DEPOSITS WITH ICICI BANK LTD. , THEREFORE, THE INTEREST EXPENDITURE OF RS. 2,17,00,000/ - INCURRED ON THE SAID LOAN WAS LIABLE TO BE SET OFF AGAINST THE INTEREST INCOME OF RS. 2,64,72,556/ - WHICH WAS RECEIVED BY THE ASSESSEE ON THE FIXED DEPOSITS HELD WITH ICICI BANK LTD. WE FIND THAT F OR REASONS DELIBERATED AT LENGTH BY US HEREINABOVE, THE A.O HAD DECLINED TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF THE AFORESAID INTEREST EXPENDITURE OF RS. 2,17,00,000/ - , WHICH ORDER OF THE A.O WAS THEREAFTER SUSTAINED BY THE CIT(A). 13. W E HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE OBSERVATIONS OF THE LOWER AUTHORITIES IN THE BACKDROP OF THE FACTS OF THE CASE AS ARE AVAILABLE ON RECORD. WE FIND THAT THE ENTITLEMENT OF THE ASSESSEE TOWARDS CLAIM OF DEDUCTION OF INTEREST EXPENDITURE OF RS. ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 12 2,17,00,000/ - , AS AGAINST THE INTEREST INCOME OF RS. 2,64,72,556/ - RECEIVED ON THE FIXED DEPOSITS HELD WITH ICICI BANK LTD., HAVE TO B E TESTED IN THE BACKDROP OF THE PROVISIONS OF SEC. 57(III) OF THE ACT, WHICH READS AS UNDER: 57. THE INCOME CHARGEABLE UN DER THE HEAD INCOME FROM OTHER SOURCES SHALL BE COMPUTED AFTER MAKING THE FOLLOWING DEDUCTIONS, NAMELY: - (III). ANY OTHER EXPENDITURE (NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE) LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME. 14. WE ARE OF THE CONSIDERED VIEW THAT IT IS ONLY WHERE AN EXPENDITURE (EXCLUDING THE EX PENSES WHICH FALL UNDER THE OTHER SPECIFIC CLAUSES OF SEC. 57) , NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE, IS LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING THE INCOME CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOUR CES , THE SAME SHALL BE ALLOWED AS A DEDUCTION WHILE COMPUTING THE INCOME OF THE ASSESSEE UNDER THE SAID HEAD OF INCOME. WE FIND THAT AS THE INTEREST EXPENDITURE INCURRED FOR EARNING OF INCOME UNDER THE HEAD OTHER SOURCES FALLS WITHIN CLAUSE (III) OF S EC. 57, THEREFORE, SUCH INTEREST EXPENDITURE SHALL BE ALLOWED AS A DEDUCTION, ONLY I F THE SAME HAD EITHER BEEN LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING THE INCOME CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES . 15. WE SHALL NOW IN THE BACKDROP OF OUR AFORESAID OBSERVATION S , THEREIN DELIBERATE ON THE ENTITLEMENT OF THE ASSESSEE TOWARDS CLAIM OF DEDUCTION OF THE INTEREST EXPENDITURE OF RS. 2,17,00,000/ - PERTAINING TO THE LOAN OF RS. 14 CRORE RAISED BY THE ASSESS EE FROM M/S ROOFTOP INFRAPROJECTS PVT. LTD. WE FIND THAT THE ASSESSEE HAD DURING THE F.Y. ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 13 2008 - 09 RAISED FUNDS BY WAY OF ISSUE OF EQUITY SHARE CAPITAL OF RS. 70 CRORES AND BORROWED UNSECURED LOANS OF RS. 29.75 CRORES FROM VARIOUS PARTIES (INCLUDING UNSECUR ED LOAN OF RS. 14 CRORE RAISED FROM M/S ROOFTOP INFRAPROJECTS PVT. LTD ) . THAT OUT OF THE AFORESAID AMOUNT OF RS. 99.75 CRORE THE ASSESSEE MADE AN INVESTMENT OF RS. 99.63 CRORES FOR PURCHASE OF 28 LAC EQUITY SHARES OF HOUSING DEVELOPMENT & INFRASTRUCTURE LT D. (FOR SHORT HDIL), WHICH WERE KEPT AS SECURITY AGAINST THE GUARANTEE GIVEN BY THE ASSESSEE FOR THE LOAN FACILITY OBTAINED BY ITS GROUP COMPANY, VIZ. WADHAWAN INTERNATIONAL INVESTMENT LTD. WE FIND THAT THERE AFTER THE AFORESAID SHARES OF HDIL WERE DISPOSED OF BY THE ASSESSEE FOR A CONSIDERATION OF RS. 74.98 CRORE (APROX), AND THE SALE CONSIDERATION WAS PARKED IN THE FORM OF FIXED DEPOS ITS WITH ICICI BANK LTD. WE FIND THAT THE ASSESSEE HAD CLAIMED THAT AS THE L OAN OF RS. 14 CRORE RAISED BY IT FROM M/S ROOFTOP INFRAPROJECTS PVT. LTD. FORMED PART OF THE AMOUNT OF RS. 74.98 CRORE WHICH WAS PARKED AS FIXED DEPOSIT WITH ICICI BANK LTD., THEREFORE, THE INTEREST EXPENDITURE ON THE SAID LOAN WAS JUSTIFIABLY ENTITLED FOR BEING SET OFF AGAINST THE INTEREST INCOME RECEIVED FROM THE AFORESAID FIXED DEPOSITS. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE SAID CLAIM OF THE ASSESSEE AND ARE UNABLE TO PERSUADE OURSELVES TO BE IN AGREEMENT WITH THE SAME. WE HAVE AT LENGTH PERU SED THE FACTS AVAILABLE ON RECORD, AND ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAD RAISED THE LOAN OF RS. 14 CRORE FROM M/S ROOFTOP INFRAPROJECTS PVT. LTD. FOR MAKING AN INVESTMENT IN THE SHARES OF HDIL. WE FIND THAT ON THE SALE OF SHARES OF HDIL FOR A CONSIDERATION OF RS. 74.98 CRORE, A MAJOR PART OF THE INVESTMENT OF RS. 99.63 CRORE MADE BY THE ASSESSEE FOR PURCHASE OF THE SHARES OF HDIL STOOD ERODED. WE ARE OF THE CONSIDERED VIEW THAT THOUGH THE LOAN OF RS. 14 CRORE RAISED BY THE ASSESSEE FROM M/S R OOFTOP INFRAPROJECTS PVT. LTD. WAS LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OF ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 14 INVESTMENT IN PURCHASE OF SHARES OF HDIL, HOWEVER, THE SUBSEQUENT PARKING OF THE FUNDS , VIZ. RS. 74.98 CRORE IN THE FORM OF FIXED DEPOSIT WITH THE B ANK , CAN NOT BE SIMILARLY CONSTRUED . WE ARE OF THE CONSIDERED VIEW THAT RAISING OF LOAN BY THE ASSESSEE FOR MAKING OF INVESTMENT IN SHARES OF HDIL AND DEPOSIT OF THE SALE PROCEEDS OF THE SHARES IN THE FORM OF FIXED DEPOSIT WITH THE BANK, BOTH WERE TWO DIFFE RENT TRANSACTIONS, INDEPENDENT OF EACH OTHER. WE HAVE DELIBERATED ON THE FACTS AND ARE OF THE CONSIDERED VIEW T HAT THE PARKING OF THE SALE PROCEEDS OF THE SHARES OF HDIL AMOUNTING TO RS. 74.98 CRORE WITH ICICI BANK LTD., WAS NOT FOR THE PURPOSE OF MAKING O R EARNING OF THE INTEREST INCOME, BUT AS STANDS GATHERED FROM THE ORDERS OF THE LOWER AUTHORITIES, THE SAME WAS FOR THE PURPOSE OF CORRECTING THE MARGIN SHORT FALL IN THE GUARANTEE WHICH WAS GIVEN BY THE ASSESSEE FOR THE LOAN RAISED BY ITS GROUP COMPANY, VIZ. WADHAWAN INTERNATIONAL INVESTMENT LTD. BE THAT AS IT MAY, IN THE BACKDROP OF THE AFORESAID FACTS, IT CAN SAFELY BE HELD THAT THE INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE TO HAVE BEEN INCURRED ON THE LOAN OF RS. 14 CRORE RAISED FROM M/S ROOFTOP INF RAPROJECTS PVT. LTD., CANNO T BE HELD TO HAVE BEEN LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING OF INTEREST INCOME ON THE FIXED DEPOSIT WITH ICICI BANK LTD. WE FIND THAT OUR AFORESAID VIEW THAT AN INEXTRICABLE NEXUS BETWEEN THE INC URRING OF THE EXPENDITURE AND EARNING OF THE INCOME FROM OTHER SOURCES, HAS TO BE ESTABLISHED IN LIGHT OF THE PROVISIONS OF SEC. 57(III), STANDS FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. UNITED WIRE ROPES LTD. (1980) 121 ITR 67 (BOM) . THE HONBLE JURISDICTIONAL HIGH COURT HAD IN THE AFORESAID JUDGMENT HELD THAT INTEREST PAID ON LOAN CANNOT BE SET OFF UNDER S. 57(III) AGAINST INTEREST EARNED ON DEPOSITS, IN THE ABSENCE OF EVIDENCE THAT THE TWO TRANSACTIONS WERE SO INTEGRATED AS TO BE REGARDED A SINGLE COMPOSITE TRANSACTION. WE FIND THAT T HE HONBLE HIGH COURT TAKING A SIMILAR VIEW , ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 15 AND STRESSING ON THE REQUIREMENT THAT THE EXPENDITURE SHOULD HAVE BEEN LAID OUT OR INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING OF THE INCOME, HAD IN THE CASE OF CIT VS. AMRITABEN R. SHAH (1999) 238 ITR 777 (BOM) , OBSERVED THAT AS I NTEREST ON LOAN TAKEN FOR PURCHASING SHARES FOR ACQUIRING CONTROLLING INTEREST IN A COMPANY COULD NOT BE HELD TO BE AN EXPENDITURE INCURRED WHOLLY OR EXCLUSIVELY FOR EARNING INCOME FROM DIVIDEND AND DEDUCTION UNDER S. 57(III) , THEREFORE, THE SAME WAS NOT ALLOWABLE AS AN EXPENDITURE . W E FURTHER FIND THAT THE HONBLE APEX COURT IN THE CASE OF VIJAY A LAXMI S UGAR MILLS LTD. VS. CIT (1991) 191 ITR 641 (SC) HAD HELD THAT THE REQUIREMENT UNDER SEC 57(III) THAT THE EXPENDITURE SHOULD HAVE BEEN INCURRED FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME ' , SHOW S THAT THE OBJECT OF SPENDING OR THE END OR AIM OR THE INTENTION OF SUCH SPENDING WAS FOR EARNING THE INTEREST INCOME . WE THUS , IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS ARE OF THE CONSIDERED VIEW THAT THE CONNECTION, IF ANY, BETWEEN THE INTEREST EARNED ON DEPOSIT AND THE PAYMENT OF INTEREST PAID TO M/S ROOFTOP INFRAPROJECTS PVT. LTD. ON THE LOAN OF RS. 14 CRORE THAT WAS RAISED FROM IT IN A.Y. 2008 - 09, IS TOO TENUOUS TO JUSTIFY THE ALLOWANCE OF INTEREST IN THE COMPUTATION OF INCOME. WE THUS, FIND OURSELV ES AS BEING IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) , THUS UPH O LD THE DISALLOWANCE OF THE INTEREST EXPENDITURE OF RS. 2,17,00,000/ - . 16. WE NOW TAKE UP THE ISSUE PERTAINING TO SUSTAINING BY THE CIT(A) OF THE DISALLOWANCE OF EXCHANGE CLAIM LOSS O F RS. 3,40,001/ - . W E HAVE DELIBERATED ON THE FACTS PERTAINING TO THE ISSUE UNDER CONSIDERATION , AND FIND THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS. 3,40,001/ - UNDER THE HEAD EXCHANGE FLUCTUATION LOSS . THE AFORESAID LOSS WAS IN RESPECT OF THE FOREIGN CURRENCY LOAN OF $6,80,509 GIVEN BY THE ASSESSEE TO ITS GROUP COMPANY, VIZ. M/S WADHWAN INTERNATIONAL INVESTMENTS LTD. THE ASSESSEE AS PER AS - 11 HAD ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 16 REPORTED THE SAID LOAN IN INDIAN RUPEE BY APPLYING THE EXCHANGE RATES BETWEEN INDIAN RUPEE AND DOLLAR ON TH E DATE OF TRANSACTION, AND THEREAFTER , AS ON THE BALANCE SHEET DATE, VIZ. 31.03.2011, AS PER THE RA TES APPLICABLE ON THE SAID LATTER DATE. THUS, THE ASSESSEE TAKING SUPPORT OF AS - 11 CLAIMED THAT AS THE REPORTING OF THE AFORESAID FOREIGN CURRENCY LOAN TRANS ACTION IN THE REPORTING CURRENCY, I.E INDIAN RUPEE, REVEALED THAT AS PER THE CLOSING RATE ON 31.03.2011, THERE WAS A LOSS OF RS. 3,40,001/ - , THEREFORE, THE SAME WAS DEBITED IN THE P ROFIT & LOSS ACCOUNT. WE FIND THAT THE A.O BEING OF THE VIEW THAT THE SAID LOSS WAS INCURRED BY THE ASSESSEE ON CAPITAL ACCOUNT, I.E IN RESPECT OF A LOAN/ADVANCE GIVEN TO A GROUP COMPANY, THEREFORE, THE SAME WOULD NOT BE ALLOWABLE AS A REVENUE EXPENDITURE. WE FIN D THAT THE A.O ON THE BASIS OF HIS AFORESAID OBSERVATIONS HAD DISALLOWED THE EXCHANGE FLUCTUATION LOSS OF RS. 3,40,001/ - CLAIMED BY THE ASSESSEE, AND ADDED BACK THE SAME TO ITS TOTAL INCOME. 17. WE FIND THAT THE LD. A.R IN HIS ATTEMPT TO DRIVE HOME HIS CON TENTION THAT THE EXCHANGE FLUCTUATION LOSS OF RS. 3,40,001/ - WAS RIGHTLY CLAIMED BY THE ASSESSEE IN ITS RETURN OF INCOME, HAD THEREIN RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA (PVT) LTD. (2009) 179 TAXMAN 326 (SC) . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ISSUE UNDER CONSIDERATION, AND ARE PERSUADED TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE LOWER AUTHORITIES. WE ARE OF THE CONSIDERED VIEW THAT AS THE LOSS OF RS. 3,40,001/ - ON ACCOUNT OF EXCHANGE FLUCTUATION WAS ON CAPITAL ACCOUNT, I.E IN RESPECT OF A LOAN/ADVANCE GIVEN TO GROUP COMPANY, THEREFORE, THE SAME WOULD NOT BE ALLOWABLE AS A REVENUE EXPENDITURE. WE FIND THAT THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF WOODWARD GOVERN OR INDIA (PVT) LTD. (SUPRA) IS IN RESPECT OF REVENUE EXPENDITURE, THEREFORE, THE SAME WOULD NOT ASSIST THE CASE OF THE ASSESSEE. WE THUS BEING IN AGREEMENT WITH THE VIEW TAKEN BY THE ITA NO. 5782/MUM/2014 A.Y. 2011 - 12 RESOURCE REALTY PVT. LTD. VS. DY. CIT 17 CIT(A) THAT THE AFORESAID LOSS OF RS. 3,40,001/ - WAS NOT ALLOWABLE AS A R EVENUE EXPENDITURE/LOSS, THEREFORE , UPHOLD HIS ORDER. 18. THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 06 /1 2/2017. SD/ - SD/ - ( R.C. SHARMA ) ( RAVISH SOOD ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 06 .1 2 .2017 ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI