SAAM TEXTILES P. LTD, MUMBAI V. ACIT 8(3), MUMBAI

ITA 6123/MUM/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9951 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 06-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 05-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 6123 / MUM/20 1 2 ( ASSESSMENT YEAR : 2009 - 10 ) M/S. SAAM TEXTILES PVT. LTD., 4 TH FLOOR, B - 4060 - 63 OBEROI GARDEN ESTATE, CHANDIVALI FARM ROAD CHANDIVALI, ANDHERI - EAST, MUMBAI - 400072 VS. ACIT 8 (3), R.NO.204, 2 ND FLOOR AAYAKAR BHAVAN, M.K.ROAD, MUMBAI PAN/GIR NO. AAFCS0433B APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI PRAKASH G. JHUNJHUNWALA REVENUE BY SHRI RAM TIWARI DATE OF HEARING 06 / 07/ 201 7 DATE OF PRONOUNCEME NT 07 / 07 / 201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 18, MUMBAI DATED 13/07/2012 FOR THE A.Y.2009 - 10 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. IN THIS APPEAL, ASSESSEE IS AGGRIEVED FOR DISALLOWANCE OF DEDUCTION CLAIMED FOR UNREALIZED FOREIGN EXCHANGE GAIN OF RS.53,67,488/ - . 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN EXPORTER WHEREIN D EBTORS ARE NOT REALIZED IMMEDIATELY ON EXPORTS. THERE IS A TIME GAP BETWEEN THE DATE OF EXPORT AND THE REALIZATION THEREOF. AS A RESULT OF WHICH, THERE IS A DIFFERENCE IN THE EXCHANGE RATE AT THE DATE OF EXPORT AN D THE DATE OF ITA NO. 6123/MUM/2012 M/S. SAAM TEXTILES PVT. LTD., 2 REALIZATION OF THE EXPORTS. SOM ETIMES, THE EXPORT IS MADE IN YEAR 1, BUT IS REALIZED IN THE YEAR 2, I.E., IN THE SUBSEQUENT YEAR. IN SUCH UNREALIZED EXPORTS - DEBTORS ARE MEASURED AT THE EXCHANGE PREVAILING A T THE END OF YEAR 1. THIS RESULTS EITHER IN 'UNREALIZED' EXCHANGE GAIN OR LOSSES. SUCH UNREALIZED GAINS OR LOSSES ARE DEDUCTED OR ADDED BACK TO THE PROFIT AS PER BOOKS TO ARRIVE AT THE TAXABLE PROFIT, FOR THE REASONS THAT THEY ARE UNREALIZED SECONDLY, SUCH UNREALIZED GAINS OR LOSSES KEEP O N CHANGING, TILL THEY ARE ACTUALLY REALIZED, DEPENDING ON EXCHANGE RATES FLUCTUATIONS. WHILE COMPUTING THE TAXABLE INCOME THE ASSESSEE HAD' REDUCED THE UNREALIZED GAIN OF RS 53,67,488/ - FROM THE BOOK PROFIT. THE ASSESSEE HAD REVERSED THE ABOVE UNREALIZED G AIN IN FY 2009 - 10, THEREBY RECOGNISING THE ACTUAL REALIZED GAINS ON THE DATE OF REALIZATION OF DEBTORS. T HE LEARNED ACIT DID NOT AGREE WITH THIS REDUCTION OF THE UNREALIZED GAIN FROM THE BOOK PROFIT. CONSEQUENTLY,' THE TAXABLE INCOME HAS GONE UP BY RS.53,6 7,488/ - ON ACCOUNT OF UNREALIZED GA IN. 5. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF WOODWARD GOVERNOR 312 ITR 254. 6. LEARNED AR FAIRLY CONCEDED THAT ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF HONBLE SUPREME COURT. 7. IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF WOODWARD GOVERN O R (SUPRA), WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITIES FOR DISALLOWING ASSESSEES CLAIM OF DEDUCTION ON ACCOUNT OF UNREALIZED FOREIGN EXCHANGE GAIN. HOWEVER, WHILE MAKING ITA NO. 6123/MUM/2012 M/S. SAAM TEXTILES PVT. LTD., 3 ADJUSTMENT AT THE END OF THE YEAR, THE AO HAS NOT MADE CORRESPONDING ADJUSTMENT IN THE OPENING VALUE OF THE DEBTORS, WE THEREFORE, DIRECT THE AO TO VALUE THE OPENING DEBTORS A LSO AT THE PREVAILING EXCHANGE RATE AND TO GIVE DEDUCTION FOR THE SAME TO THE ASSESSEE. WE DIRECT ACCORDINGLY. 8. IN THE RESULT, APPEAL IS ALLOWED IN PART FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 07 / 07 /2017 S D/ - ( AMARJIT SINGH ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 07 / 07 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDEN T. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//