JCIT (OSD) 8(2), MUMBAI V. LAGUNA CLOTHING P.LTD, Bangalore

ITA 6129/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71756 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 05-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: BHAVIK SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO. 6129/MUM/2012 (ASSESSMENT YEAR: 2009-10) D C I T - 8(2) M/S. LAGUNA CLOTHING PVT. LTD. ROOM NO. 209, 2ND FLOOR NO. 50, 1ST FLOOR, 1 MAIN AAYAKAR BHAVAN, M.K. ROAD VS. 9TH CROSS PHASE III, JP NAGAR MUMBAI 400020 BANGALORE 560078 PAN - AABCL1210B APPELLANT RESPONDENT APPELLANT BY: SHRI M.L. PERUMAL RESPONDENT BY: SHRI BHAVIK SHAH DATE OF HEARING: 04.12.2013 DATE OF PRONOUNCEMENT: 04.12.2013 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 09.07.2012 PASSED BY CIT(A)-18, MUMBAI AND IT PERTA INS TO A.Y. 2009-10. 2. THE ONLY ISSUE URGED BEFORE US READS AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.20, 88,885/- ON ACCOUNT OF UNREALIZED FOREIGN EXCHANGE LOSS IGNORIN G THE FACT THAT THE SAID LOSS IS NEITHER ON ACTUAL LOSS NOR AN ACCRUED LOSS AND HENCE NOT AN ALLOWABLE LOSS UNDER THE PROVISIONS OF INCOME-TA X ACT. 3. THE ASSESSEE IS ENGAGED IN MANUFACTURING OF GARMENT S. FOR THE YEAR UNDER CONSIDERATION ASSESSEE CLAIMED DEDUCTION IN R ESPECT OF LOSS IN EXCHANGE FLUCTUATION WHEREFROM THE AO NOTICED THAT THE SAID LOSS INCLUDED MARK TO MARKET LOSS OF ` 20,88,885/- REPRESENTING EXCHANGE DIFFERENCE ON FORWARD CONTRACT. THE AO WAS OF THE OPINION THAT SU CH LOSS CANNOT BE ALLOWED AS DEDUCTION SINCE IT IS A CONTINGENT LIABI LITY. ON AN APPEAL FILED BY THE ASSESSEE THE LEARNED CIT(A) OBSERVED THAT IN TH E LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE ISSUE STANDS COVERED BY THE DECISION OF THE APEX COURT IN THE CASE OF WOODWARD GOVERNOR INDIA P VT. LTD. 294 ITR 451. IN THIS REGARD HE OBSERVED AS UNDER: - ITA NO. 6129/MUM/2012 M/S. LAGUNA CLOTHING PVT. LTD. 2 FROM THIS IT IS CLEAR THAT NOT ONLY THE EXCHANGE L OSS ON OUTSTANDING FORWARD CONTRACTS IS CONSIDERED BUT ALSO EXCHANGE G AIN ON OUTSTANDING FORWARD CONTRACTS IS ALSO CONSIDERED. HENCE IT IS C LEAR THAT ASSESSEE COMPANY FOLLOWS THE ACCOUNTING POLICIES AS PER AS-1 1 PRESCRIBED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (ICAI). THIS ACCOUNTING POLICY HAS BEEN CONSISTENTLY FOLLOWED IRRESPECTIVE OF WHETHER IT IS GAIN OR LOSS AND HENCE NEEDS TO BE ACCEPTED AND THE DISA LLOWANCE DELETED. 3.2. I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. C OUNSEL AND THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT VS. WOODWARD GOVERNOR INDIA PVT. LTD. 294 ITR 451(SC) SQUARELY C OVERS THE ISSUE IN FAVOUR OF THE APPELLANT AND RESPECTFULLY FOLLOWING THIS DECISION OF HON'BLE SUPREME COURT THE A.O. IS DIRECTED TO DEL ETE THE DISALLOWANCE OF RS.20,88,885/- AND ALLOW THE SAME AS CLAIMED BY THE APPELLANT IN THE RETURN OF INCOME. HENCE, THIS GROUND OF APPEAL IS ALLOWED. 4. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. THOUGH T HE LEARNED D.R. STRONGLY RELIED UPON THE ORDER PASSED BY THE AO, NO MATERIAL, WHATSOEVER, WAS PLACED BEFORE US TO CONTRADICT THE FINDINGS AND CONCLUSIONS RAISED BY THE CIT(A). 5. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE WE D O NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE CIT(A). THEREF ORE, WE DISMISS THE APPEAL FILED BY THE REVENUE BY AFFIRMING THE ORDER PASSED BY THE LEARNED CIT(A). ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH DECEMBER, 2013. SD/- SD/- (SANJAY ARORA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 4 TH DECEMBER, 2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 18, MUMBAI 4. THE CIT 8, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.