JBF INDUSTRIES LTD, MUMBAI V. PR.CIT-4, MUMBAI

ITA 701/MUM/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2210 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2011-2012
• Appeal Filed On: 05-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PADMAJA
• Assessee Lawyers: D B SHAH WITH SHRI ARUN SHAH
• Keywords: Capital asset; Depreciation; Transfer pricing; Principle of natural justice; Commercial expediency; Revenue expenditure
• Section: 143(3); 37(1); 37; 263

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL F BENCH MUMB AI BEFORE SHRI G.S. PANNU, VICE-PRESIDENT AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 701/MUM/2018 (ASSESSMENT YEAR 2011-12 ) M/S JBF INDUSTRIES LTD. 8 TH FLOOR, EXPRESS TOWERS NARIMAN POINT, MUMBAI-400213. PAN: AAACJ2575J VS. PCIT-4, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. APPELLANT RESPONDE NT ITA NO. 702/MUM/2018 (ASSESSMENT YEAR 2012-13 ) M/S JBF INDUSTRIES LTD. 8 TH FLOOR, EXPRESS TOWERS NARIMAN POINT, MUMBAI-400213. PAN: AAACJ2575J VS. PCIT-4, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. APPELLANT RESPONDE NT APPELLANT BY : SHRI D.B. SHAH WITH SHRI ARUN SHAH (AR) RESPONDENT BY : SHRI S. PADMAJA (DR) DATE OF HEARING : 09.10.2018 DATE OF PRONOUNCEMEN T : 16.11.2018 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THESE TWO APPEALS BY ASSESSEE UNDER SECTION 253 OF INCOME-TAX ACT ARE DIRECTED AGAINST THE TWO SEPARATE ORDER OF LD. PRIN CIPAL COMMISSIONER OF INCOME TAX-4 (PCIT), MUMBAI DATED 05.12.2017 PASSED UNDER SECTION 263 OF INCOME TAX ACT (ACT) FOR ASSESSMENT YEARS 2 011-12 & 2012-13. IN BOTH THE APPEAL, THE ASSESSEE HAS RAISED IDENTIC AL GROUNDS OF APPEAL EXCEPT VARIATION OF FIGURES OF BUSINESS LOSS, HENCE , BOTH THE APPEALS WERE ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 2 CLUBBED, HEARD TOGETHER AND ARE DECIDED BY COMMON O RDER TO AVOID THE CONFLICTING DECISION. WITH THE CONSENT OF BOTH PART IES, THE APPEAL FOR ASSESSMENT YEAR 2011-12 WAS TREATED AS LEAD CASE. I N APPEAL FOR ASSESSMENT YEAR 2011-12, THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL: 1) ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WEL L AS IN LAW, THE LEARNED PRINCIPAL CIT HAS ERRED IN PASSING REVISION ORDER U /S.263 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT ORDER U/S. 143(3) R.W. S 144((1) OF THE ACT PASSED BY THE LEARNED ASSESSING OFFICER AFTER MAKING ADEQU ATE ENQUIRIES AND APPLICATION OF MIND WITHOUT CONSIDERING THE FACTS A ND CIRCUMSTANCES OF THE CASE. 2) ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WEL L AS IN LAW, THE LEARNED PRINCIPAL CIT HAS ERRED IN CONSIDERING THE ORDER PA SSED U/S. 143(3) R.W.S 144C(1) OF THE INCOME TAX ACT, 1961 BY THE LEARNED ASSESSING OFFICER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE, WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 3) ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WEL L AS IN LAW, THE LEARNED PRINCIPAL CIT HAS ERRED IN SETTING ASIDE ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING OFFICER AND DIRECTING HIM TO MAKE FRESH ASSESSMENT, WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 4) ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WEL L AS IN LAW, THE LEARNED PRINCIPAL CIT HAS ERRED IN GIVING DIRECTION TO THE LEARNED ASSESSING OFFICER TO VERIFY APPELLANT'S CLAIM OF BUSINESS LOSS OF RS.84, 09,36,466/- ON ACCOUNT OF CURRENCY SWAP, WITHOUT APPRECIATING THE FACTS AND C IRCUMSTANCES OF THE CASE. 2. BRIEF FACTS OF THE CASE AS GATHERED FROM THE RECORD OF LOWER AUTHORITIES ARE THAT THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINES S OF MANUFACTURING AND TRADING IN PARTIALLY ORIENTED YARN (POY) AND BU LK DRUGS, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2011-12 ON 25. 11.2011 DECLARING TOTAL INCOME OF RS. 1,49,25,68,140/-. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S 144C ON 29.01.2016. THE ASSESSING OFFICER WHILE PAS SING THE ASSESSMENT ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 3 ORDER MADE VARIOUS ADDITIONS/ DISALLOWANCE INCLUDIN G THE ADJUSTMENT OF RS. 13.52 CRORE ON ACCOUNT OF TRANSFER PRICING ADJU STMENT, DISALLOWED RS. 12.24 CRORE UNDER SECTION 14A, DISALLOWED RS. 3 .28 CRORE ON ACCOUNT OF EMPLOYEE STOCK OPTION SCHEME. 3. THE ASSESSMENT ORDER WAS REVISED BY LD. PCIT VIDE I TS ORDER DATED 05.12.2017. THE LD. PCIT ISSUED NOTICE UNDER SECTI ON 263 DATED 17.10.2017 TO THE ASSESSEE AS TO WHY ASSESSMENT ORD ER PASSED UNDER SECTION 143(3) R.W.S 144C DATED 29.1.2016 SHOULD NO T BE REVISED. IN THE SHOW CAUSE NOTICE THE LD PCIT RAISED THE ISSUE THAT IN THE RETURN OF INCOME THE ASSESSEE CLAIMED BUSINESS LOSS ON CURRENCY SWAP OF RS. 84.09 CRORE DEBITED TO PROFIT & LOSS ACCOUNT, WHICH WAS ALLOWED BY ASSESSING OFFICER. THE ASSESSING OFFICER WHILE ALLOWING THE L OSS NOT FOLLOWED THE DECISION OF HONBLE SUPREME COURT IN CASE OF M/S SU TLEJ COTTON MILLS VS. CIT [1979] 116 ITR 1 AND THEREFORE THE ORDER PASSED BY ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV ENUE AS PER CLAUSE (D) OF EXPLANATION 2 TO SECTION 263(1) OF THE ACT. 4. THE ASSESSEE FILED ITS REPLY VIDE REPLY DATED 21.11 .2017. IN THE REPLY, THE ASSESSEE CONTENDED THAT THE DECISION OF M/S SUTLEJ COTTON MILLS (SUPRA) IS NOT APPLICABLE TO THE FACT OF THE ASSESSEES CASE. THE ASSESSEE FURTHER CONTENDED THAT THE HONBLE SUPREME COURT IN SAID CA SE STATED THAT THE PRINCIPLE OF LAW THAT WHERE ANY PROFIT OR LOSS ARIS ES TO ASSESSEE ON ACCOUNT OF DEPRECIATION IN FOREIGN CURRENCY FROM SUCH PROFI T AND LOSS WOULD ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 4 ORDINARY BE TREATED AS LOSS, IF THE FOREIGN CURRENC Y HELD BY ASSESSEE ON REVENUES ACCOUNT AS TRADING ASSET OR AS A PART OF CIRCULATING CAPITAL EMBARGO IN BUSINESS. HOWEVER, IF FOREIGN CURRENCY I S HELD TO BE A CAPITAL ASSET, THE LOSS SHOULD BE CAPITAL IN NATURE. IN THE PRESENT CASE THE ASSESSEE OBTAINED CERTAIN LOAN FROM EUROPEAN CENTRAL BANK (E CB) IN JAPAN CURRENCY /YEN (JPY) VIDE AGREEMENT DATED 04.06.2007 . THE ASSESSEE UNDER ADVICE FROM LEHMAN BROS, BANK OF INDIA AND OT HER LENDERS TO CONVERT THIS LOAN INTO U.S. DOLLAR (USD). THE REASO N GIVEN WAS THAT JPY WAS VERY FLUCTUATING CURRENCY VIS--VIS US DOLLAR. THUS, THE ASSESSEE ENTERED INTO CURRENCY SWAP DERIVATIVE ON 18.07.2007 BY WHICH HALF OF THE AMOUNT I.E. 20 MILLION EQUIVALENT OF JPY LOAN WAS C ONVERTED INTO USD. THE BUSINESS LOSS CLAIMED BY ASSESSEE DURING THE YE AR ON ACCOUNT OF THIS CURRENCY SWAP TRANSACTION. THE ASSESSEE FURTHER CON TENDED THAT THE TRANSACTION OF BORROWING MONEY IN FOREIGN CURRENCY (JPY) FOR ACQUIRING CAPITAL ASSET AND TRANSACTION OF CONVERSION OF SUCH CURRENCY INTO ANOTHER CURRENCY, BY ENTERING INTO CURRENCY SWAP DERIVATIVE NOT TO REDUCE ITS COST OF BORROWING IS ENTIRELY AND DISTINCT AND INDEPENDE NT TRANSACTION AND HAS NO BEARING ON THE TRANSACTION OF ACQUISITION OF ASS ET OUT OF SAID LOAN AMOUNT BORROWED. THE MAIN PURPOSE OF ASSESSEE WAS T O REDUCE ITS EFFECTIVE COST OF BORROWING DUE TO CURRENCY FLUCTUA TION. THE SWAP CONTRACT TRANSACTION IS NOT IN THE NATURE OF HEDGING TRANSAC TION TO HEDGE AGAINST THE CURRENCY FLUCTUATION AND IS TO REDUCE THE COST OF B ORROWING. THE ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 5 FLUCTUATION LOSS SUFFERED BY ASSESSEE HAS NO NEXUS OR RELATION TO ACQUISITION OF ASSET. THE UNDERLINE OBJECTION WAS TO REDUCE THE COST OF BORROWING WHICH IS REVENUE IN NATURE AND DEDUCTABLE LOSS. THE ASSESSEE ALSO RELIED UPON THE DECISION OF PUNE BENCH IN CASE OF COOPER C ORPORATION PVT. LTD. VS. DCIT [(2016) 159 ITD 165 (PUNE). THE ASSESSEE F INALLY CONTENDED TO DROP THE PROCEEDING. 5. THE REPLY OF ASSESSEE WAS NOT ACCEPTED BY LD. PCIT. THE LD PCIT CONCLUDED THAT THE ASSESSEE-COMPANY AVAILED LOAN FO R ACQUIRING CAPITAL ASSET AND THAT PRIMA FACIE THE DECISION OF HONBLE SUPREME COURT IN M/S SUTLEJ COTTON MILLS (SUPRA) IS APPLICABLE ON THE FA CTS OF THE ASSESSEES CASE. THE ASSESSING OFFICER HAS NOT EXAMINED THE CLAIM OF BUSINESS LOSS ON CURRENCY SWAP OF RS. 84.09 CRORE DEBITED TO PROFIT & LOSS ACCOUNT AND ALLOWING IT TO RENDER ORDERS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE. THE LD. PCIT DIRECTED THE ASSESSING OFFICE R TO EXAMINE THE ALLOWABLE CLAIM OF BUSINESS LOSS IN ITS ORDER DATED 05.12.2017. BEFORE REVISING THE ASSESSMENT ORDER THE LD. PCIT CONCLUDE D THAT THE ASSESSEE CLAIMED BUSINESS LOSS ON CURRENCY SWAP OF RS. 84.09 CRORE, DEBITED TO PROFIT & LOSS ACCOUNT WAS ALLOWED BY ASSESSING OFFI CER. THE ASSESSING OFFICER WHILE ALLOWING THE LOSS NOT FOLLOWED THE DE CISION OF HONBLE SUPREME COURT IN CASE OF M/S SUTLEJ COTTON MILLS VS . CIT [1979] 116 ITR 1. THUS, THE ORDER PASSED BY ASSESSING OFFICER IS E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS PER CLAUSE (D) OF EXP LANATION 2 TO SECTION ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 6 263(1) OF THE ACT. AGGRIEVED BY THE ORDER OF LD. PC IT, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 6. WE HAVE HEARD THE SUBMISSIONS OF THE LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. AR OF THE ASSESSEE SUBMITS THAT DURING THE FINANCIAL YEAR 2007-08 VIDE AGREEMENT DATED 04.06.2007. THE COPY OF LOAN AGREEMENT IS PLACED ON RECORD AS PAGE NO. 1 TO 95 OF PAPER BOOK (PB). THE ASSESSEE RECEIVED EXT ERNAL COMMERCIAL BORROWINGS (ECB) IN JPY WORTH 40 MILLION USD, OUT O F WHICH THE ASSESSEE INVESTED 17.5 MILLION USD IN SUBSIDIARY AB ROAD BALANCE OF ECB WAS BROUGHT TO INDIA WHICH WAS USED FOR ACQUIRING F IXED ASSET FOR ASSESSEES PLANT AT SARIGAM (SILVASSA). THE ASSETS WERE PUT TO USE DURING THE YEAR. THE ASSESSEE CLAIMED DEPRECIATION ON THOS E ASSETS WHICH WAS ALLOWED. THE ASSESSEE UNDER LEGAL ADVICE BY BANKERS ENTERED INTO CURRENCY SWAP AGREEMENT ON 18.07.2007 TO HEDGE THE FOREIGN EXCHANGE FLUCTUATION RISK. THE COPY OF THE BANK OF INDIAS SWAP LETTER DATED 18.07.2007 IS ALSO PLACED ON RECORD AT PAGE NO. 96 TO 99 OF PB. THE FO REIGN EXCHANGE FLUCTUATION LOSS WAS DEBITED TO PROFIT & LOSS ACCOU NT IN LINE WITH AS-11 AS PER PROVISIONS COMPANIES ACT. THE FIGURES OF CUR RENCY SWAP LOSS WERE SPECIFICALLY MENTIONED IN ANNUAL ACCOUNTS IN NOTE N O.25(C). FURTHER, DETAILS WERE FURNISHED DURING THE COURSE OF ASSESSMENT PROC EEDING. THE ASSESSING OFFICER AFTER EXAMINING THE DETAILS COMPLETED THE A SSESSMENT UNDER SECTION ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 7 143(3). THE ASSESSING OFFICER HAS PASSED ASSESSMENT ORDER WHICH IS LEGALLY SUSTAINABLE ORDER. THE ASSESSMENT ORDER CAN BE REVI SED IF IT IS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. THE ORDER P ASSED BY ASSESSING OFFICER IS NOT ERRONEOUS. THOUGH THE ASSESSING OFFICER HAS EXAMINED THE ISSUE. HOWEVER, THERE IS NO REFERENCE IN THE ASSESSMENT OR DER. THE LD. PCIT REVISED THE ORDER BY REFERRING THE DECISION OF HON BLE SUPREME COURT IN M/S SUTLEJ COTTON MILLS (SUPRA), THOUGH THE FACTS O F THE DECISION ARE TOTALLY DIFFERENT AND DISTINGUISHABLE. IN THE SAID CASE THE FLUCTUATION LOSS WAS IN RELATION TO A FOREIGN CURRENCY ASSET, WHEREAS THE A SSESSEE HAS ENTERED IN TO FOREIGN CURRENCY SWAP AGREEMENT TO HEDGE FOREIGN EX CHANGE FLUCTUATION RISK OF LIABILITY OF FOREIGN CURRENCY. THE LD. PCIT HAS NOT GIVEN ANY FINDING HOW THE ORDER IS ERRONEOUS; THEREFORE, THE ORDER IS NOT VALID BEING BAD IN LAW. THE AMENDMENT OF EXPLANATION INSERTED I N SECTION 263 IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION, WHICH MAY BE APPLICABLE FROM ASSESSMENT YEAR 2015-16 ONWARD. 7. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASS ESSEE RELIED UPON THE DECISION OF HONBLE APEX COURT IN MALABAR INDUSTRIA L CO VS CIT [ 243 ITR 083], HONBLE GUJARAT HIGH COURT IN QUALITY STE EL SUPPLIERS VS. CIT [2014(141 TAXMAN 177 (GUJ.), DECISION OF TRIBUNAL I N COOPER CORPORATION (P.) LTD. VS. DCIT [(2016) 69 TAXMANN.C OM 244 (PUNE TRIB.), DECISION OF HONBLE SUPREME COURT IN OIL & NATURAL GAS CORPORATION. LTD. [2010] 189 TAXMAN 292 (SC), IN CIT VS. WOODWAR D GOVERNOR INDIA ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 8 (P.) LTD. [2009] 179 TAXMAN 326 (SC), DECISION OF T RIBUNAL IN VARDHMAN INDUSTRIES LTD. VS. DCIT [2017] 82 TAXMANN.COM 118 (CHANDIGARH TRIB.), RELIANCE INDUSTRIES LTD. VS. CIT (LTU) [2013] 40 TA XMANN.COM 431 (MUM. TRIB.). ON MERIT, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN M/S INDUS BEST HOSPITALITY & REALTORS PVT. LTD. VS. PCIT IN ITA NO. 3125/MUM/201 7 DATED 19.01.2018. 8. ON THE OTHER HAND, THE LD. CIT-DR FOR THE REVENUE S UPPORTED THE ORDER OF LD. PCIT. THE LD. DR FURTHER SUBMITS THAT THERE IS NO REFERENCE IN THE ASSESSMENT ORDER WHETHER THE ISSUE WAS EXAMINED BY THE ASSESSING OFFICER DURING THE ASSESSMENT OR NOT. THE LD. DR FU RTHER SUBMITS THAT THE PRESENT CASE IS SQUARELY COVERED BY EXPLANATION 2 T O SECTION 263(1) OF THE ACT. THE ASSESSING OFFICER ALLOWED THE RELIEF WITHO UT ENQUIRING THE CLAIM AND MAKING ENQUIRIES AND VERIFICATION OF CLAIM. FUR THER, THE ORDER PASSED BY ASSESSING OFFICER IS NOT IN ACCORDANCE WITH THE DECISION OF HONBLE SUPREME COURT IN M/S SUTLEJ COTTON MILLS (SUPRA). M OREOVER, THE FACT MAY BE EXAMINED BY ASSESSING OFFICER AS PER THE DIRECTI ON OF LD. PCIT. THE LD. DR FOR THE REVENUE PRAYED FOR DISMISSAL OF THE APPE AL. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE HONBL E SUPREME COURT IN MALABAR INDUSTRIAL CO LTD (SUPRA) HAS LAID DOWN THE FOLLOWING PRINCIPAL ; A BARE READING OF SECTION 263 OF THE ACT 1961, MA KES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION BY TH E CIT SUO MOTO UNDER IT, IS ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 9 THAT THE ORDER OF ITO IS ERRONEOUS, SO FAR AS IT I S PREJUDICIAL TO THE INTEREST OF REVENUE. THE CIT HAS TO BE SATISFIED TWIN CONDIT IONS, NAMELY (1), THE ORDER OF AO SOUGHT TO BE REVISED IS ERRONEOUS AND ( 2) IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. IF ONE OF THEM IS ABSENT- IF THE ORDER OF ITO IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SECTION 263 (1 ) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORR ECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE AO, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN IN CORRECT ASSUMPTION OF FACT OR AN INCORRECT APPLICATION OF LAW WILL SATISF Y THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL OR DERS PASSED WITHOUT APPLYING THE PRINCIPLE OF NATURAL JUSTICE OR WITHOU T APPLICATION OF MIND. THE PHRASE PREJUDICIAL TO THE INTEREST OF REVENUE IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UNDERSTOOD IT IS ORDINARY MEANING IT IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISI ON OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRO NEOUS ORDER OF THE ITO, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PER SON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTEREST OF REVENUE. THE PHRASE PREJUDICIAL TO THE INTEREST OF REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ER RONEOUS ORDER PASSED BY THE AO. EVERY LOSS OF REVENUE AS A CONSEQUENCE O F AN ORDER OF AO, CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE, FOR EXAMPLE, WHEN AN ITO, ADOPTED ONE OF THE COURSE PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS AR E POSSIBLE AND THE ITO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGRE E, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST O F REVENUE. UNLESS THE VIEW TAKEN BY ITO IS UNSUSTAINABLE IN LAW. 10. HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS GABRIEL INDIA LTD 203 ITR 108 (BOM), HELD THAT THE POWER OF SUO MOTO REVISION UNDER SUBSECTION (1) OF SECTION 263 OF THE ACT IS IN THE NATURE OF SUPERVISORY DIRECTION AND CAN BE EXERCISED ONLY IF THE CIRCUMST ANCES SPECIFIED THEREIN ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 10 EXIST. TWO CIRCUMSTANCES MUST EXIST TO ENABLE THE C IT TO EXERCISE THE POWER OF REVISION UNDER THIS SUB SECTION VIZ (1) TH E ORDER SHOULD BE ERRONEOUS AND ( 2) BY VIRTUE OF THE ORDER BEING ERR ONEOUS PREJUDICE MUST HAVE BEEN CAUSED TO THE INTEREST OF THE REVENUE. AN D ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF ITO. ACT IN ACCORDANCE WITH LAW. MAKE CERTAIN ASSESSMENT; THE S AME CANNOT BE BRANDED AS ERRONEOUS BY THE CIT SIMPLY BECAUSE ACCO RDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE CELEBRATORY. TH IS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGEMENT O F THE CIT FOR THAT OF THE ITO, WHO PASSED THE ORDER, UNLESS THE DECISION IS H ELD TO BE ERRONEOUS. THIS IS MAY BE VISUALISED WHERE THE ITO WHILE MAKIN G THE ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIED HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINE THE INCOME EITHER BY ACCEPTING THE ACCOUNTS FOR BY MAKING SOME ESTIMATE HIMSELF. T HE CIT ON PERUSAL OF RECORDS, MAY BE OF OPINION THAT THE ESTIMATE MADE B Y THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE CIT , HE WOULD HAVE ESTIMATED THE INCOME AT A HIGHER FIGURE THAN ONE DE TERMINE BY THE ITO. THAT WOULD NOT VEST THE CIT WITH POWER TO RE-EXAMIN E THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT THE HIGHER FIGURE. 11. FURTHER HONBLE DELHI HIGH COURT IN CASE OF ITO VS DG HOUSING PROJECTS LTD [343ITR 329 (DELHI)] HELD THAT THE ORD ER IS ERRONEOUS IF THE TWIN CONDITION MUST BE SATISFIED FOR EXERCISE OF J URISDICTION UNDER SECTION ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 11 263 OF INCOME-TAX ACT. THE MATTER CANNOT BE REMITTE D BACK FOR FRESH DECISION TO THE ASSESSING OFFICER TO CONDUCT FURTHE R INQUIRES WITHOUT A FINDING THAT ORDER IS ERRONEOUS. THE COMMISSIONER M UST AFTER RECORDING REASONS HOLD THAT ORDER IS ERRONEOUS. THE COMMISSIO NER CANNOT DIRECT RECONSIDERATION ONLY WHEN THE ORDER IS ERRONEOUS. A N ORDER OF REMIT CANNOT BE PASSED BY THE COMMISSIONER TO ASK THE ASS ESSING OFFICER TO DECIDE WHETHER THE ORDER WAS ERRONEOUS, WHICH IS NO T PERMISSIBLE. 12. IN DIT VS JYOTI FOUNDATION (357ITR 388 DELHI) THE H ONBLE DELHI HIGH COURT WHILE DISTINGUISHING THE ORDER PASSED AFTER P ROPER INQUIRY AND WITHOUT INQUIRY HELD THAT THE ORDERS WHICH ARE PASS ED WITHOUT INQUIRY OR INVESTIGATION ARE TREATED AS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE, BUT ORDERS WHICH ARE PASSED AFTER INQUIRY OR INVESTIGATION ON THE ISSUES ARE NOT PER SE OR NORMALLY TREATED AS ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF REVENUE. BECAUSE THE REVISIONARY AUTHOR ITY FEELS AND OPINES THAT FURTHER INQUIRY OR INVESTIGATION WAS REQUIRED OR DE EPER OR FURTHER SCRUTINY SHOULD BE UNDERTAKEN, THE COMMISSIONER MUST RECORD A FINDING THAT THE ORDER MADE IS ERRONEOUS. THIS CAN HAPPEN IF AN INQU IRY AND VERIFICATION IS CONDUCTED BY COMMISSIONER AND HE IS ABLE TO ESTABLI SH AND SHOW THE ERROR OR MISTAKE MADE BY ASSESSING OFFICER, MAKING THE OR DER UNSUSTAINABLE IN LAW. AN ORDER OF REMIT CANNOT BE PASSED BY COMMISSI ONER TO ASK THE ASSESSING OFFICER TO DECIDE IF THE ORDER IS ERRONEO US. ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 12 13. IN VIEW OF THE ABOVE LEGAL POSITION, NOW WE SHALL CONSIDER THE SUBMISSION OF LEARNED AR OF THE ASSESSEE AND WOULD EXAMINE THE FACTS OF THE PRESENT CASE. WE HAVE NOTED THAT THE LEARNED PCIT ISSUED SH OW CAUSE NOTICE UNDER SECTION 263 DATED 17 TH OF OCTOBER 2017. IN THE SHOW CAUSE NOTICE THE LEARNED PCIT RAISED THE ISSUE THAT ASSESSEE COMPANY CLAIMED BUSINESS LOSS OF RS. 84.09 CRORE INCURRED ON ACCOUNT OF CURRENCY SWAP AND THE SAME WAS ALLOWED TO THE ASSESSEE IN THE ASSESSMENT ORDER, IN ALLOWING THE LOSS THE ASSESSING OFFICER HAS NOT FOLLOWED THE DECISION OF HONBLE SUPREME COURT IN SUTLEJ COTTON MILLS LTD VERSUS CIT (SUPRA). THE LEARNED PCIT AFTER CONSIDERING THE REPLY FURNISHED BY THE ASSESSEE CON CLUDED THAT IN THE REPLY THE ASSESSEE HAS ADMITTED THAT LOAN WAS AVAILED FOR ACQUIRING CAPITAL ASSET AND PRIME FACE THE DECISION OF SUPREME COURT IS AP PLICABLE ON THE FACTS OF THE ASSESSEES CASE. THE LEARNED PCIT HAS NOT EXAMI NED THE FACT OF THE CASE, RATHER DIRECTED THE ASSESSING OFFICER TO EXAM INE THE ALLOWABILITY OF THE CLAIM OF BUSINESS LOSS ON CURRENCY SWAP. 14. THE HONBLE SUPREME COURT IN CASE OF SUTLEJ COTTON MILLS LTD VERSUS CIT (SUPRA) HELD THAT IT IS WELL SETTLED THAT WHERE PRO FIT OR LOSS ARISES TO AN ASSESSEE ON ACCOUNT OF APPRECIATION OR DEPRECIATION IN THE VALUE OF FOREIGN CURRENCY HELD BY IT, ON CONVERSION INTO ANOTHER CUR RENCY, SUCH PROFIT OR LOSS WOULD ORDINARILY BE TRADING PROFIT OR LOSS IF THE FOREIGN CURRENCY IS HELD BY THE ASSESSEE ON REVENUE ACCOUNT OR AS A TRA DING ASSET OR AS PART OF CIRCULATING CAPITAL EMBARKED IN THE BUSINESS. BUT, IF ON THE OTHER HAND, THE ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 13 FOREIGN CURRENCY IS HELD AS A CAPITAL ASSET OR AS F IXED CAPITAL; SUCH PROFIT OR LOSS WOULD BE OF CAPITAL NATURE. NOW, IN THE INSTAN T CASE, NO FINDING WAS GIVEN BY THE TRIBUNAL AS TO WHETHER THE SUMS WERE H ELD BY THE ASSESSEE IN WEST PAKISTAN ON CAPITAL ACCOUNT OR REVENUE ACCOUNT AND WHETHER THEY WERE PART OF FIXED CAPITAL OR OF CIRCULATING CAPITA L EMBARKED AND ADVENTURED IN THE BUSINESS IN WEST PAKISTAN. IF THE AMOUNTS IN QUESTION WERE EMPLOYED IN THE BUSINESS IN WEST PAKISTAN AND FORMED PART OF THE CIRCULATING CAPITAL OF THAT BUSINESS, THE LOSS RESU LTING TO THE ASSESSEE ON REMISSION OF THOSE TWO AMOUNTS IN INDIA, ON ACCOUNT OF ALTERATION IN THE RATE OF EXCHANGE, WOULD BE A TRADING LOSS, BUT IF, INSTEAD, THOSE AMOUNTS WERE HELD ON CAPITAL ACCOUNT AND WERE PART OF FIXED CAPITAL, THE LOSS WOULD PLAINLY BE A CAPITAL LOSS. THE QUESTION WHETHER THE LOSS SUFFERED BY THE ASSESSEE WAS A TRADING LOSS OR A CAPITAL LOSS COULD NOT, THEREFORE, BE ANSWERED UNLESS IT WAS FIRST DETERMINED WHETHER THE AMOUNTS IN QUESTION WERE HELD BY THE ASSESSEE ON CAPITAL ACCOUNT OR ON REVENUE ACCOUNT OR, TO PUT IT DIFFERENTLY, AS PART OF FIXED CAPITAL OR OF CIRCULATING CAPITAL. 15. WE HAVE NOTED THAT THE HONBLE APEX COURT IN SUTLE J COTTON MILLS LTD (SUPRA) ALSO HELD THAT, IF, THE FOREIGN CURRENCY IS HELD AS A CAPITAL ASSET OR AS FIXED CAPITAL; SUCH PROFIT OR LOSS WOULD BE OF C APITAL NATURE. WE HAVE FURTHER NOTED THAT FIGURES OF CURRENCY SWAP LOSS HA S BEEN SPECIFICALLY MENTIONED IN THE ANNUAL ACCOUNTS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND EXPLAINED IN NOTE NO. 25(C) AND 2 8(3), COPY OF WHICH IS ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 14 PLACED ON RECORD AT PAGE NUMBER 176 &170. THE ASSES SEE HAS DEBITED FOREIGN EXCHANGE FLUCTUATION LOSS IN PROFIT AND LOS S ACCOUNT IN LINE WITH A AS-11, WHICH IS MANDATORY FOR THE ASSESSEE TO FOLLO W AS PER SECTION 209 OF THE COMPANIES ACT. 16. FURTHER THE HONBLE SUPREME COURT IN OIL AND NATURA L GAS CORPORATION VERSUS CIT (SUPRA) HELD THAT FOREX LOSS IS ALLOWABL E DEDUCTION UNDER SECTION 37(1) NOTWITHSTANDING WHETHER IT IS ACTUALL Y PAID. SIMILARLY IN CIT VERSUS WOODWARD GOVERNOR INDIA PRIVATE LTD (312 IT R 326 SC), IT WAS HELD THAT WHERE THE PROVISION OF SECTION 43A ARE NO T ATTRACTED, FOREX LOSS SUFFERED ON ACCOUNT OF FOREIGN EXCHANGE DIFFERENCE IS ALLOWABLE AS DEDUCTION UNDER SECTION 37(1) OF THE ACT. 17. THE COORDINATE BENCH OF PUNE TRIBUNAL IN COOPER COR PORATION PRIVATE LTD VS DCIT (SUPRA) HELD THAT WHERE ASSESSEES ACT OF C ONVERSION OF INDIAN CURRENCY LOAN AVAILED FOR ACQUISITION OF ASSETS ETC , INTO FOREIGN CURRENCY LOAN WAS DICTATED BY REVENUE CONSIDERATION TOWARDS SAVING INTEREST COST ET CETERA, FOREIGN EXCHANGE FLUCTUATION LOSS BEING ON REVENUE ACCOUNT WAS ALLOWABLE EXPENDITURE UNDER SECTION 37 OF THE ACT. THE RELEVANT PART OF THE DECISION IS EXTRACTED BELOW: 10.5 BEFORE WE DELINEATE ON THE ALLOWABILITY OF LOSS BAS ED ON GENERALLY ACCEPTED ACCOUNTANCY PRINCIPLES, IT MAY BE PERTINEN T TO EXAMINE WHETHER THE INCREASED LIABILITY DUE TO FLUCTUATION LOSS CAN BE ADDED TO THE CARRYING COSTS OF CORRESPONDING CAPITAL ASSETS WITH REFERENCE TO S . 43(1) OF THE ACT. SECTION 43(1) DEFINES THE EXPRESSION 'ACTUAL COST'. AS PER S. 43(1), ACTUAL COST MEANS ACTUAL COST OF THE ASSETS TO THE ASSESSEE, REDUCED BY THAT PORTION OF THE COSTS ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 15 AS HAS BEEN MET DIRECTLY OR INDIRECTLY BY ANY OTHER PERSON OR AUTHORITY. SEVERAL EXPLANATIONS HAVE BEEN APPENDED TO S. 43(1) . HOWEVER, THE SECTION NOWHERE SPECIFIES THAT ANY GAIN OR LOSS ON FOREIGN CURRENCY LOAN ACQUIRED FOR PURCHASE OF INDIGENOUS ASSETS WILL HAVE TO BE REDUC ED OR ADDED TO THE COSTS OF THE ASSETS. THUS, VIEWED FROM THIS PERSPECTIVE A LSO, SUCH INCREASED LIABILITY CANNOT BE BRACKETED WITH COST OF ACQUISIT ION OF CAPITAL ASSETS SAVE AND EXCEPT IN TERMS OF OVERRIDING PROVISIONS OF S. 43A OF THE ACT. 10.6 WE ALSO SIMULTANEOUSLY NOTE HERE THAT THE HON'BLE S UPREME COURT IN THE CASE OF CIT V. TATA IRON AND STEEL CO. LTD. [1998] 231 ITR 285/98 TAXMAN 459 HELD THAT COST OF AN ASSET AND COST OF RAISING MON EY FOR PURCHASE OF ASSET ARE TWO DIFFERENT AND INDEPENDENT TRANSACTIONS. THUS, EVENTS SUBSEQUENT TO ACQUISITION OF ASSETS CANNOT C HANGE PRICE PAID FOR IT. THEREFORE, FLUCTUATIONS IN FOREIGN EXCHANGE RATE WH ILE REPAYING INSTALMENTS OF FOREIGN LOAN RAISED TO ACQUIRE ASSET CANNOT ALTE R ACTUAL COST OF ASSETS. THE RELEVANT OPERATIVE PARA IS REPRODUCED HEREUNDER. 'COMING TO THE QUESTION RAISED, WE FIND IT D IFFICULT TO FOLLOW HOW THE MANNER OF REPAYMENT OF LOAN CAN AFFECT THE COST OF THE ASSETS ACQUIRED BY THE ASSESSEE. WHAT IS THE ACTUAL COST M UST DEPEND ON THE AMOUNT PAID BY THE ASSESSEE TO ACQUIRE THE ASSET. T HE AMOUNT MAY HAVE BEEN BORROWED BY THE ASSESSEE, BUT EVEN IF THE ASSESSEE DID NOT REPAY THE LOAN IT WILL NOT ALTER THE COST OF THE AS SET. IF THE BORROWER DEFAULTS IN REPAYMENT OF A PART OF THE LOAN, THE CO ST OF THE ASSET WILL NOT CHANGE. WHAT HAS TO BE BORNE IN MIND IS THAT TH E COST OF AN ASSET AND THE COST OF RAISING MONEY FOR PURCHASE OF THE A SSET ARE TWO DIFFERENT AND INDEPENDENT TRANSACTIONS. EVEN IF AN ASSET IS PURCHASED WITH NON-REPAYABLE SUBSIDY RECEIVED FROM THE GOVERN MENT, THE COST OF THE ASSET WILL BE THE PRICE PAID BY THE ASSESSEE FOR ACQUIRING THE ASSET. IN THE INSTANT CASE, THE ALLEGATION IS THAT AT THE TIME OF REPAYMENT OF LOAN, THERE WAS A FLUCTUATION IN THE R ATE OF FOREIGN EXCHANGE AS A RESULT OF WHICH, THE ASSESSEE HAD TO REPAY A MUCH LESSER AMOUNT THAN HE WOULD HAVE OTHERWISE PAID. IN OUR JUDGMENT, THIS IS NOT A FACTOR WHICH CAN ALTER THE COST INCUR RED BY THE ASSESSEE FOR PURCHASE OF THE ASSET. THE ASSESSEE MAY HAVE RA ISED THE FUNDS TO PURCHASE THE ASSET BY BORROWING BUT WHAT THE ASSESS EE HAS PAID FOR IT, IS THE PRICE OF THE ASSET. THAT PRICE CANNOT CHANGE BY ANY EVENT SUBSEQUENT TO THE ACQUISITION OF THE ASSET. IN OUR JUDGMENT, THE MANNER OR MODE OF REPAYMENT OF THE LOAN HAS NOTHING TO DO WITH THE COST OF AN ASSET ACQUIRED BY THE ASSESSEE FOR THE P URPOSE OF HIS BUSINESS. WE HOLD THAT THE QUESTIONS WERE RIGHTLY A NSWERED BY THE HIGH COURT. THE APPEALS ARE DISMISSED. THERE WILL B E NO ORDER AS TO COSTS. ' ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 16 THUS, IT IS EVIDENT THE VARIATION IN THE LOAN AMOUN T HAS NO BEARING ON THE COST OF THE ASSET AS THE LOAN IS A DISTINCT AND INDEPEND ENT TRANSACTION AS IN COMPARISON WITH ACQUISITION OF ASSETS OUT OF SAID L OAN AMOUNT BORROWED. ACTUAL COST OF THE CORRESPONDING FIXED ASSET ACQUIR ED EARLIER BY UTILIZING THE AFORESAID LOAN WILL NOT UNDERGO ANY CHANGE OWING TO SUCH FLUCTUATION. 10.7 THE ISSUE IS ALSO TESTED IN THE LIGHT OF PROVISION OF S. 36(1)(III) GOVERNING DEDUCTION OF INTEREST COSTS ON BORROWALS. AS STATED EARLIER, MANNER OF UTILIZATION OF LOAN AMOUNT HAS NOTHING TO DO WITH A LLOWABILITY OF ANY EXPENDITURE IN CONNECTION WITH LOAN REPAYMENT. BOTH ARE INDEPENDENT AND DISTINCT TRANSACTIONS IN NATURE. SIMILAR ANALOGY CA N BE DRAWN FROM S. 36(1)(III) OF THE ACT WHICH ALSO REINFORCES THAT UT ILIZATION OF LOAN FOR CAPITAL ACCOUNT OR REVENUE ACCOUNT PURPOSE HAS NOTHING TO D O WITH ALLOWABLITY OF CORRESPONDING INTEREST EXPENDITURE. A PROVISO INSER TED THERETO BY FINANCE ACT, 2003, ALSO PROHIBITS CLAIM OF INTEREST EXPENDI TURE IN REVENUE ACCOUNT ONLY UPTO THE DATE ON WHICH CAPITAL ASSET IS PUT TO USE. ONCE THE CAPITAL ASSET IS PUT TO USE, THE INTEREST EXPENDITURE ON MONEY BO RROWED FOR ACQUISITION OF CAPITAL ASSET IS ALSO TREATED AS REVENUE EXPENDITUR E. AS ALSO NOTED, S. 43A SPECIFICALLY AND CATEGORICALLY CALLS FOR ADJUSTMENT S IN COST OF ASSETS FOR LOSS OR GAIN ARISING OUT OF FOREIGN CURRENCY FLUCTUATIONS I N RESPECT OF FUNDS BORROWED IN FOREIGN CURRENCY FOR ACQUISITION OF FOREIGN ASSE TS. HOWEVER, THE SAME RATIONALE OF A DEEMING PROVISION OF S. 43A CANNOT B E APPLIED TO LOSS OR GAIN ARISING FROM FOREIGN CURRENCY LOSS UTILIZED FOR PUR CHASE OF INDIGENOUS ASSETS. NEEDLESS TO SAY, IMPUGNED CURRENCY FLUCTUATION LOSS HAS EMANATED FROM FOREIGN CURRENCY LOANS. BESIDES AS-11, THE CLAIM OF EXCHANGE FLUCTUATION LOSS AS REVENUE ACCOUNT IS ALSO FOUNDED ON THE ARGUMENT THAT THE AFORESAID ACTION WAS TAKEN TO SAVE INTEREST COSTS AND CONSEQUENTLY T O AUGMENT THE PROFITABILITY OR REDUCE REVENUE LOSSES OF THE ASSESSEE. THE IMPUG NED FLUCTUATION LOSS THEREFORE HAS A DIRECT NEXUS TO THE SAVING IN INTER EST COSTS WITHOUT BRINGING ANY NEW CAPITAL ASSET INTO EXISTENCE. THUS, THE BUS INESS EXIGENCIES ARE IMPLICIT AS WELL EXPLICIT IN THE ACTION OF THE ASSE SSEE. THE ARGUMENT THAT THE ACT OF CONVERSION HAS SERVED A HEDGING MECHANISM AG AINST REVENUE RECEIPTS FROM EXPORT ALSO PORTRAYS COMMERCIAL EXPEDIENCY. TH US, WE ARE OF THE OPINION THAT THE PLEA OF THE ASSESSEE FOR CLAIM OF EXPENDITURE IS ATTRIBUTABLE TO REVENUE ACCOUNT HAS CONSIDERABLE MERITS. ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 17 18. FURTHER THE COORDINATE BENCH OF MUMBAI TRIBUNAL IN RELIANCE INDUSTRIES LTD VERSUS CIT (SUPRA) HELD THAT THE FOREX LOSS DUE TO FLUCTUATION IN EXCHANGE RATE IS NOT NOTIONAL LOSS AND IS ALLOWABLE AS DEDUCTION AND IN SUCH SITUATION THE ORDER UNDER SECTION 263 WAS HELD AS NOT JUSTIFIED. 19. WE HAVE FURTHER NOTED THAT ADMITTEDLY THE LOSS ON C URRENCY SWAP IS AN EVENT SUBSEQUENT TO THE ACQUISITION AND PUT TO USE OF THE ASSET FOR BUSINESS AND THEREFORE, FOLLOWING THE RATIO OF THE SUPREME COURT DECISION IN TATA IRON STEEL CO. LTD (SUPRA), WHICH HAS BEEN RELIED B Y COORDINATE BENCH OF PUNE TRIBUNAL IN COOPER CORPORATION (P) LTD (SUPRA) , SUCH LOSS CANNOT ALTER THE COST OF ASSET AND IS RATHER ALLOWABLE AS REVENUE EXPENDITURE. THUS, THE RATIO OF THE JUDGMENT OF HONBLE SUTLEJ COTTON MILLS LTD (SUPRA) IS NOT APPLICABLE IN THE INSTANT CASE AND THE ASSESSMENT O RDER CANNOT BE ERRONEOUS IN LAW.THEREFORE, CLAUSE (D) OF EXPLANATION 2 OF SECTION 263 IS NOT FULFILLED. CONSIDERING THE ALL ABOVE REFERRED CASE LAW, WE FIND THAT THE LOSS CLAIMED BY ASSESSEE ON ACCOUNT OF FLUCTUATION LOSS IS REVENUE LOSS AND THE ASSESSEE IS ENTITLED FOR ITS DEDUCTION. THEREFO RE, THE ORDER PASSED BY ASSESSING OFFICER IS NOT ERRONEOUS. CONSIDERING THE FACT THAT THE TWIN CONDITION AS ENUNCIATED BY HONBLE APEX COURT IN CA SE OF MALABAR INDUSTRIAL COMPANIES LTD (SUPRA) ARE NOT FULFILLED, THEREFORE, THE ORDER PASSED BY ASSESSING OFFICER CANNOT BE SUBJECT MATTE R OF REVISION. THEREFORE, THE REVISION ORDER PASSED BY LEARNED PCI T IS NOT SUSTAINABLE IN ITA NO. 701 & 702 MUM 201 8 M/S JBF INDUSTRIES LTD . 18 THE EYES OF LAW, WHICH WE HOLD THAT SUCH. IN THE RE SULT THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE ALLOWED. 20. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. I TA NO. 702/MUM/2018 FOR AY 2012-13 BY ASSESSEE. 21. THE ASSESSEE HAS RAISED IDENTICAL GROUNDS OF APPEAL EXCEPT THE VARIATION OF FIGURE AS RAISED IN APPEAL FOR AY 2011-12, WHICH WE HAVE ALREADY ALLOWED. THEREFORE, CONSIDERING THE PRINCIPAL OF CO NSISTENCY THE GROUNDS OF APPEAL RAISED IN THE APPEAL FOR THE YEAR UNDER C ONSIDERATION IS ALSO ALLOWED WITH SIMILAR OBSERVATION. 22. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 16/11/2018. SD/- SD/- G.S. PANNU PAW AN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 16.11.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR F BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI