DCIT CIR 6(2)(1), MUMBAI V. COASTAL GUJARAT POWER LTD, MUMBAI

ITA 7110/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5685 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 05-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: H N SINGH
• Assessee Lawyers: F V IRANI; JAYESH DESAI

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAMLAL NEGI (JM) I.T.A. NO. 7110 /MUM/ 201 6 (ASSESSMENT YEAR 20 11 - 12 ) DCIT, CIRCLE - 6(2)(1) R.NO. 563 AAYAKAR BHAVAN M.K. ROAD CHURCHGATE MUMBAI - 400 020. V S . M/S . COASTAL GUJARAT POWER LTD. C/O. TATA POWER COMPANY LTD. 148, LT.GEN. J. BHONSLE MARG NARIMAN POINT MUMBAI - 400 021. PAN : AADCC1347A ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI F.V. IRANI & SHRI JAYESH DESAI DEPARTMENT BY SHRI H.N. SINGH DATE O F HEARING 1 6 . 7 . 201 8 DATE OF PRONOUNCEMENT 16 . 7 . 201 8 O R D E R PER B.R. BASKARAN (AM) : THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 2.9.2016 PASSED BY THE LEARNED CIT(A) - 12, MUMBAI AND IT RELATES TO A.Y. 2011 - 12. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN HOLDING THAT FOREX GAIN OF ` 122.86 CRORES IS NOT TAXABLE BUT TO BE REDUCED FROM THE VALUE OF ASSET. 2. THE LEARNED AR SUBMITTED THAT THE ASSESSEE IS IN THE PROCESS OF SETTING UP OF ITS POWER PLANT AN D HENCE THE PLANT HAS NOT BEEN SET UP DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY FOREIGN EXCHANGE FLUCTUATION GAIN S ARISING ON CANCELLATION OF CONTRACT AS WELL AS ON REINSTATEMENT OF OUTSTANDING LIABILITIES HAS BEEN REDUCED FROM THE VALUE OF ASSET. T HE LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER DID NOT ACCEPT THE SAME AND HAS ASSESSED FOREIGN EXCHANGE GAIN AS INCOME OF THE ASSESSEE. HE SUBMITTED THAT IDENTICAL ADDITION WAS MADE IN A.Y. 2009 - 10 & 2010 - 11 ALSO AND THE COORDINATE BENCHES OF THE TRI BUNAL, VIDE ITS ORDER PASSED IN ITA NO. 1410/MUM/2015 DATED 6.11.2015 FOR A.Y. 2009 - 10 AND IN ITA NO. 2298/MUM/2015 DATED 15.3. 2 017 PASSED FOR ASST. YEAR 2010 - 11 HAS ALLOWED THE CLAIM OF THE ASSESSEE. M/S. COASTAL GUJARAT POWER LTD. 2 3. ON THE CONTRARY, THE LEARNED DR SUBMITTED THAT THE F OREIGN EXCHANGE GAIN OF ` 122.86 CRORES EARNED BY THE ASSESSEE CONSISTS OF FOLLOWING ITEMS : REALISED GAIN ON CANCELLATION OF FORWARD CONTRACTS ` 15,61,03,216 UNREALISED GAINS ON RESTATEMENT OF FOREIGN CURRENCY ` 96,49,02,389 BORROWINGS AND CREDITORS U NREA LISED MARK TO MARKET GAINS ON REALIGNMENT ` 10,76,11,425 OF FORWARD CONTRACTS THE L EARNED DR SUBMITTED THAT THE ORDER PASSED BY THE TRIBUNAL IN EARLIER YEARS WOULD COVER REALIZED GAIN OF ` 15.61 CRORES ONLY . WITH REGARD TO REMAINING TWO ITEMS, THE LEARNED DR SUBMITTED THAT RELEVANT DETAILS NEEDS TO BE VERIFIED IN ORDER TO FIND OUT WHETHER THE RATIO OF THE DECISION RENDERED BY THE TRIBUNAL IN EARLIER YEARS WOULD APPLY TO THEM OR NOT . 4 . THE LEARNED AR SUBMITTED THAT OTHER TWO ITEMS OF GAINS ALSO RELATED TO SETTING UP OF POWER PLANT ONLY AND HENCE THEY WOULD BE COVERED THE RATIO LAID DOWN BY THE TRIBUNAL IN EARLIER YEARS. 5 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE NOTICED THAT THE LEARNED DR HAS FAIRLY AGREED THAT REALIZED GAIN OF ` 15.61 CRORES WAS RELATED TO POWER PLANT AND WOULD BE COVERED BY THE DECISION RENDERED BY THE TRIBUNAL IN EARLIER YEARS. ACCORDINGLY, FOLLOWING THE DECISION RENDERED BY THE COORDINATE BENCHES IN EARLIER YEARS (REFERRED SUPRA), WE CONFIRM THE ORDER PASSED BY THE LEARNED CIT(A) ON THE ADDITION RELATING TO RS.15.61 CRORES . 6 . WITH REGARD TO REMAINING TWO ITEMS, WE NOTICED THAT THE RATIO LAID DOWN BY THE TRIBUNAL IN EARLIER YEARS WOULD APPLY IF THOSE FOREIGN CURRENCY BORROWINGS/CREDITORS WERE RELATED TO THE ASSETS PURCHASED BY THE ASSESSEE FOR SETTING UP OF POWER PLANT. SINCE THIS ASPECT REQUIRES VERIFICATION, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON THESE TWO ITEMS AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECT ION TO EXAMINE THE DETAILS RELATING TO THE SAME AND TAKE APPROPRIATE DECISION BY FOLLOWING THE ORDER PASSED BY THE TRIBUNAL IN EARLIER YEAR S . M/S. COASTAL GUJARAT POWER LTD. 3 7 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER HAS BE EN PRONOUNCED IN THE COURT ON 16 . 7 . 201 8 . SD/ - SD/ - (RAMLAL NEGI) (B.R.BASKARAN) J U DICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 16 /7 / 20 1 8 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. BY ORDER, //TRUE COPY// ( SENIOR P RIVATE S ECRETARY ) PS ITAT, MUMBAI