Shin-Etsu-Polymer India P. Ltd., CHENNAI V. DCIT Corporate Circle 6(2), CHENNAI

ITA 76/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9524 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 09-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N GOPI KRISHNA
• Assessee Lawyers: S SRIDHAR
• Keywords: Capital asset; Gift; Depreciation; Revenue expenditure; Capital expenditure; Set aside

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A BENCH, CHENNAI . . . , , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ I.T.A.NO.76/CHNY/2019 ( [ [ / ASSESSMENT YEAR: 2010-11) M/S. SHIN-ETSU POLYMER INDIA PVT. LTD., PLOT: OZ-12, HITECH SEZ, SIPCOT INDUSTRIAL GROWTH CENTRE, ORAGADAM, CHENNAI 602 105. VS THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6(2), CHENNAI. PAN: AALCS2482E ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI N. GOPIKRISHNA, JCIT /DATE OF HEARING : 26.06.2019 /DATE OF PRONOUNCEMENT : 27.06.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-16, CHENNAI DATED 14.11.2018 AND PERTAINS TO THE ASSESSMENT YEAR 2010-11. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS DISALLOWANCE OF LOSS ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION. THE ASSESSEE CLAIMED A 2 I.T.A. NO. 76/CHNY/2019 SUM OF RS.1,26,279/- AS FOREIGN EXCHANGE FLUCTUATION. THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY PLACING RELIANCE ON THE ORDER OF THIS TRIBUNAL IN SCM GARMENTS (P.) LTD., VS. DCIT, [2015] 59 TAXMANN.COM 395. IT IS NOT KNOWN WHETHER THE LOSS IN FOREIGN EXCHANGE FLUCTUATION WAS DUE TO EXPORT OF ANY FINISHED GOODS OR PURCHASE OF ANY CAPITAL ASSET. THE LOSS OR GAIN ARISING OUT OF FLUCTUATION OF FOREIGN EXCHANGE WOULD DEPEND UPON THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE. SINCE NO DETAILS ARE AVAILABLE ON RECORD WITH REGARD TO THE DETAILS OF FOREIGN EXCHANGE LOSS / GAIN, THIS TRIBUNAL IS OF THE CONSIDERED OPINION, THE MATTER NEEDS TO BE RE- EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY THE ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ISSUE RELATING TO LOSS IN FOREIGN EXCHANGE FLUCTUATION IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AND BRING ON RECORD THE NATURE OF FOREIGN EXCHANGE LOSS I.E., WHETHER IT IS ON ACCOUNT OF EXPORT OF ANY FINISHED GOODS OR ON ACCOUNT OF PURCHASE OF ANY CAPITAL ASSET AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 3 I.T.A. NO. 76/CHNY/2019 3. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISALLOWANCE OF RS.3,44,625/- TOWARDS PURCHASE OF DINNER SET, GIFT, ETC. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER, THE EXPENDITURE INCURRED IN RESPECT OF EACH PERSON DOES NOT EXCEED RS.20,000/-. THEREFORE THE PROVISION OF SECTION 40A3 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') IS NOT APPLICABLE AT ALL. THE FACT REMAINS IS THAT THERE WAS A PURCHASE OF DINNER SET, GIFT, ETC., WHICH IS SAID TO BE DISTRIBUTED TO ITS EMPLOYEES. THE PURCHASE EXCEEDED RS.20,000/- AND THE ASSESSEE HAS MADE CASH PAYMENT. SECTION 40A3 OF THE ACT IS FOR RESTRICTING THE PAYMENT EXCEEDING RS.20,000/- IN CASH. IN THIS CASE, ADMITTEDLY THE ASSESSEE HAS PAID MORE THAN RS.20,000/- IN CASH FOR PURCHASE OF DINNER SET AND GIFT WHICH IS DISTRIBUTED TO ITS EMPLOYEES. THEREFORE THIS TRIBUNAL DID NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND THE SAME IS CONFIRMED. 4. THE NEXT ISSUE IS WITH REGARD TO DISALLOWANCE OF RS.63,522/-. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER, THE COST OF PURCHASE OF VACUUM CLEANER TO THE EXTENT OF RS.1,05,870/- AS REVENUE EXPENDITURE. THE ASSESSING OFFICER FOUND THAT PURCHASE OF NEW VACUUM CLEANER IS A CAPITAL EXPENDITURE, THEREFORE IT CANNOT BE 4 I.T.A. NO. 76/CHNY/2019 ALLOWED AS REVENUE EXPENDITURE. THE ASSESSING OFFICER ALLOWED DEPRECIATION AT THE RATE OF 40% AND THE BALANCE AMOUNT OF RS.63,522/- WAS DISALLOWED. THIS TRIBUNAL IS OF THE CONSIDERED OPINION PURCHASE OF NEW VACUUM CLEANER FOR THE USE OF THE ASSESSEE IN ITS BUSINESS IS A CAPITAL EXPENDITURE. THEREFORE IT CANNOT BE ALLOWED AS REVENUE EXPENDITURE. THE ASSESSING OFFICER HAS RIGHTLY ALLOWED DEPRECIATION AT THE RATE OF 40%. THEREFORE THIS TRIBUNAL DID NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND THE SAME IS CONFIRMED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 27 TH JUNE, 2019 AT CHENNAI. SD/- SD/- ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, /DATED, THE 27 TH JUNE, 2019. RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. [ /GF