ITO, WARD-7(1), Kolkata, Kolkata V. M/s Mangalam Fiscal Services Pvt. Ltd., Kolkata

ITA 91/KOL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1430 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 18-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE
• Assessee Lawyers: DEVESH MISHRA
• Keywords: Business expenditure; Speculation loss
• Section: 143(3); 37(1); 80G

Judgement Text

ITA NO.91/KOL/2017 MANGALAM FISCAL SERVICES (P)LTD A.Y .2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH 'D', KO LKATA [BEFORE HON'BLE SRI N.V.VASUDEVAN, JM & HON'BLE SRI WASEEM AHMED, AM] ITA NO.91/KOL/2017 ASSESSMENT YEAR : 2009-10 I.T.O., WARD-7(1), -VS- M/SMANGAL AM FISCAL SERVICES (P) LTD., KOLKATA KOLKATA (PAN AABCM 6772 D) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI.ARINDAM BHATTACHARJEE, ADDL. CIT FOR THE RESPONDENT: SHRI DEVESH MISHRA, AR DATE OF HEARING : 27.2.2018 DATE OF PRONOUNCEMENT : 01.03.2018. ORDER PER SHRI N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 15.11.2016 OF CIT(A)-8, KOLKATA RELATING TO A.Y.2009-10. 2. GROUND NO.1 RAISED BY THE REVENUE READS AS FOLLO WS :- L. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW LD.CIT(A) ERRED IN ALLOWING DONATION AS ADMISSIBLE EXPENDITURE .' 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE FINANCE BUSINESS. IN THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 (ACT) THE AO NOTICED THAT THE ASSESSEE HAD CLAIMED A SUM OF RS.16,280/- AS DEDUCTION UNDER THE HEAD DONATION AND SUBSCRIPTION . THE AO HELD THAT THE SUM CANNOT BE ALLOWED AS A DEDUCTION AS IT WAS NOT FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE AO ALSO OBSERVED THAT NO CERTIFICATE U/S 80G OF THE ACT WAS FILED T O SHOW THAT THE DONATION CAN BE CLAIMED AS DEDUCTION. ITA NO.91/KOL/2017 MANGALAM FISCAL SERVICES (P)LTD A.Y .2009-10 2 4. ON APPEAL BY THE ASSESSEE THE CIT(A) HELD THAT DONATION WAS IN CONNECTION WITH THE BUSINESS OF THE ASSESSEE FOR FOSTERING BUSINESS ENVIRONMENT ON THE OCCASION OF FESTIVALS , CEREMONIES, FUNCTIONS ETC. HE THEREFORE DIRECTED THE AO TO ALLOW DEDUCTION U/S 37(1) OF THE ACT. 5. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE HAS RAISED GROUND NO.1 BEFORE THE TRIBUNAL. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR , WHO RELIED ON THE ORDER OF AO. WE ARE OF THE VIEW THAT IN THE LIGHT OF THE SPECIFI C FINDING OF CIT(A) THAT DONATIONS WERE MADE TO MAINTAIN AND FOSTER BUSINESS RELATIONSHIP AND WERE MADE ON THE OCCASION OF FESTIVALS, CEREMONIES AND FUNCTIONS ETC. THE DEDUCT ION WAS RIGHTLY CONSIDERED AS ALLOWABLE U/S 37(1) OF THE ACT. WE FIND NO GROUNDS TO INTERFERE WITH THE ORDER OF CIT(A). GROUND NO.1 RAISED BY THE REVENUE IS ACCORDINGLY DI SMISSED. 7. GROUND NO.2 RAISED BY THE REVENUE READS AS FOLLO WS :- 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW LD. CIT(A) ALLOWED FOREIGN CURRENCY FLUCTUATION LOSS TO BE TRE ATED AS BUSINESS LOSS INSTEAD OF SPECULATIVE LOSS.' 8. THE ASSESSEE DEBITED A SUM OF RS.48,33,767/- UND ER THE HEAD EXCHANGE RATE FLUCTUATION. THE ASSESSEE HAD SOLD PRODUCTS TO ONE BUNGE S.A. OF USA. THE AMOUNTS PAYABLE BY BUNGE S.A. WERE RESTATED AS THE LAST DAT E OF THE PREVIOUS YEAR AND DUE TO EXCHANGE RATE FLUCTUATION THE SUM RECEIVABLE WAS LE SS BY RS.48,33,767/- AND THIS WAS CLAIMED AS A LOSS. THE AO HELD THAT THIS IS A SPECU LATION LOSS. THE CIT(A) HOWEVER AFTER NOTICING THE FACT THAT THE LOSS IN QUESTION WAS ON ACCOUNT OF REVENUE TRANSACTION IN THE ORDINARY COURSE OF BUSINESS OF THE ASSESSEE THE LOS S HAD TO BE REGARDED AS NORMAL BUSINESS LOSS AND ALLOWED AS DEDUCTION. THE CIT(A) FOUND THA T THE HONBLE SUPREME COURT IN THE CASE OF CIT VS WOODWARD GOVERNOR INDIA PVT. LTD. 31 2 ITR 254 (SC) HELD THAT LOSS ON REVENUE ACCOUNT WAS ALLOWABLE AS A BUSINESS EXPENDI TURE U/S 37(1) OF THE ACT. THE ITA NO.91/KOL/2017 MANGALAM FISCAL SERVICES (P)LTD A.Y .2009-10 3 CIT(A) HELD THAT THE LOSS IN THE PRESENT CASE WAS O N ACCOUNT OF ADVANCE RECEIVED ON SALE AND THEREFORE IT WAS A REVENUE ACCOUNT. THE CIT(A) THEREFORE ALLOWED THE CLAIM OF THE ASSESSEE. 9. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE HAS RAISED GROUND NO.2 BEFORE THE TRIBUNAL. 10. WE HAVE HEARD THE SUBMISSIONS OF THE LD. DR, WH O RELIED ON THE ORDER OF AO. WE ARE OF THE VIEW THAT IN THE LIGHT OF A CLEAR FINDIN G THAT THE FLUCTUATION IS ON ACCOUNT OF MONEY RECEIVABLE ON SALE DONE IN THE NORMAL COURSE OF BUSINESS, THE EXCHANGE FLUCTUATION LOSS CONNECTED WITH SUCH TRANSACTIONS HAD TO BE REG ARDED AS ALLOWABLE BUSINESS EXPENDITURE. WE FIND NO GROUND TO INTERFERE WITH TH E ORDER OF CIT(A). GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 11. IN THE RESULT THE APPEAL BY THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 01.03.2018. SD/- SD/- [WASEEM AHMED] [ N.V.VAS UDEVAN ] ACCOUNTANT MEMBER JUDICIAL M EMBER DATED : 01.03.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1. M/S MANAGALAM FISCAL SERVICES PVT. LTD., 8A, MOI RA STREET, MINTO PARK, KOLKATA- 700017. 2. I.T.O., WARD-7(1), KOLKATA. 3. CIT(A)-8, KOLKATA 4. C.I.T.-3, KOLKAT A. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O., ITAT KOLKATA BENCHES ITA NO.91/KOL/2017 MANGALAM FISCAL SERVICES (P)LTD A.Y .2009-10 4