ACIT CIRCLE-2 (1)(1) , MUMBAI V. M/S MADURA GARMENTS LIFESTYLE RETAIL CO. LTD (NOW MERGED WITH ADITYA BIRLA FINANCE LTD) , MUMBAI

ITA 96/MUM/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6775 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 02-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JISHAAN JAIN
• Keywords: Income from undisclosed sources; Earning of tax free income; Proportionate interest; Additional evidence; Bad and doubtful debts; TDS; Rule 8D; FORM 26AS
• Section: 14A; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI AMARJIT SINGH (JUDICIAL MEMBER) ITA No. 96/MUM/2020 Assessment Year: 2014-15 ACIT, Circle-2(1)(1), Room No. 561, 5 th floor, Aayakar Bhavan, M.K. Road, Mumbai-400020. Vs. M/s Madura Garments Lifestyle Retail Co. Ltd. (now merged with Aditya Birla Finance Ltd.), 18 th floor, One Indiabulls Centre, Tower-1, Senapati Bapat Marg, Elphinstone Road, Mumbai-400013. PAN No. AAFCM 0483 M Appellant Respondent ITA No. 563/MUM/2020 Assessment Year: 2014-15 Aditya Birla Finance Ltd., (Successor of M/s Madura Garments and Lifestyle Retail Company Ltd.) 18 th floor, One Indiabulls Centre, Tower-1, Senapati Bapat Marg, Elphinstone Road, Mumbai-400013. Vs. Dy. CIT Circle-2(1)(1), Room No. 561, 5 th floor, Aayakar Bhavan, M.K. Road, Mumbai-400020. PAN No. AAFCM 0483 M Appellant Respondent Assessee by : Mr. Yogesh Thar & Mr. Jishaan Jain, ARs Revenue by : Mr. S.N. Kabra, DR Date of Hearing : 22/02/2022 Date of pronouncement : 16/03/2022 M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 2 ORDER PER OM PRAKASH KANT, AM These cross appeals by the Revenue and assessee are directed against order dated 15/10/2019 passed by the Ld. Commissioner of Income-Tax (Appeals)-4, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2014-15. The grounds raised by the Revenue in its appeal are reproduced as under: 1. On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance us 14A of the IT Act r.w. Rule 8D made by the AO without appreciating the fact that it was correctly worked out as per the method of calculation prescribed in Rule 8D of the Income tax Rules, 1962, which is the changed law w.e.f. AY. 2008-09. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance u/s 14A of the IT Act r.w. Rule 8D made by the AO without appreciating that the method of working of disallowance is held as reasonable method by jurisdictional High Court in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. CIT328 ITR 81 (Bom). 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing relief to the assessee relying on the decision of Hon"ble Special Bench of ITAT Delhi in the case of Vireet Investment (P) Ltd., without appreciating the facts that the issue has not reached to its finality as the Hon'ble Delhi High Court in its decision in the case of Goetz India Ltd., reported in 361 ITR 505 held that while computing Book Profit disallowance u/s 14A is required to be made. However, in its later judgment the Hon'ble Delhi High Court in the case of Bhushan Steel Ltd. (ITA No. 593 & 594/2015) has taken a contrary view. 4. On the facts and the circumstances of the case and in law, the Ld. CIT(A) is correct in deleting the addition of Rs.6,03,200/- relying on the affidavit filed M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 3 by the assessee that the amount was erroneously credited by BCCI without appreciating the said amount is duly reflected in 26AS statement as receipt by the assessee during the year and that no other documentary proofs have been submitted by the assessee evidencing that the same is not its income. 2. The assessee has filed two set of Form No. 36 containing details of grounds of appeal. In the revised form No. 36 (new format), three grounds have been raised, whereas in the Form No. 36 in old format, six grounds have been raised. As revised form No. 36 has been substituted by Income Tax (Tenth Amendment), Rules 2018 w.e.f. 23.10.2018 and the Ld. counsel of the assessee also argued the grounds listed in revised form No. 36, therefore those grounds are only considered for adjudication. For ready reference, those grounds are reproduced as under: 1. Erred in retaining the suo-moto disallowance under section 14A carried out by the Appellant out of caution only, amounting to ₹12,97,50,000/- despite the fact that claimed exempt income earned during the year was only ₹3,26,164/- only. 2. Erred in upholding the disallowance of provision for doubtful debts and provision for doubtful advance of ₹1,83,952/- and ₹16,63,064/- respectively made by the Ld. AO without considering the submissions made by the Appellant in this regard. 3. Upholding the disallowance of mark to market loss of ₹5,38,534/- & not accepting the decision of Hon’ble Supreme Court in the case of CIT v. Woodward Governor, M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 4 wherein such expenditure being revenue in nature is allowed u/s 37(1) of the Act. 2.1 The assessee has also raised additional ground as under: 4. On the facts and in the circumstances of the case and in law, the learned AO has erred in disallowing provision for doubtful debts and provision for doubtful advance of Rs. 1,83,952 and Rs.16,63,064 respectively. The learned AO be directed to allow the above additions aggregating to Rs.18,47,016 and reduce the total income accordingly. 5. On the facts and in the circumstances of the case and in law, the learned AO has erred in- i. disallowing mark to market loss of Rs. 5,38,534/- ii. Not appreciating the fact that there are no MTM losses in the year under consideration. iii. Without Prejudice, Not accepting the decision of Hon'ble Supreme Court in the case of CIT V/s Woodward Governor India Pvt. Ltd (312 IT 254), wherein it has been held that loss suffered by the Appellant on account of fluctuation in the rate of foreign exchange as on the date of the balance-sheet is an item of expenditure under Section 37(1) of the Act. The learned AO be directed to allow the deduction of Rs.5,38,534/- W/s 37(1) of the Act and to reduce the total income accordingly. 3. We have heard rival submission of the parties on the issue of the admission of the additional ground. We find that the grounds raised are purely legal in nature and no further investigation of fresh facts is required therefore, following the finding of the Hon’ble Supreme Court in the case of NTPC Ltd reported in 229 ITR 383 (SC), the additional grounds are admitted for adjudication. M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 5 4. Briefly stated facts of the case that the assessee company i.e. M/s. Madura Garments lifestyle retail company limited, was engaged in trading of ready- made apparel and accessories. The assessee filed return of income on 28/11/2014 declaring Nil income. The return of income filed by the assessee was selected for the scrutiny assessment and statutory notices under the Income Tax Act, 1961 (in short ‘the Act’) were issued and complied with. Due to merger of the company with M/s Aditya Birla Finance Ltd, the case of the assessee got transferred from Assessing Officer at Bangalore to Assessing Officer at Mumbai. After considering submission of the assessee, the Assessing Officer completed the assessment on 26/12/2016 and made certain additions/disallowances. The assessee filed further appeal before the Ld. CIT(A), who allowed part relief to the assessee. Aggrieved, both the assessee and the Revenue are before the Tribunal, raising the respective grounds 5. The ground Nos. 1 to 3 of the appeal of the Revenue and ground No.1 of the appeal of the assessee are related to disallowance under section 14A of the Act read with rule 8D of Income Tax Rules, 1962 (in short ‘the Rules’). 6. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. In the case, the assessee has shown investment of ₹425 crores in preference shares of Aditya Finance Ltd as on M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 6 31/03/2013 (i.e. opening of previous year) and this amount remained invested till the end of the previous year as on 31/03/2014. The assessee earned a dividend income of ₹3,26,164/- from said investment. In the return of income filed, the assessee made suo moto disallowance of ₹12,97,50,000/- for proportionate amount of the interest corresponding to the borrowed funds utilized for investment in preference shares of M/s Aditya Birla Finance Ltd. Before the Assessing Officer, the assessee submitted that none of the expenses debited in profit and loss account were related to earning of exempted income and therefore no further disallowance under section 14A of the Act other than already offered suo moto was warranted. The Ld. Assessing Officer rejected the contention of the assessee and invoked rule 8D for computing disallowance under section 14A of the Act, but restricted the disallowance under rule 8D(2)(iii) at the rate of 0.5% of average investment which could yield exempted income because proportionate interest expenditure (i.e. which is provided in rule 8D(2)(ii)) was already offered suo moto by the assessee. 7. Before the Ld. CIT(A) the assessee claimed that in view of the decision of the Tribunal Mumbai bench in the case of Daga global chemicals Private Limited (ITA No. 5592/Mum/2012) disallowance under section 14A should be restricted to the quantum of exempted income earned. The Ld. CIT(A) M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 7 accordingly, restricted the disallowance made by the Assessing Officer under rule 8D(2)(iii) to ₹3,26,164/- (i.e. equivalent to the amount of exempted income of dividend) however retained the suo moto disallowance of ₹12,97,50,000/- made by the assessee in the return of income. 8. Before us, the Ld. DR relied on the order of the Assessing Officer and submitted that once the Rule 8D had been invoked, the disallowance had to be made as per the method provided in Rule 8D, which has been held to be a reasonable method by the Hon’ble jurisdictional High Court in the case of Godrej & Boyce Mfg. Co Ltd Vs CIT 328 ITR 81(Bom). Accordingly, he submitted that disallowance computed by the Assessing Officer under rule 8D(2)(iii) of ₹2,12,50,000/-should be retained along with sumo disallowance of proportionate interest of ₹12,97,50,000/-. 9. The Ld. counsel of the assessee on the other hand submitted that in view of the decision of Tribunal in the case of Daga global chemicals Private Limited (supra) and decision of Hon’ble Delhi High Court in the case of Joint Investment Private Limited versus CIT (ITA 117/2015), the disallowance under section 14A of the Act in the case of the assessee should be restricted to the exempted income of ₹3,26,164/-only. M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 8 10. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The disallowance Rule 8D has three components. The first component as per rule 8D(2)(i) is the expenditure which is directly related to earning of exempted income. The second component as per rule 8D(2)(ii) is in respect of the interest expenditure only. When the assessee is unable to identify the interest expenditure having direct nexus with the investment which could yield exempted income, interest in proportion to such investment has been prescribed for disallowance under rule 8D(2)(ii). The third component is towards estimation of expenses in the nature of the administration and management of the investment, which could yield exempted income. The rule has prescribed disallowance at the rate of 0.5% of the average investment under rule 8D(2)(iii). In the case, the assessee himself as worked out the proportionate interest amounting to ₹12,97,50,000/-, claimed to have been incurred for earning dividend income from investment in preference share in M/s Aditya Birla Finance Ltd. (i.e. the company with whom the assessee has later on merged). It is the component of the interest related to borrowings utilized for investment in preference shares, from which the assessee has earned dividend income. The Assessing Officer has further made disallowance for administrative expenses at the rate of 0.5% of such investment following rule 8D(2)(iii), but Ld. CIT(A) has restricted that disallowance to M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 9 ₹3,26,164/-. Now the contention of the assessee that entire disallowance under section 14A should be restricted to ₹3,26,164/- following the decision cited. But we find that in the case of Joint Investment Private Limited (supra), the assessee shown dividend income of ₹48,90,000/- and against which identified disallowance of ₹2,97,440/- directly related to earning exempted income [i.e. the amount mentioned in Rule 8D(2)(i)] but no disallowance was identified by the assessee for earning the exempted income corresponding to Rule 8D(2)(ii) and 8D(2)(iii). In said case, the Assessing Officer worked out disallowance under rule 8D(2)(ii) at ₹34,08,582 and under rule 8D(2)(iii) at ₹65,36,743/-, but finally restricted disallowance under section14A at ₹52,56,197/-. In those circumstances, the Hon’ble High Court (supra) observed that disallowance cannot exceed the entire exempted income. But in the instant case assessee itself has identified the expenditure of interest incurred for earning of exempted income and therefore ratio of said decision cannot be imported over the facts of the assessee. The basic principle of disallowance under section 14A of the Act is that any expenditure incurred for earning exempted income cannot be allowed as expenditure against the taxable income. When no tax is being paid in respect of exempted income, then any expenditure related to such exempted income if included in the expenditure eligible against taxable income, then such expenditure need to be identified and disallowed. In this case M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 10 assessee itself has suo moto identified the amount of interest in relation to investment in the preference shares of M/s Aditya Birla finance Ltd. This was a single investment and the assessee even could have identified the interest incurred directly in relation to borrowing for investment in such preferential shares, but even the Assessing Officer has accepted the proportionate disallowance of interest. Therefore, now the claim of assessee that sumo disallowance should be ignored and entire disallowance under section 14A should be restricted to the exempted income is not justified. But as far as disallowance under Rule 8D(2)(iii) of the Rule is concerned, the expenditure computed is far exceeding the dividend income and therefore the action of the Ld. CIT(A) in restricting the said disallowance towards administrative expenses for earning exempted income is justified in view of the decision cited by the assessee. 11. Before us, the Ld. counsel of the assessee submitted that in assessment year 2013-14 Tribunal in ITA No. 95 & 564/Mum/2020 has upheld the finding of the Ld. CIT(A) and restricted the disallowance to the extent of exempted income. The relevant finding of the tribunal is reproduced as under: “9. We have considered the rival submissions of the learned Counsel appearing for the parties and perused the material on record. The facts borne out from records clearly indicate that the assessee has earned dividend for the M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 11 impugned assessment year. It is a well settled principles of law that disallowance computed under section 14A r/w Rule 8D shall not hold entire income earned for the year. In other words, disallowance of expenditure under section 14A r/w rule 8D shall not exceed exempt income earned for the year. This proposition of law is also supported by the decision of Hon'ble Delhi High Court in Cheminvest Ltd. v/s CIT, [2015] 378 ITR 33 (Del.), wherein it was clearly held that disallowance of expenditure under section 14A of the Act shall not exceed exempt income earned by the assessee for the year. As discussed in the forgoing paragraph, in the present case, although the dividend income earned by the assessee during the year under consideration, the Assessing Officer has computed disallowance which is in excess of exempt income earned for the year. Therefore, considering the facts and circumstances of the case and also by following the decision of the Hon'ble Delhi High Court in Cheminvest M/s. Madura Garments Lifestyle Retail Co. Ltd. (Now merged with Aditya Birla Finance Ltd.) Ltd. (supra), we direct the Assessing Officer to restrict the disallowance computed under section 14A of the Act r/w Rule 8D of I.T. Rules, 1962, to the extent of exempt income earned for the year. Consequently, we find no legal infirmity in the impugned decision of the learned CIT(A) warranting us to interfere with the order passed him which is hereby upheld. The grounds raised by the Revenue are dismissed.” 11.1 On perusal of the above order, we find that tribunal has relied on the decision of Hon'ble Delhi High Court in the case of Cheminvest Ltd Vs CIT (2015) 378 IT 33 (Delhi) for restricting the disallowance under section 14A of the Act to the extent of exempted income, whereas in the case of Chminvest Ltd (supra) there was no exempted income and therefore disallowance u/s 14A was deleted. The decisions relied upon by the tribunal (supra) is not relevant M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 12 to the facts case in hand. Before us, the assessee has relied on the decision of the Hon'ble Delhi High Court in the case of joint investment private Limited (supra). 11.2 In view of the aforesaid decision, we uphold the finding of the Ld. CIT(A) on the issue in dispute. The ground No. 1 to 3 raised by the revenue as well as ground No. one raised by the assessee are accordingly dismissed. 12. In ground No.4 (four), the Revenue is aggrieved with the deletion of addition of ₹6,03,200/- which was made by the Assessing Officer for amount reflected in Form 26AS statement. The Ld. CIT(A) has deleted the addition observing as under: “6.3 Ground No. 3: Vide this ground, appellant has agitated against addition of ₹6,03,200/- being unaccounted income from BCCI reflected in form No. 26AS. In para 6 of the assessment order, the Ld. AO had mentioned that the assessee company had received an amount of 6,03,200/- from the Board of Control for Cricket in India on which TDS had been deducted for an amount of 212,064/- u/s.194C. The Ld. AO raised a query during the course of assessment proceeding about the inclusion of such receipts from the BCCI in the total taxable income of the assessee. In response to the query raised by the appellant the assessee company submitted that BCCI had erroneously credited the said amount and deducted the TDS thereon under the PAN of the assessee. The appellant further submitted that since it was not the income of the assessee, therefore, the assessee did not claim the TDS which was deducted by the BCCI. The Ld. AO did not accept the explanation submitted by the assessee M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 13 company and made an addition of ₹6,03,200/. During the course of appellate proceeding, it was once again reiterated that the assessee company had not received any income from the BCCI. It was further submitted that the appellant had not rendered any service to the BCCI and the TDS was wrongly deducted by the BCCI. In this regard an affidavit was also filed by the appellant which is placed in annexure 'F’ of the paper book in the record. In the affidavit once again the appellant categorically stated that the assessee company had not received any income from the BCCI and it was a mistake on part of the BCCI by mentioning a wrong PAN No. Since, appellant had neither rendered any service to the BCCI nor received any income, therefore. No such addition can be made in hand of the assessee. Hence addition of ₹6,03,200/- made by the AO is deleted. Appellant can also not avail the credit of TDS mentioned by the BCCI. Hence, AO is directed not to allow credit of TDS on transaction with BCCI.” 12.1 The Form No. 26AS is being prepared by the Income Tax Department on the basis of information gathered from various sources including quarterly return of tax deducted at source (TDS) filed by the tax deductors. In the said form no 26AS which is maintained in respect of each assessee, the amount of TDS, the amount paid or credited by the deducutor and name of the deducter and deductee are picked up from said quarterly TDS returns. In this case, in the form No. 26AS of the assessee, an amount of ₹6,03,200/- has been shown as paid to the assessee by the Board of Control for Cricket in India (BCCI). The assessee has denied receipt of any such sum from the BCCI and also filed an affidavit in this regard. In such circumstances, the onus was on the Assessing M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 14 Officer to verify from the BCCI, whether any such payment was made to the assessee. No such effort has been made on the part of the Assessing Officer. In the circumference, the Ld. CIT(A) is justified in deleting the addition. The Ld. CIT(A) has also directed the Assessing Officer not to allow the credit of said TDS relating to said alleged payment by the BCCI to the assessee. In our opinion, there is no error in the finding of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground No. 4 (four) of the appeal of the Revenue is accordingly dismissed. 13. The ground No. five of the appeal being general in nature, is dismissed as infructuous. 14. The ground No. 2 (two) of the appeal of the assessee relates to disallowance of provision for doubtful debts and provision for doubtful advances of ₹1,83,952/-and ₹16,63,064/- respectively. 14.1 The Assessing Officer observed provision for doubtful debt and doubtful advances and found that such provision had not been disallowed by the assessee in the computation of the income and therefore, he issued show cause to the assessee as why such provision should not be disallowed. The assessee contended that in view of the decision of the Hon’ble Supreme Court in the case M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 15 of Vijay bank Vs CIT (323 ITR 166), it was not necessary for the purpose of writing off the bad debt to pass the corresponding entries in the individual account of each and every debtor and corresponding credit is made in the “bad Debt Reserve Account. “The Ld. Assessing Officer rejected the contention of the assessee. The Ld. CIT(A) confirmed the disallowance observing as under: “6.4 Ground No. 4: Vide this ground, appellant has agitated against disallowance of Provision for doubtful debts and doubtful advances amounting to ₹1,83,952/- and ₹16,63,064/- respectively. In para 7 of the assessment order, the Ld. AO had mentioned that in the profit and loss account, the assessee company had debited ₹1,83,952/- and ₹16,63,064/- on account of provision for doubtful debts and Provision for doubtful advances. During the course of assessment proceedings, the Ld. AO asked the appellant to explain how such type of doubtful debts and Provision in doubtful advances were allowable as per provision of law. In response to the query raised by the AO appellant filed the written submission which is reproduced by the Ld. AO in para 7 of the assessment order. The Ld. AO did not accept the submissions of the appellant by citing the reason with decision of Hon'ble Supreme Court in case of Vijaya Bank vs. CIT 232 IT 166 is applicable only in case of banks. During the course of appellate, proceeding once again submission made before AO were repeated and it was claimed that provision for doubtful deposits amounting to R 12,00,000/- was in response to a lease premises in Hyderabad and provision for doubtful capital advance amounting to ₹4,63,064/- was in respect of store design fees paid to Blocher India Put. Ltd. in respect of store design for the store that was to be opened. During the course of appellate proceedings, the appellant could not submit any documentary evidences in respect of above mentioned expenses. The assessee also could not justify how these expenses were related to the business of the assessee. It is also important to point out M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 16 that the Hon'ble Apex Court in case of TRF Ltd. vs CIT 323 ITR 397 (SC) has held that for claiming credit of bad debt written off or irrecoverable u/s 36(1)(vii). The assessee had to fulfil following conditions:  The debt should be written off in the books of accounts.  It must have been declared as income in the books of account of the assessee in earlier years. Appellant had failed to provide any evidence regarding fulfilment of above mentioned conditions. Therefore, the claim of the appellant cannot be accepted, hence, respectively following judgement of Hon'ble Apex Court TRF Ltd. vs. CIT(supra) appeal of the assessee on this ground is dismissed.” 15. Before us, the Ld. counsel of the assessee has filed additional evidence under Rule 29 of the ITAT Rules to support that expenditure of ₹16,63,064/- was incurred in relation to lease deposit for a showroom (₹12,00,000/-) and towards design fee (₹4,36,064/-). He further submitted that details and documentary evidence of the same could not be provided during the assessment or first appellate proceedings as same were not asked. The Ld. counsel submitted that these documents goes to the root of issue in dispute and therefore should be admitted for deciding the issue in dispute. 16. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The Ld. counsel referred to the Note - 20 of profit and loss account, which is available on page 16 of the paperbook (containing pages 1 to 103). According to this note assessee has debited M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 17 provision for doubtful debts of ₹1, 83,952/ and provision for doubtful advances of ₹16,63,064/-. For claiming deduction under section 36(1)(vii) as bad debt written off, the assessee was required to fulfil the two conditions as led by the Hon’ble Supreme Court in the case of TRF Ltd (supra). The first condition is that the amount should have been taken as income in the books of account of the assessee in earlier years. The second condition is that the debt must be written off in the books of accounts. In respect of both of these amounts of provision of doubtful debts and doubtful advances, the assessee has failed to substantiate that same were taken as income in the books of accounts of the earlier years. The assessee has also failed to substantiate as how the said amounts have been written off in the books of accounts of the assessee. The assessee has not submitted any evidence in the form of entries carried out in the books of accounts for writing off of said amounts. The additional evidences submitted by the assessee are in respect of advances made by the assessee and not in respect of the trade debt. As the additional evidences are not in respect of the issue in dispute of bad debt written off i.e. the ground in dispute before us and therefore same are not admitted. In view of the discussion above, the ground No. two of the appeal of the assessee is dismissed. M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 18 17. The ground No. 3 (three) of the appeal of the assessee and additional ground No. 4 (four) and 5 (five) raised by the assessee are connected with the disallowance of foreign exchange loss on mark to market valuation of ₹5,38,534/-. 18. Before the Assessing Officer, the assessee submitted that loss was incurred for avoiding the risk of loss due to foreign exchange fluctuation. The Assessing Officer in view of the CBDT Instruction No. 3 of 2010 dated 23/03/2010 disallowed the said loss. The Ld. CIT(A) also upheld the disallowance holding that the assessee did not clarify whether the losses incurred from actual transaction for forex derivatives losses were booked without actual sale or settlement. 19. Before us the assessee has filed details of forward contract transactions and submitted that same were entered to safeguard the price of transaction of import of trading goods. 19.1 A chart of such transaction produced on PB-77 is reproduced as under: Bank Reference Number Maturity end date MTM loss debited to P&L account Annexure reference 21-277132 30-05-2014 1,11,374 C(1) 21-277137 09-05-2014 60,249 -----“----- 21-277143 09-06-2014 62,454 -----“----- 21-277149 16-05-2014 62,678 -----“----- 21-277151 10-07-2014 29,110 -----“----- 21-277319 16-05-2014 15,669 C(2) 21-277320 30-05-2014 27,843 -----“----- M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 19 21-277330 09-06-2014 15,613 -----“----- 21-277331 10-07-2014 7,277 -----“----- 21-280305 15-05-2014 43,178 C(3) 21-280307 16-05-2014 23,678 -----“----- 21-280309 30-05-2014 81,612 -----“----- Total 5,40,738/- 19.2 According to the submission of the assessee, these transactions are hedging transactions entered into for safeguarding of any extra liability of rupee payment on account of fluctuation in exchange rate of currency of import on the date of payment. So when the forward contract transactions and actual underlying transaction are considered together, there will not be any actual gain or loss. The loss or gain if any calculated at the year end i.e. 31/03/2014 in respect of the forward contract on standalone basis at the rate of prevalent exchange rate of currency, will only be a notional loss or gain. The Tribunal in the case of the assessee for assessment year 2013-14 in ITA No. 95 & 564/Mum/2020 has disallowed such notional loss and directed to allow such a loss on maturity of contract. The relevant finding of the Tribunal is reproduced as under: “16. Considered the rival submissions and material on record. It is brought to our notice that the assessee is in regular import business and it has covered the foreign currency fluctuation by booking forex forward contract cover from the bank. The Ld. AR brought to our notice page 67 and 68 of the Paper Book to highlight loss incurred by the assessee. We noticed that the assessee has booked the loss in the profit and loss account considering the closing mark to market rate as on 31.03.2013. But we notice that the maturity date mentioned in the M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 20 contract falls on April, May and June 2013. The loss calculated by the assessee as on 31.03.2013 is only notional loss and the actual loss falls only when it is failed to fulfil the terms of the contract in the respective contract maturity date. Therefore, this loss actually falls on April, May and June 2013. Therefore, this loss pertains to next assessment year, the assessee can claim this loss only in the year of actual loss. Accordingly, this ground of appeal is dismissed.” 19.3 We find that no details supporting each transaction of forward contracts have been filed by the assessee either before the lower authorities or before us. Therefore, in the interest of substantial justice, we feel it appropriate to set aside the finding of the Ld. CIT(A) on issue-in-dispute and restore this issue back to the file of the Ld. Assessing Officer for deciding afresh after verification of the documentary evidences which will be submitted by the assessee regarding each forward contract transactions, its underlying transaction of import/export, rollover of forward contract transactions if any and final settlement of the contract transactions. 19.4 In additional ground (marked as Ground No.4), the assessee is seeking to give effect of the direction of the Tribunal (supra) given in assessment year 2013-14, in the present assessment year. We are of the opinion that the assessee should have requested in assessment year 2014-15 i.e. current assessment year, before the Ld. Assessing Officer by way of rectification for giving effect of the order of the Tribunal (supra) dated 29.10.2021 for M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 21 assessment year 2013-14, but no such request has been claimed to have been made before the Assessing Officer. However, since we have restored this issue of claim of foreign exchange loss to the Assessing Officer, he may consider this request of the assessee in accordance with law. This additional ground (Ground No. 4) is accordingly allowed for the statistical purposes. 19.5 As far as additional ground (Ground No. 5), is concerned which has been raised without prejudice to ground No. 3, we have already restored the main ground No. 3 to the file of the Ld. Assessing Officer for deciding afresh in the light of the decision of the Tribunal after verification of documentary evidences and therefore this ground is rendered infructuous. Accordingly, this ground is dismissed. 20. In the result, the appeal of the Revenue is dismissed whereas the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 16/03/2022. Sd/- Sd/- (AMARJIT SINGH) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 16/03/2022 Rahul Sharma, Sr. P.S./Dragon Legal Software M/s Aditya Birla Finance Ltd. ITA Nos. 96 & 563/M/2020 22 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// (Sr. Private Secretary) ITAT, Mumbai