MAHINDRA & MAHINDRA LTD, MUMBAI V. ADDL CIT RG 2(2), MUMBAI

MA 446/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4684 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2009-2010
• Appeal Filed On: 01-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGH
• Assessee Lawyers: H P MAHAJANI
• Keywords: Capital asset; Depreciation; Rectification of order; Cost of acquisition; Revenue expenditure; Capital expenditure; Set aside
• Section: 201; 254(2); 13

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI RAMLAL NEGI (JM) M.A. NO. 446/MUM/2019 ARISING OUT OF I.T.A. NO. 1956 /MUM/ 201 4 (ASSESSMENT YEAR 20 09 - 10 ) MAHINDRA & MAHINDRA LTD. CORPORATION TAXATION P.K. KU RNE CHOWK WORLI, MUMBAI - 400 018. PAN : AAACM3025E V S . ADDL. CIT - RANGE2(2) AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI H.P. MAHAJANI DEPARTMENT BY SHRI A MIT PRATAP SINGH DATE OF HEARING 13.12.2019 DA TE OF PRONOUNCEMENT 21 . 0 2 . 20 20 O R D E R PER SHAMIM YAHYA (AM) : - BY WAY OF THIS MISCELLANEOUS AP PLICATION THE ASSESSEE SEEKS RECTIFICATION OF MISTAKE APPARENT FROM RECORD IN THE ORDER OF THIS TRIBUNAL UNDER SECTION 254(2) OF THE INCOME TAX ACT IN ITA NO. 1956/MUM/2014 V IDE ORDER DATED 10.4.2019. 2. T HE 1 ST ISSUE RAISED IN THE MISCELLANEOUS APPLICATION RELATES TO THE DISALLOWANCE OF CONTRIBUTION TO THE MAHINDRA ACADEMY UNDER SECTION 40A ( 9 ) OF THE ACT. T HE SUBMISSION OF THE ASSESSEE IN THIS REGARD R EAD AS UNDER : - G ROUND NO 5 (PAGE 14 - 15, PARA 13 - 14) DEALT WITH THE ISSUE OF DISALLOWANCE U/S. 40A(9) OF RS. 2,59,6507 - AND RS. 12,00,000/ - REPRESENTING CONTRIBUTION TO MAHINDRA ACADEMY READS AS UNDER: A) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE APPELLANT CONTENDS THAT THE LEARNED ADDL C.I.T. ERRED IN PROPOSING AND THE DRP ERRED IN CONFIRMING DISALLOWANCE OF DEDUCTION OF RS. 2,59,6507 - BEING THE ACTUAL EXPENDITURE INCURRED DURING THE YEAR ON EMPLOYEE WELFARE. MAHINDRA & MAHINDRA LTD. 2 B) ON THE FACTS A ND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE APPELLANT CONTENDS THAT THE LEARNED ADDL . C.I.T. ERRED IN PROPOSING AND THE DRP ERRED IN CONFIRMING DISALLOWANCE U/S. 40A(9) OF RS. 12,00,000 REPRESENTING AMOUNT PAID TO MAHINDRA ACADEMY. THE APPELLANT CON TENDS THAT THE SCHOOL RUN BY MAHINDRA ACADEMY WAS FOR THE BENEFIT APPELLANT'S EMPLOYEES AND ALSO OF OTHER LOCAL RESIDENTS AND THEREFORE, PROVISIONS OF SECTION 40A(9) ARE NOT APPLICABLE TO SUCH PAYMENT. THE CLAIM OF THE APPELLANT BE ALLOWED.' 4. HON'BLE TRIBUNAL HAS DISPOSED OF THE GROUND IN THE FOLLOWING WORDS (PARA 14 - 15, PAGE 13 - 14); '13.................. WE NOTE THAT IN ITA NO. 586/MUM/2013 FOR A. Y. 2008 - 09, ITAT HAS DEALT WITH IDENTICAL ISSUE AS UNDER : - 4. IN GROUND NO.6, THE ASSESSEE HAS CHALLE NGED THE DISALLOWANCE UNDER SECTION 40A(9) OF RS. 27,47,447 REPRESENTING THE ACTUAL EXPENDITURE OFRS. 18 LAKHS INCURRED ON EMPLOYEES WELFARE BEING CONTRIBUTION TO MAHINDRA ACADEMY. 25. BEFORE US, IT HAS BEEN ADMITTED BY BOTH THE PARTIES THAT THE TRIBUNAL, FOR THE ASSESSMENT YEARS 2006 - 07 AND 2007 - 08, IN ASSESSEE'S OWN CASE, HAS SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. 26. AFTER HEARING BOTH THE PARTIES AND IN VIEW OF THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR EARLIER YEARS, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE ASSESSING OFFICER AND RESTORE THIS ISSUE BACK TO HIS FILE FOR DENOVO ADJUDICATION AND IN ACCORDANCE WITH THE LAW. THUS, GROUND NO.6, IS ALLOWED FOR STATISTICAL PURPOSES. ACCORDINGLY FOLLOWING PRECEDENT AS ABOVE, WE REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION.' 5. IN THE CHART SUBMITTED DURING THE COURSE OF THE HEARING, FOLLOWING REMARKS WERE MADE IN RESPECT OF THIS GROUND: 'THE ISSUE OF EXPENDITURE ON EMPLOYEE WELFARE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN AY 2000 - 01 (ITA NO 3998/MUM/2010, PAGE 2, PARA 7) & AY 2001 - 02 (ITA NO 7581/MUM/2011, PAGE 6, PARA 27). THE ISSUE OF CONTRIBUTION TO MAHINDRA ACADEMY HAD BEEN REFERRED BACK TO AO BY HONLTAT IN AY 2006 - 0 7 (PAGE 41 - 44 PARA 11), AY 2007 - 08 . (PAGE 9, GR.6); AY 2008 - 09) ( PAGE NO. 9,PARA 26). CIT (A) HAS ALLOWED THE APPEAL ON THIS ISSUE FOR AY 2006 - 07 AND 2007 - 08 IN APPEAL IT - 35/14 - 15 DATED 03.11.2015 FOR A. Y. 2006 - 07 AND IT - 34/14 - 15 DATE D 06.10.2016 FOR A. Y . 2007 - 08. MAHINDRA & MAHINDRA LTD. 3 6 . THE MISTAKE THAT IS APPARENT FROM THE RECORD IS THAT THE HONOURABLE TRIBUNAL HAS INADVERTENTLY ADJUDICATED THIS ISSUE BY FOLLOWING THE ORDER IN ITA NO.586/MUM/2013 FOR A.Y. 2008 - 09 INSTEAD OF WITH REFERENCE TO THE LAST OPERATIVE ORDERS VIZ . ORDER IN ITA 3998/MUM/2010 FOR A.Y. 2000 - 01 AND THE DECISION OF LEARNED CIT(A) FOR A.Y. 2007 - 08 (ACCEPTED BY THE DEPARTMENT) . 3. U PON CAREFUL CONSIDERATION AND HEARING BOTH THE PARTIES IN OUR CONSIDERED OPINION MISTAKE APPARENT FROM RECORD HAS CR EPT IN THE ORDER OF THE TRIBUNAL IN AS MUCH AS LATEST ORDER OF THE TRIBUNAL ON THE ISSUE HAS NOT BEEN CONSIDERED. ACCORDINGLY THE CONCERNED GROUND OF APPEAL IS RECALLED FOR FRESH ADJUDICATION . 4. A NOTHER ISSUE RAISED IN THE MISCELLANEOUS APPLICATION RELATES TO THE FOLLOWING GROUND : - 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED ADDL C.I.T. ERRED IN PROPOSING AND THE DRP ERRED IN NOT ALLOWING DEDUCTION FOR DIFFERENCE IN EXCHANGE OF RS. 251.63 CRORES AS CLAIMED BY THE APPELLANT IN THE COMPUTATION OF INCOME. THE LEARNED ADDL CIT/DRP OUGHT TO HAVE ACCEPTED THE CONTENTION THAT THERE IS NO REQUIREMENT IN THE LAW TO CAPITALIZE THE DIFFERENCE IN EXCHANGE TO THE CAPITAL ASSETS ACQUIRED BY THE APPELLANT AS ALSO THE LOSS ARISING DUE TO DIFFERE NCE IN EXCHANGE WAS NOT CONTINGENT IN NATURE AND THEREFORE WAS ALLOWABLE AS REVENUE DEDUCTION WHILE COMPUTING THE TAXABLE INCOME OF THE APPELLANT. WITHOUT PREJUDICE TO THE AFORESAID CONTENTION THAT THE DIFFERENCE IN EXCHANGE WAS ALLOWABLE AS REVENUE DEDUC TION, THE LEARNED ADDL CIT/DRP OUGHT TO HAVE ALLOWED DEPRECIATION ON SUCH DIFFERENCE IN EXCHANGE AS CAPITALIZED IN THE BOOKS OF ACCOUNTS.' 5. WE FIND THAT THE ITAT HAS ADJUDICATED THIS ISSUE IN ITS ORDER AS UNDER : - GROUND NO.16: DISALLOWANCE OF DIFFERE NCE IN EXCHANGE LOSS CLAIMED AS REVENUE EXPENDITURE RS. 251,63,00,000/ - . 35. BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR, THE ASSESSEE CLAIMED A DEDUCTION OF RS. 251.63 CRORES OUT OF COMPUTATION OF INCOME ON ACCOUNT OF DIFFERENCE IN EXCHANGE ARISING OUT OF REPAYMENT OF FOREIGN CURRENCY LOANS/ REVALUATION OF FOREIGN CURRENCY. THE LOANS HAVE NOT BEEN REPAID DURING THE YEAR. THE LOANS ARE SAID TO HAVE BEEN UTILIZED TOWARDS PURCHASE OF FIXED ASSETS AS WELL AS FOR CERTAIN CURRENT ASSETS. THE ASSESSEE HAS GIVEN DETAILS OF FOREIGN EXCHANGE FLUCTUATION EXPENSES AND APPLICATION OF THE FOREIGN EXCHANGE LOANS AS UNDER: - MAHINDRA & MAHINDRA LTD. 4 PARTICULAR PROFIT AND LOSS FY 2009 RS. IN LAKHS CAPITAL EXPENDITURE IN LAKHS FOREX RESERVE RS. IN LAKHS UNUTILISATION OF FOREX RESERVE ZERO COUPON FOREIGN CURRENCY CONVERTIBLE BONDS LOAN 19507 16496 3011 INVESTMENT IN MAHINDRA GEARS INTERNATIONAL LTD. MAURITIUS AND MAHINDRA OVERSEAS INVESTMENT COMPANY (MAURITIUS) LTD. HSBC LOAN 5181 4904 277 INVESTMENT IN MAHINDRA GEARS INTERNATIONAL LIMITE D, MAURITIUS AND MAHINDRA OVERSEAS INVESTMENT COMPANY (MAURITIUS) LTD. UNION BANK OF INDIA 145T 1455 GENERAL WORKING CAPITAL PURPOSE CITI BANK & DBS 3 3 GENERAL WORKING CAPITAL PURPOSE ICS S GIVEN 0982 - 982 TOTAL 25164 21400 3764 36. IT WAS SUB MITTED THAT THE ASSESSEE HAS NOT DEBITED THIS AMOUNT IN THE PROFIT AND LOSS ACCOUNT AND HAS ACCOUNTED THE SAME IN COMPLIANCE WITH ACCOUNTING STANDARD 11. THE ASSESSEE HAS CHARGED THE SAME TO THE FIXED CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT' TO BE WRITTEN - OFF TO THE PROFIT & LOSS ACCOUNT IN LATER YEARS. THE ASSESSEE SUBMITTED THAT THE FOREIGN EXCHANGE EXPENSE FLUCTUATION LIABILITY HAS BEEN CAPITALIZED IN THE BOOKS BUT FOR INCOME TAX PURPOSES IT IS CONSIDERED AS REVENUE EXPENSE. ACCORDINGLY THE COST OF ASSETS FOR COMPUTATION OF DEPRECIATION ALLOWABLE UNDER SECTION 32, SUCH FOREIGN EXPENSE HAS NOT BEEN CONSIDERED AS COST OF CAPITAL ASSET. THE DEDUCTION HAS BEEN CLAIMED IN THE COMPUTATION OF TOTAL INCOME FILED. 37. THE AO HAS DISALLOWED THIS EXPE NDITURE STATING THAT THE SAME IS A CONTINGENT LIABILITY. ALSO, FOR THE LOANS TAKEN FOR FIXED ASSETS, THE SAME WAS REQUIRED TO BE CAPITALIZED AND HENCE THE AO HAS DISALLOWED THIS EXPENDITURE. 38. THE DRP UPON ASSESSEES APPEAL HAS DEALT WITH THE ISSUE AS U NDER: - 21.4. WE HAVE CONSIDERED THE ASSESSMENT ORDER, THE FACTS OF THE CASE AS WELL AS THE SUBMISSIONS OF THE ASSESSEE. ADMITTEDLY FOREIGN EXCHANGE LOSS OF RS. 214 CRORES IS ON CAPITAL ACCOUNT AND THE ASSESSEE VIDE SUBMISSION DATED 18TH DECEMBER 2013 HAS SUBMITTED THAT DEPRECIATION ON THIS AMOUNT MAY BE ALLOWED CONSIDERING THAT THE ASSETS HAVE BEEN PUT TO USE FOR PERIOD LESS THAN 182 DAYS DURING THE YEAR. HOWEVER, THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH THE DETAILS OF SPECIFIC FOREIGN EXCHANGE LOANS TAK EN FOR CAPITAL PURPOSES AND IDENTIFIED AND CORRELATED THE RESPECTIVE CAPITAL ASSETS AND WHEN SUCH ASSETS HAVE BEEN PUT TO USE. IT HAS SUBMITTED THAT FOREIGN EXHANGE MAHINDRA & MAHINDRA LTD. 5 LOSS ON ZERO COUPON FCCB RS. 195.07 CRORE, AND ON HSBC LOAN 51.81 CRORES ARE OF BOTH CAPITA L AND REVENUE PURPOSES. THE CAPITAL PURPOSE LOSS ON FCCB LOAN IS 164.96 CRORES LOAN IS 49.04 CRORES AND ON HSBC LOAN IS 49.04 CRORES. 21.5. FROM THE BALANCE SHEET OF THE ASSESSEE IT IS SEEN THAT THE ASSESSEE HAS SECURED FOREIGN CURRENCY LOAN FROM BANKS RS. 378 CRORES (302 CRORES IN PRECEDING YEAR) AND UNSECURED FOREIGN CURRENCY LOANS ON FCCB AND BANK IS RS 1587 CRORES (1293 CRORES IN PRECEDING YEAR). THE SECURED LOAN INCLUDES RS. 253 CRORE SHORT TERM LOANS. FROM THE SCHEDULE OF FIXED ASSETS IN THE BALANCE S HEET IT IS SEEN THAT THE ASSESSEE HAS ADDED FIXED ASSETS RS. 1291 CRORE DURING THE YEAR. THE CAPITAL WIP ON 31ST MARCH IS 646.73 CRORES WHEREAS IN THE PRECEDING YEAR IT WAS 546.45 CRORES. 21.6. THE ADDITION TO THE ASSETS HAVE BEEN MADE UNDER VARIOUS HEADS INCLUDING LAND, BUILDING, PLANT AND MACHINERY, FURNITURE FITTINGS AND VEHICLES, DEVELOPMENT AND SOFTWARE EXPENDITURE. THE ASSESSEE PAS NOT FURNISHED DETAILS OF FOREIGN EXCHANGE LOSS ATTRIBUTABLE TO VARIOUS ITEMS OF CAPITAL ASSETS AND WIP. IN ABSENCE OF DET AILS OF APPLICATION OF FOREIGN EXCHANGE LOANS TO DIFFERENT ITEMS OF CAPITAL ASSETS IT IS NOT POSSIBLE TO ATTRIBUTE SUCH LOSS TO ANY ITEM OF CAPITAL ASSET AS COST OF ACQUISITION OF SUCH ASSET AND ALLOW DEPRECIATION. FROM APPLICATION OF LOAN AS GIVEN IN THE TABLE, IT IS EVIDENT THAT LOAN HAS BEEN APPLIED ALSO FOR INVESTMENT IN EQUITY OF FOREIGN SUBSIDIARIES. THEREFORE THE ORDER OF THE AO REGARDING DISALLOWANCE OF FOREIGN EXCHANGE LOSS TO THE TUNE OF RS. 214 CRORES IS UPHELD. 21.7. REGARDING THE BALANCE FORE IGN EXCHANGE LOSS OF RS 37.64 CRORES CLAIMED AS REVENUE EXPENDITURE, AS PER INFORMATION SUBMITTED, THE LOSS OF RS. 32.88 CRORES HAS BEEN INCURRED IN RELATION TO INVESTMENT IN THE EQUITY OF MAHINDRA GEARS INTERNATIONAL LIMITED MAURITIUS AND MAHINDRA OVERSEA S INVESTMENT COMPANY MAURITIUS LIMITED. THEREFORE THE FOREX LOSS OF RS 32.88 CRORES IS ON CAPITAL ACCOUNT AND THE DISALLOWANCE IN THIS REGARD DOES NOT NEED ANY INTERVENTION. 21.8. ANOTHER FOREIGN EXCHANGE LOSS OF RS. 14.55 CRORES IS STATED TO BE INCURRED IN RELATION TO WORKING CAPITAL LOAN FROM UNION BANK OF INDIA; THE COPY OF LOAN DOCUMENT REGARDING SUCH LOAN HAS BEEN PRODUCED. THIS IS AN UNDATED DOCUMENT SIGNED BY THE ASSESSEE PURPORTING TO BE A PACKING CREDIT AGREEMENT WITH UNION BANK OF INDIA, INDUSTR IAL FINANCE BRANCH, NARIMAN POINT FOR PACKING CREDIT LOAN OF RS. 100 CRORE. THIS LOAN IS IN INDIAN CURRENCY. THEREFORE THIS IS NOT FOREIGN CURRENCY LOAN AND HENCE ANY FOREIGN CURRENCY LOSS CANNOT BE INCURRED IN RELATION TO THIS LOAN. 21.9. THE ASSESSEE H AS ALSO CREDITED FOREIGN EXCHANGE GAIN OF RS.9.82 CRORE UNDER THE REVENUE ACCOUNT BEING FOREIGN EXCHANGE LOSS ACCRUED ON INTER CORPORATE DEPOSITS GIVEN IN FOREIGN CURRENCY. THIS GAIN HAS BEEN TREATED BY THE ASSESSEE ON THE REVENUE ACCOUNT AND ACCORDINGLY G ROSS FOREIGN EXCHANGE LOSS ON REVENUE ACCOUNT RS. 47.46 CRORES HAS BEEN REDUCED BY THIS AMOUNT AND DEDUCTION OF ONLY THE BALANCE RS.37.64 CRORES HAS BEEN CLAIMED. THE FOREIGN EXCHANGE MAHINDRA & MAHINDRA LTD. 6 LOSSES ON VARIOUS ACCOUNTS HAVE ALREADY BEEN DISCUSSED AND DIRECTIONS AS APPROPRIATE HAVE BEEN ISSUED. THE AO IS DIRECTED TO TREAT THIS FOREIGN EXCHANGE GAIN ON ICDS ON REVENUE ACCOUNT AS SHOWN BY THE ASSESSEE IN THE RETURN AND BRING IT TO TAX. 21.10. IN THE RESULT THE DISALLOWANCE OF FOREIGN EXCHANGE LOSS RS. 251.64 CRORES MADE BY THE AO IS UPHELD AND THE AO IS FURTHER DIRECTED TO TAX THE FOREIGN EXCHANGE GAIN OF RS.9.82 CRORE ON ICD. 39. AGAINST THIS ORDER, ASSESSEE HAS FILED AN APPEAL BEFORE US. 40. THE SUBMISSION OF THE LD. COUNSEL OF THE ASSESSEE ON THIS I SSUE ARE SUMM ARISED AS UNDER: - THERE IS NO PROVISION IN THE INCOME TAX ACT, OTHER THAN S. 43A, WHICH DEALS WITH TAX TREATMENT OF FOREIGN EXCHANGE FLUCTUATIONS. IN THIS SITUATION, THE ACCOUNTING PRINCIPLES LAID DOWN IN ACCOUNTING STANDARDS NOTIFIED BY THE ICAI WOUL D GOVERN. IN WOODWARD GOVERNOR INDIA P LTD THE SC HAS HELD (PARA 17) THAT ACCOUNTING STANDARD 11 IS MANDATORY. THE AS DEALT WITH BY THE COURT WAS THE ONE ' REVISED IN 1994 PARA 10 OF WHICH PROVIDED FOR ADJUSTMENT OF CARRYING AMOUNT OF FIXED ASSETS FOR EXC HANGE DIFFERENCES; ON THE OTHER HAND, PARA 13 OF IF AS 11 REVISED IN 2003 PROVIDES THAT EXCHANGE DIFFERENCES ARISING ON SETTLEMENT OR REVALUATION OF MONETARY ITEMS SHOULD BE TREATED AS INCOME OR EXPENSE OF THE RELEVANT PERIOD. SIMILARLY, INCOME COMPUTA TION AND DISCLOSURE STANDARDS NOTIFIED UNDER S 145(2) WE - F AY 2017 - 18 PROVIDE IN PARA 5(1) THAT EXPENSES DIFFERENCES SHOULD BE RECOGNIZED AS INCOME OR EXPENSE IN THE RELEVANT YEAR . IN HIS SUBMISSIONS BEFORE THE DELHI HIGH COURT IN THE CASE OF CHAMBER OF TAX CONSULTANTS WHEREIN THE CONSTITUTIONAL VALIDITY OF ICDS WAS CHALLENGED THE ADDITIONAL SOLICITOR GENERAL. APPEARING ON B EHALF OF THE UNION OF INDIA S UBMITTED THAT THE CHANGES BROUGHT ABOUT (BY ICDS) ARE ONLY AIMED AT BRINGING UNIFORMITY AND CLARITY IN T HE COMPUTATION OF INCOME. THEREFORE IN TERMS OF AS 11 (REVISED 2003) AND ICDS VI, ALL EXCHANGE DIFFERENCES RELATING TO MONETARY ITEMS (REVISION OF LIABILITY DESIGNATED IN FOREIGN CURRENCY) WOULD HAVE TO BE RECOGNIZED AS INCOME OR EXPENSE. 41. UPON HEARING BOTH THE COUNSEL AND PERUSING THE RECORDS, WE FIND THAT HONBLE APEX COURT IN THE CASE OF SATLEJ COTTON MILLS LTD., VS. VIR 116 ITR 1 HAD EXPOUNDED THAT WHERE PROFIT OR LOSS ARISES TO AN ASSESSEE ON ACCOUNT OF APPRECIATION OR DEPRECIAT ION IN THE VALUE OF FOREIGN CURRENCY HELD BY IT, ON MAHINDRA & MAHINDRA LTD. 7 CONVERSION INTO ANOTHER CURRENCY, 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 TRADING ASSET OR AS PART OF CIRC ULATING CAPITAL EMBARKED IN THE BUSINESS. BUT, IF ON THE OTHER HAND, THE FOREIGN CURRENCY IS HELD AS A CAPITAL ASSET OR AS FIXED CAPITAL, SUCH PROFIT OR LOSS WOULD BE OF CAPITAL NATURE. IN THIS VIEW OF THE MATTER, IN OUR CONSIDERED OPINION THE ACTION OF TH E AUTHORITIES BELOW IN HOLDING THAT FOREIGN EXCHANGE GAIN OR LOSS INCURRED ON ACQUISITION OF CAPITAL ASSET HAS TO BE ADJUSTED WITH THE COST OF CAPITAL ASSET IS CORRECT. 42. AS REGARDS THE GAIN OR LOSS OF REVENUE ACCOUNT, THE SAME HAS TO BE DEALT WITH IN T HE REVENUE FIELD. THE AO IN THIS REGARD HAS ERRED IN HOLDING THAT THESE ARE CONTINGENT AS THE SAME IS CONTRARY TO THE HONBLE APEX COURT DECISION IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA P LTD. HOWEVER, WE NOTE THAT THE LD. DRP HAS ANALYZED THE NATUR E OF FOREIGN EXCHANGE LOSS CLAIMED BY THE ASSESSEE AND DECIDED THE ISSUE PROPERLY. THE CLAIM OF THE ASSESSEE THAT FOREIGN EXCHANGE FLUCTUATION LOSS IRRESPECTIVE OF IT BEING IN THE FIELD OF CAPITAL OR REVENUE BE ALLOWED AS REVENUE EXPENDITURE IS NOT SUSTAIN ABLE IN THE LIGHT OF THE ABOVE CASE LAW FROM SATLEJ COTTON MILLS (SUPRA) FROM THE HONBLE SUPREME COURT. THE REFERENCE OF THE ASSESSEE REGARDING THE INCOME COMPUTATION AND DISCLOSURE STANDARDS (ICDS) NOTIFIED U/S.145(2) W.E.F. AY 2017 - 18 DOES NOT HELP THE CASE OF THE ASSESSEE. FROM THE PERUSAL OF CBDT CIRCULAR 10/2017 DATED 23/03/2017, IT IS OBSERVED THAT ICDS SHALL BE APPLICABLE WITH THE TRANSACTION YEARS HELD THEREIN IN RELATION TO A.Y.2017 - 18 AND SUBSEQUENT ASSESSMENT YEAR. ADMITTEDLY, IN THE PRESENT ASS ESSMENT YEAR THE SAID ICDS IS NOT APPLICABLE, HENCE, THE EXPOSITION OF HONBLE APEX COURT DECISION IN THE CASE OF SUTLEJ COTTON MILLS (SUPRA) AS ABOVE DULY HOLDS THE FIELD. IN THESE CIRCUMSTANCES, WE FIND THAT THE OBSERVATIONS OF THE DRP IN THIS REGARDS AR E IN ACCORDANCE WITH THE ABOVE SAID EXPEDITIONS. IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF DRP, HENCE, WE ARE UPHOLDING THE SAME. 6. N OW BY WAY OF MISCELLANEOUS APPLICATION IN THIS REGARD THE ASSESSEE STATES AS UNDER : - 10. THE MISTAKE THAT IS APPARENT FROM RECORD IS THAT THE HONORABLE TRIBUNAL HAS NOT CONSIDERED THE DECISION OF CHENNAI TRIBUNAL IN THE CASE OF HYUNDAI MOTOR INDIA LTD (SUPRA), WHICH IN TURN FOLLOWED THE DECISION OF THE PUNE BENCH IN THE CASE OF COOPER CORPN. ( P.) LTD. V. DY. CIT [2016] 69 TAXMANN.COM 244/159 ITD 165 (PUNE - TRIB.) WHERE IN SUPREME COURT DECISION IN SUTLEJ COTTON MILLS WAS CONSIDERED AND DISTINGUISHED. 11. FURTHER, THE HONORABLE TRIBUNAL HAS NOT ADJUDICATED THE FOLLOWING RELATED ISSUES : - ALLOWABILITY OF DEPRECIATION IN RESPECT OF FOREIGN EXCHANGE LOSS RELATED TO ACQUISITION OF CAPITAL ASSETS WITHOUT THERE BEING ANY NEED TO FURNISH DETAILS OF PUT TO USE OF INDIVIDUAL ASSETS, MAHINDRA & MAHINDRA LTD. 8 FOREIGN EXCHANGE LOSS TRANSFERRED TO FCMITDA (FORMING PART OF TOTAL DISALLOWANCE CONTESTED BEFORE HONORABLE TRIBUNAL); FOREIGN EXCHANGE GAIN OF RS. 9.82 CRORES IN RESPECT OF ICDS (FORMING PART OF TOTAL DISALLOWANCE CONTESTED BEFORE HONORABLE TRIBUNAL) AND LOAN FORM UNION BANK (WHICH HAS BEEN UPHE LD TO BE L OAN IN LOCAL CURRENCY BY LD. DRP) IS ALSO LOAN IN FOREIGN CURRENCY . 7. W E HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS IN THIS REGARD. THE LEARNED COUNSEL OF THE ASSESSEE HAS REITERATED THE SUBMISSIONS AS ABOVE. PER CONTRA LEARNED DEPARTMENTAL REPR ESENTATIVE SUBMITTED THAT ITAT IN ITS ORDER HAS FOUND THAT THE DECISION OF HONOURABLE SUPREME COURT IN TH E CASE OF SUTLEJ COTTON MILLS (SUPRA) IS DIRECTLY APPLICABLE ON THE FACTS OF THE CASE. HENCE LEARNED DEPARTMENTAL REPRESENTATIVE PLEADED THAT THE ORDER OF THE HONOURABLE SUPREME COURT TAKES PRECEDENCE OVER D ECISION OF INFERIOR COURTS AND T RIBUNALS. FURTHERMORE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT BY CLAIMING THAT THERE WAS NO NEED TO FURNISH DETAILS FOR CLAIM OF ALLOWANCE OF DEPRECIATION TH E ASSESSEE IS ITSELF MAKING OUT A CASE FOR REVIEW. AS REGARDS THE OTHER ISSUES MENTIONED IN THE SUBMISSION LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THESE ARE NOT ARISING OUT OF THE GROUNDS OF APPEAL OR THE ORDER OF THE ITAT. H E CLAIMED THAT THE A SSESSEE IS PLEADING FOR SOME FURTHER ISSUES TO T HE ADJUDICATED AS RELATED WHICH IS NOT PERMISSIBLE IN THE GARB OF RECTIFICATION OF MISTAKE APPARENT FROM RECORD . 8. U PON CAREFUL CONSIDERATION WE FIND THAT ITAT HAS ELABORATELY DISCUSSED THE ISSUE. IT HAD FOUND THAT THE DECISION OF HONO URABLE SUPREME COURT IN SUTLEJ C OTTON MILLS (SUPRA) IS DIRECTLY APPLICABLE ON THE FACTS OF THE CASE. FURTHERMORE AS DETAILED IN THE SUBMISSION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE ABOVE THE OTHER ASPECTS RAISED IN THE MISCELLANEOUS APPLICATION CALL FOR A REVIEW OF THE ORDER OF THE ITAT IN THE GARB OF RECTIFICATION OF MISTAKE APPARENT FROM RECORD UNDER SECTION 254(2 ) OF THE IT A CT. THE SUBMISSION IN THE MISCELLANEOUS A PPLICATION THAT SOME RELATED ISSUES HAVE REMAINED TO BE ADJUDICATED ARE IN FACT AIMED AT GETTING THE REVIEW OF THE ORDER. THIS IS NOT MAHINDRA & MAHINDRA LTD. 9 PERMISSIBLE. THESE ISSUES ARE NOT ARISING OUT OF THE GROUNDS OF APPEAL BEFORE THE TRIBUNAL . ACCORDINGLY THE MISCELLANEOUS APPLICATION FOR THIS ISSUE STANDS DISMISSED . 9. I N T HE RESULT THE MISCELLANEOUS APPLICATION STANDS PARTLY ALLOWED . ORDER HAS BE EN PRONOUNCED IN THE COURT ON 21 . 2 . 20 20 . SD/ - SD/ - ( RAMLAL NEGI ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DAT ED : 2 1 / 0 2 / 20 20 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// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI