NAVNIT MULCHAND SHAH,ANAND V. ASSISTANT COMMISSIONER OF INCOME TAX, ANAND

MA 144/AHD/2024

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The case revolves around the assessment year 2021-22, where the Assistant Commissioner of Income Tax, Anand, contested the decisions made by the CIT(A) regarding foreign exchange losses claimed by the assessee, Navnit Mulchand Shah. The Revenue challenged the deletion of disallowances related to both gross and net foreign exchange losses by the CIT(A). The ITAT initially upheld the disallowance of the net loss but did not explicitly address the gross loss in their order, leading to confusion. The Miscellaneous Application was filed to rectify this oversight, resulting in the deletion of the gross loss from the taxable income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25169 (ITAT-AHMEDABAD)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2021-2022
• Laws Referred To: Income Tax Act, ICDS
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: BANDISH SOPARKAR; PARIN

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER MISCELLANEOUS APPLICATION No. 144/Ahd/2024 (In ITA No. 958/Ahd/2024) (Ǔनधा[रण वष[ / Assessment Year : 2021-22) Assistant Commissioner of Income Tax Anand बनाम/ Vs. Navnit Mulchand Shah C/o. Nabros Exports 5, Matru Chhaya, Bhathi Vado Lal Darwaja, Anand, Gujarat 387411 èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AJWPS7649Q (Revenue) .. (Applicant) Appellant by : Shri Bandish Soparkar & Shri Parin Shah, A.Rs. Revenue by : Shri Rignesh Das, Sr. DR Date of Hearing 03/01/2025 Date of Pronouncement 08/01/2025 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This Miscellaneous Application is filed by the assessee with a request to modify the order of this Tribunal in ITA No.958/Ahd/2024 dated 21.10.2024 for the Assessment Year 2021-22. MA No. 144/Ahd/2024 [Navnit Mulchand Shah vs. ACIT] A.Y. 2021-22 - 2 – 2. Shri Bandish Soparkar, Ld. AR of the assessee explained that the Revenue had taken the following Ground No.2 and 2.1 in the appeal filed in ITA No.958/Ahd/2024: “2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the disallowance of Rs.93,15,890/-without appreciating the fact that the assessee had no loss on foreign exchange account being the value of foreign currency higher at the time of realization of debtors? 2.1 Whether on the facts and in the circumstances. of the case and in law, Ld. CIT(A) is justified in deleting the addition of Rs.47,50,390/- without appreciating the fact that the assessee had not booked true and correct gain on foreign exchange account being the value of foreign currency higher at the time of realization of debtors?” 3. The Ld. AR submitted that these grounds were decided together in para nos. 9 to 12 of the order dated 21.10.2024. The Ld. AR explained that the assessee had debited a sum of Rs.93,15,890/- on account of foreign exchange fluctuation charges in its P&L account. Further profit of Rs.45,65,500/- in respect of currency conversion was credited to the P&L account. The Ld. AR submitted that the Tribunal has rightly held that after adjusting these two entries, there was net loss of Rs.47,50,390/- debited to the P&L account. In Para 12 of the order, the Tribunal had upheld the disallowance of this net loss of Rs.47,50,390/-. The Ld. AR pointed out that in the assessment order, the AO had disallowed the gross loss of Rs.93,15,890/- as well as the net loss of Rs.47,50,390/-, which both were deleted by the ld. CIT(A). The Ground Nos.2 & 2.1 taken by the Revenue pertained to these two disallowances. MA No. 144/Ahd/2024 [Navnit Mulchand Shah vs. ACIT] A.Y. 2021-22 - 3 – 4. The Ld. AR explained that in Para no.12 of order dated 21.10.2024, the Tribunal had observed that the ground taken by the Revenue is allowed, which gives an impression that the addition in respect of gross loss as well as the net loss, both was confirmed. However, in the body of Para 12 of the order, the Tribunal had confirmed the addition of net loss of Rs.47,50,390/- only. Thus, according to the Ld. AR, there was error in confirming the order of the AO in its totality, in Para 12 of the order dated 21.10.2024. 5. Per contra, Shri Rignesh Das, Ld. Sr. DR submitted that the matter may be decided on merits. 6. We have considered the submission of the Ld. AR. In para 12 of the order dated 21.10.2024, the ITAT had categorically upheld as under: “12……….. “Since, the assessee had not correctly recognized the forex loss as per ICDS and not followed the provisions of Section 43AA of the Act, the net loss of Rs.47,50,390/- in respect of foreign fluctuation loss was rightly disallowed by the AO. Accordingly, the addition as made by the AO and the decision of the Ld. CIT(A) on this issue is upheld. The ground taken by the Revenue is allowed.” MA No. 144/Ahd/2024 [Navnit Mulchand Shah vs. ACIT] A.Y. 2021-22 - 4 – While upholding the addition of Rs.47,50,390/- as taken in Ground No 2.1, no observation was made in the order in respect of Ground No.2 taken by the Revenue in respect of disallowance of Rs.93,15,890/- in respect of gross loss on foreign exchange account. This appears to be a mistake apparent from record. 7. It is evident from the order that the assessee had claimed deduction for net loss of Rs.47,50,390/- only in the P&L account, the addition in respect of which, was upheld. The disallowance of gross loss of Rs.93,15,890/- as made by the AO was patently wrong. This issue was considered and only thereafter the addition for net loss of Rs.47,50,390/- was confirmed. Accordingly, in Para 12 of the order, the ground 2.1 taken by the Revenue in respect of addition of Rs.47,50,390/- in respect of loss on foreign exchange account was upheld. However, no specific finding regarding Ground No.2 as taken by the Revenue was given in the order. Thus, there is a mistake apparent from the record in the order which requires to be rectified. Therefore, the last three lines of Para No.12 of the order dated 21.10.2024 may be read as under: 12.……. Since, the assessee had not correctly recognized the forex loss as per ICDS and not followed the provisions of Section 43AA of the Act, the net loss of Rs.47,50,390/- in respect of foreign fluctuation loss was rightly disallowed by the AO. Accordingly, the addition of Rs.47,50,390/- as MA No. 144/Ahd/2024 [Navnit Mulchand Shah vs. ACIT] A.Y. 2021-22 - 5 – made by the AO is confirmed and the decision of Ld. CIT(A) on this issue is upheld and the addition of gross loss of Rs.93,15,890/- as made by the AO is deleted. The Ground No.2 taken by the Revenue is rejected, whereas, the Ground No.2.1 taken by the Revenue is allowed.” 8. In the result, the Miscellaneous Application preferred by the assessee is allowed. This Order pronounced on 08/01/2025 Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 08/01/2025 S. K. SINHA True Copy आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधत आयकर आयुÈत / Concerned CIT 4. आयकर आयुÈत(अपील) / The CIT(A)- 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण, अहमदाबाद / ITAT, Ahmedabad "