OCEAN SPARKLE LIMITED,HYDERABAD V. DCIT., CIRCLE 5(1), HYDERABAD

ITA 1030/HYD/2024

AI Insights

Ocean Sparkle Limited appealed against the order of the CIT(A) which sustained the additions made by the Assessing Officer regarding forex gains. The company argued that the forex gains were notional and should not be taxed, referencing CBDT Circular 3/2010 and AS-11. However, the CIT(A) and the Tribunal found that under the mercantile system of accounting and as per AS-11, any gain or loss arising from the restatement of foreign currency liabilities should be recognized in the profit and loss account for the reporting period. The Tribunal also noted that the Supreme Court's decision in CIT vs. Woodward Governor India (P.) Ltd. supports the view that such gains are taxable.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714647 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2010-2011
• Other Referred Cases: CIT vs. Woodward Governor India (P.) Ltd., Mettle Toledo India Pvt. Ltd. vs. ITO, DCIT vs. Cyient Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GURPREET SINGH; ASSESSEE
• Assessee Lawyers: SOURABH SOPARKAR
• Keywords: Set aside; Bad and doubtful debts; Depreciation; Cost of acquisition; Earning of tax free income; Capital asset converted into stock in trade
• Section: 142(1); 56; 145; 37; 28; 37(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “A” BENCH: HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER ITA.No.1030/Hyd./2024 Assessment Year 2010-2011 Ocean Sparkle Limited, Hyderabad – 500 073. Telangana. PAN AAACO2519H vs. The DCIT, Circle-5(1), Hyderabad. (Appellant) (Respondent) For Assessee : Sri Sourabh Soparkar, Advocate For Revenue : Shri Gurpreet Singh, Sr. AR Date of Hearing : 31.07.2025 Date of Pronouncement : 06.08.2025 ORDER PER MANJUNATHA G. : The above appeal has been filed by the assessee against the order dated 14.08.2024 of the learned Commissioner of Income Tax-(Appeals)-National Faceless Appeal Centre [in short “NFAC], Delhi, relating to the assessment year 2010-2011. Printed from counselvise.com 2 ITA.No.1030/Hyd./2024 2. Brief facts of the case are that, the appellant company is engaged in the business of O & M of ports and Marine services. The assessee had filed it’s return of income for the Assessment year 2010-11 on 30.09.2010 admitting total income Rs.10,16,37,986/- under normal provisions of the Income Tax Act, 1961, after claiming deduction u/sec.801A amounting to Rs.2,12,27,868/- and book profit u/sec.115JB of the Act at Rs.21,01,79,679/-. The assessment was completed u/sec.143(3) of the Income Tax Act, 1961 on 26.12.2012 determining the taxable income of the assessee-company at Rs.12,29,39,428/-. 2.1. Subsequently, the learned PCIT, Hyderabad noticed that, the Assessing Officer has allowed certain expenses without making proper enquiries. Therefore, the learned PCIT noted that, the order of the Assessing Officer is not only erroneous, but, also prejudicial to the interest of the Revenue. Therefore, the learned PCIT issued notice u/sec.263 of the Act on 25.02.2015 and called-upon the assessee to furnish it’s explanation with supporting documentary evidences on the issues of expenses claimed Printed from counselvise.com 3 ITA.No.1030/Hyd./2024 under the Head “Administrative Expenses” in Schedule-17 of the P & L A/c amounting to Rs.43,72,428/- [i.e., Donations Rs.30,81,535/- + Provision for doubtful debts Rs.7,79,072/- + provision for doubtful loans and advances of Rs.5,11,821/-], debiting the expenses related to dividend income to P & L A/c as per schedule-15 of P & L A/c amounting to Rs.3,86,29,869/-, reducing the gain on foreign exchange fluctuation of Rs.1,39,93,231/- from the taxable income stating that it is notional and as per schedule-7, the assessee has investments in equity shares and the expenses debited on account of exempt income amounting to Rs.30,45,15,607/-. After considering the submissions of the assessee, the learned PCIT vide order dated 18.03.2015 set-aside the assessment order and directed the Assessing Officer to make addition of Rs.5,55,047/- on account of doubtful debts and doubtful loans, which has been admitted by the assessee before the learned PCIT and with respect to the remaining issues directed the Assessing Officer to examine the issues, after providing reasonable opportunity of hearing to the assessee Printed from counselvise.com 4 ITA.No.1030/Hyd./2024 and in case, the assessee could not produce evidence on record, directed the Assessing Officer to add back the disallowable items. 3. In pursuance to the directions of the learned PCIT’s order dated 18.03.2025 u/sec.263 of the Act, the Assessing Officer issued notices u/sec.143(2) and 142(1) of the Act and called-upon the assessee to furnish it’s submissions with supporting documentary evidences on the issues pointed-out by the learned PCIT preceding paragraph 2.1 and remitted back to the Assessing Officer for fresh examination. In response, the assessee furnished his submissions with supporting documentary evidences. The Assessing Officer after considering the relevant submissions of the assessee, assessed the income of the assessee at Rs.15,62,52,269/- by making additions on account of disallowance provision for doubtful debts amounting to Rs.5,55,046/-, disallowance u/sec.14A of the Act amounting to Rs.1,87,64,564/-, disallowance of forex gain of Rs.1,39,93,231/- as against the returned income of the Printed from counselvise.com 5 ITA.No.1030/Hyd./2024 assessee at Rs.12,29,39,428/- vide order dated 30.06.2015 u/sec.143(3) r.w.s.263 of the Income Tax Act, 1961. 4. Aggrieved by the order of the Assessing Officer passed in pursuance to the directions of the learned PCIT, the assessee carried the matter in appeal before the learned CIT(A). Before the learned CIT(A), the assessee has challenged the additions made by the Assessing Officer. The assessee further contended that, the forex gain on account of restatement of existing liability in the books of account as on the balance-sheet date is a national income and the same is needs to be excluded, while computing income from business and profession. The assessee took support from the Circular no.3/2010 dated 23.03.2010 and argued that, marked to market loss is a national income and, therefore, the same should be adjusted while computing income from business. The learned CIT(A) after considering the relevant submissions of the assessee and also taking note of certain judicial precedents including decision of Hon’ble Supreme Court in the case of CIT vs., Woodward Governor India (P.) Ltd., [2009] 312 ITR 254 (SC), observed that, gain or loss on Printed from counselvise.com 6 ITA.No.1030/Hyd./2024 forex monitory items as on the balance date, should be accounted at the prevailing exchange rate and any difference in liability should be recognised as income or expenses in terms of AS-11 issued by the ICAI. The learned CIT(A) took support from the decision of ITAT, Mumbai in the case of Mettle Toledo India Pvt. Ltd., vs., ITO in ITA.No.2152, 2153 and 2574/Mum./2007 and held that, when the assessee is following mercantile system of accounting, any changes in foreign currency transaction should be recognised as income or expenses in terms of AS- 11 and further, as per the decision of Hon’ble Supreme Court in the case of CIT vs., Woodward Governor India (P.) Ltd., (supra), when loss is allowable as deduction, then, the gain on such restatement of liability also needs to be taxed as income. Therefore, rejected the arguments of the assessee and sustained the addition made by the Assessing Officer towards forex gain on restatement of liability. 5. Aggrieved by the order of the learned CIT(A), the assessee is now, in appeal before the Tribunal. Printed from counselvise.com 7 ITA.No.1030/Hyd./2024 6. Sri Sourabh Soparkar, Advocate-Learned Counsel for the Assessee submitted that, the learned CIT(A) was erred in upholding the addition of forex gain on derivatives for Rs.1,39,93,231/- without considering the fact that, the same is notional in nature and is un-realised amount and not a real income and hence, it is not taxable and not covered in terms of section 43A of the Income Tax Act, 1961. Learned Counsel for the Assessee further referring to the chart submitted by the assessee submitted that, although, the assessee has treated forex gain on account of restatement of liabilities existed as on the balance-sheet date as income or expenses in the books of accounts, but, by following the CBDT Circular 3/2010, dated 23.03.2010 has excluded the said income while computing income from business and profession because, it is notional in nature. Although, the assessee has explained this fact to the learned CIT(A), but, the learned CIT(A) had given a different finding in light of certain judicial precedents, even though, the said decisions are on the issue of forex gain, whether it is capital or revenue. The Learned Counsel for the Assessee Printed from counselvise.com 8 ITA.No.1030/Hyd./2024 further referring to the accounting policies of the assessee submitted that, right from the beginning, the assessee is following mercantile system of accounting, where forex gain or loss on account of monetary transactions in respect of foreign currency liability has been treated as income or expenditure upon crystallization of said liability either on settlement or cancellation. The learned CIT(A) without appreciating the relevant facts, has simply held that, it is capital in nature and needs to be capitalised, even though, it pertains to the trading liability and since the liability is not accrued to the assessee and it is only a notional entry for adjustment of foreign currency fluctuation in books of accounts in terms of AS-11, the assessee has accounted gain in the books of accounts. In this regard, he relied upon the decision of ITAT, Hyderabad Bench in the case of DCIT vs., Cyient Ltd., [2018] 91 taxmann.com 353 [Hyd.-Tribu.] 7. Sri Gurpreet Singh, learned Sr. AR, on the other hand, supporting the order of the learned CIT(A) submitted that, the CIT(A) had discussed the issue in light of decision of Hon’ble Supreme Court in the case of CIT vs., Woodward Printed from counselvise.com 9 ITA.No.1030/Hyd./2024 Governor India (P.) Ltd., (supra), where the issue has been settled and according to the decision of Hon’ble Supreme Court, forex gain or loss on account of restatement of liability should be recognised as income or expenses and accordingly, the learned CIT(A) after considering the relevant facts and by following certain judicial precedents, has rightly sustained the addition made by the Assessing Officer. Therefore, he submitted that, the addition made by the Assessing Officer should be upheld. 8. We have heard both the parties, perused the material on record and the orders of the authorities below. We have also considered the relevant case laws relied upon by the Learned Counsel for the Assessee in support of his contentions and also the case law relied upon by the learned Sr. AR in support of addition towards forex gain. Admittedly, the assessee company is following mercantile system of accounting. The assessee has reported foreign currency liabilities and the same has been re-stated as on the date of balance-sheet on the prevailing market rate of respective currency and has provided loss or gain in the Printed from counselvise.com 10 ITA.No.1030/Hyd./2024 books of accounts as income or expenditure. However, while computing the income from business and profession, the assessee has reduced the forex gain on the ground that, it is notional income and has not accrued to the assessee. The assessee took support from the CBDT Circular no.3/2010 dated 23.03.2010, which deals about tax treatment of forex loss or gain arise in the normal course of the business. The assessee has also took support from the decision of ITAT, Hyderabad Bench in the case of DCIT vs., Cyient Ltd., (supra), and argued that, although, the Hon’ble Supreme Court in the case of CIT vs., Woodward Governor India (P.) Ltd., (supra), held that, forex loss is an allowable deduction on account of restatement of liability, but, forex gain on account of restatement of liability is notional in nature and should be excluded while computing the income from business. 9. We have given our thoughtful consideration to the reasons given by the learned CIT(A) in light of arguments of the Learned Counsel for the Assessee. However, we ourselves do not subscribe to the arguments of the Counsel Printed from counselvise.com 11 ITA.No.1030/Hyd./2024 for the Assessee for the simple reason that, as per AS-11 which deals with giving accounting treatment for the effect of changes in foreign exchange transactions very categorically stated that, exchange difference arising on foreign currency transactions have to be recognised as income or as expenses in the period in which they arise. Further, AS-11 stipulates that, effects of changes in exchange rate vis-a-vis monetary items denominated in foreign currency to be taken into account for giving accounting treatment on the balance-sheet date. Therefore, an enterprise has to report the outstanding liability denominated in foreign currency by using closing rate of exchange. Any difference, the loss or gain arising on conversion of the said liability at the closing rate, should be recognised in the P and L A/c for the relevant period. From the method of accounting followed by the assessee and the AS-11 issued by the ICAI, it is undisputedly clear that, any difference, loss or gain arising on account of restatement of existing liability in the books of accounts as on the balance- Printed from counselvise.com 12 ITA.No.1030/Hyd./2024 sheet date, should be recognised as income or expenses on the reporting date. 10. In the present case, there is no dispute with regard to the fact that, the assessee is following mercantile system of accounting, has recognized the difference i.e., loss or gain arising on account of restatement of liability in the books of accounts as on the balance-sheet date, as income or expenditure. However, excluded the income while computing income from business and profession in light of CBDT Circular no.3/2010, dated 23.03.2010 and claims that, it is notional in nature and not accrued to the assessee for the relevant period. The assessee further claims that, it is following consistently mercantile system of accounting for recognising loss or gain on account of forex transactions only upon settlement or cancellation of forward contracts or any loan transactions and, therefore, gain arising on account of restatement of existing liability is a notional income and should be excluded from the income for the purpose of Income Tax Act. In our considered view, the arguments of the Counsel for the Assessee in light of CBDT Printed from counselvise.com 13 ITA.No.1030/Hyd./2024 Circular no.3/2010, dated 23.03.2010 is devoid of merit because, first of all, the method of accounting followed by the assessee is not relevant to determining the income for the purpose of taxation which is very clear from the decision of Hon’bnle Supreme Court in the case of Sutlej Cotton Mills Limited vs., CIT [1979] 116 ITR 1 (SC). Further, as per AS- 11 issued by the ICAI, it is mandatory for the assessee to recognise, any difference, gain or loss on account of restatement of liability, as income or as expenses for reporting period. Since the assessee is following mercantile system of accounting and further AS-11 mandates recognition of difference in monetary transaction of foreign currency as on the date of balance-sheet as income or expenses, in our considered view, the method of accounting followed by the assessee does not change the position of law as explained by the Hon’ble Supreme Court in the case of CIT vs., Woodward Governor India (P.) Ltd., (supra). Therefore we reject the arguments of Counsel for assessee. 11. We further note that, this issue is also squarely covered against the assessee by the Judgment of Hon’ble Printed from counselvise.com 14 ITA.No.1030/Hyd./2024 Supreme Court in the case of CIT vs., Woodward Governor India (P.) Ltd., (supra), wherein the Hon’ble Supreme Court held as under : “There was no dispute that in the previous years, whenever the dollar rate stood reduced, the department had taxed the gains which accrued to the assessee on the basis of accrual and it was only in the year in question when the dollar rate stood increased resulting in a loss, that the department had disallowed the deduction/debu That fact was important. It indicated the double standard adopted by the department. [Para 10] The word 'expenditure\" is not defined in the Act. The word 'expenditure' is, therefore, required to be understood in the context in which it is used. Section 37 enjoins that any expenditure not being expenditure of the nature described in sections 30 to 36 laid out or expended wholly and exclusively for the purpose of the business, should be allowed in computing the income chargeable under the head profits and gains of business. In sections 30 to 36, the expression 'expenses incurred as well as 'allowances and depreciation' have also been used. For example, depreciation and allowances are dealt with in section 32. Therefore, the Parliament has used the expression 'any expenditure in section 37 to cover both. Therefore, the expression 'expenditure' as used in section 37 may, in the circumstances of a particular case, cover an amount which is really a \"loss', even though said amount has not gone out from the pocket of the assessee. [Para 13) Printed from counselvise.com 15 ITA.No.1030/Hyd./2024 The provisions of section 145 recognise the rights of a trader to adopt either the cash system or the mercantile system of accounting. The quantum of allowances permitted to be deducted under diverse heads under sections 30 to 43C from the income, profits and gains of a business would differ according to the system adopted. This is made clear by defining the word 'paid in section 43(2), which is used in several sections from sections 30 to 43C, as meaning actually paid or incurred according to the method of accounting upon the basis of which profits or gains are computed under section 28/29. That is why, in deciding the question, as to whether the word \"expenditure in section 37(1) includes the word 'loss', one has to read section 37(1) with sections 28, 29 and 145(1). Accounts regularly maintained in the course of business are to be taken as correct, unless there are strong and sufficient reasons to indicate that they are unreliable. Under section 28(0, one needs to decide the profits and gains of any business which is carried on by the assessee during the previous year. Therefore, one hat to take into account stock-in- trade for determination of profits. The Act makes no provision with regard to valuation of stock. But the ordinary principle of commercial accounting requires that in the profit and loss account, the value of the stock-in-trade at the beginning and at the end of the year should be entered at cost or market price, whichever is lower. This is how business profits arising during the year need to be computed. This a one more reason for reading section 37(1) with section 145. For valuing the closing stock at the end of a particular year, the value prevailing on the last date is relevant, because profits/loss is embedded in the closing stock. While anticipated loss is taken into account, anticipated profit in the shape of appreciated value of the closing stock is not brought into account, as no prudent trader would care to show increase in Printed from counselvise.com 16 ITA.No.1030/Hyd./2024 profits before actual realization. This is the theory underlying the rule that the closing stock is to be valued at cost or market price, whichever is the lower. As profits for Income Tax purpose are to be computed in accordance with ordinary principles of commercial accounting, unless such principles stand superseded or modified by legislative enactments, unrealized profits in the shape of appreciated value of goods remaining unsold at the end of the accounting year and carried over to the following year's account in a continuing business are not brought to charge as a matter of practice, though loss due to fall in the price below cost is allowed even though such loss has not been realized actually. The said system of commercial accounting can be superseded or modified by legislative enactment. Under section 145(2), the Central Government is empowered to notify from time-to-time the Accounting Standards to be followed by any class of the assessees or in respect of any class of income. Accordingly, under section 209 of the Companies Act, mercantile system of accounting has been made mandatory for companies. In other words, Accounting Standard, which is continuously adopted by an assessee, can be superseded or modified by legislative intervention. However, but for such intervention or in cases falling under section 145(3), the method of accounting undertaken by the assessee continuously is supreme. In the instant case, there was no finding given by the Assessing Officer on the correctness or completeness of the accounts of the assessee. Equally, there was no finding given by the Assessing Officer stating that the assessee had not complied with the Accounting Standards. [Para 14] Therefore, in the instant case, the loss suffered by the assessee on account of the exchange difference as on the date of the Printed from counselvise.com 17 ITA.No.1030/Hyd./2024 balance sheet was an item of expenditure under section 37(1). [Para 15] Thus, it is clear that profits and gains of the previous year are required to be computed in accordance with the relevant accounting standard. It is important to bear in mind that the basis on which stock-in-trade is valued is part of the method of accounting. It is well-established that on general principles of commercial accounting, in the profit and loss account, the value of the stock-in-trade at the beginning and at the end of the accounting year should be entered at cost or market value, whichever is lower the market value being ascertained as on the last date of the accounting year and not as on any intermediate date between the commencement and the closing of the year, failing which it is not possible to ascertain the true and correct state of affairs. No gain or profit can arise until a balance is struck between the cost of acquisition and the proceeds of sale. The word 'profit' implies comparison between the state of business at two specific dates, usually separated by an interval of twelve months. Stock-in-trade is an asset. It is a trading asset. Therefore, the concept of profit and gains made by business during the year can only materialize when a comparison of the assets of the business at two different dates is taken into account. Section 145(1) enacts that for the purpose of sections 28 and 56 alone, income, profits and gains must be computed in accordance with the method of accounting regularly employed by the assessee. Therefore, section 145(1) was attracted to the facts of the instant case. Under the mercantile system of accounting, what is due is brought into credit before it is actually received, it brings into debit an expenditure for which a legal liability has been incurred before it was actually disbursed. Therefore, the accounting method followed by an assessee continuously for a Printed from counselvise.com 18 ITA.No.1030/Hyd./2024 given period of time needs to be presumed to be correct till the Assessing Officer would come to the conclusion for reasons to be given that the system do not reflect true and correct profits. In the instant case, there was no finding given by the Assessing Officer on the correctness of the accounting standard followed by the assessee. [Para 16] AS-II deals with giving of accounting treatment for the effects of changes in foreign exchange rates. In case of the revenue items falling under section 37(1), para 9 of AS-II, which deals with recognition of exchange differences, needs to be considered. Under this para, exchange differences arising on foreign currency transactions have to be recognized as income or as expense in the period in which they arise. The important point to be noted is that AS-11 stipulates effect of changes in exchange rate vis-a-vis monetary items denominated in a foreign currency to be taken into account for giving accounting treatment on the balance sheet date. Therefore, an enterprise has to report the outstanding liability relating to import of raw materials using closing rate of exchange. Any difference, loss or gain arising on conversion of the said liability at the closing rate, should be recognized in the profit and loss account for the reporting period. [Para 18] In conclusion, it may be stated that in order to find out if an expenditure is deductible, the following factors have to be taken into account (1) whether the system of accounting followed by the assessee is mercantile system, which brings into debit the expenditure amount for which a legal liability has been incurred before it is actually disbursed and brings into credit what is due, immediately it becomes due and before it is actually received, (ii) whether the same system is followed by the assessee from the very beginning and if there was a change in the system, whether Printed from counselvise.com 19 ITA.No.1030/Hyd./2024 the change was bona fide; (iii) whether the assessee has given the same treatment to losses claimed to have accrued and to the gains that may accrue to it; (iv) whether the assessee has been consistent and definite in making entries in the account books in respect of losses and gains; (v) whether the method adopted by the assessee for making entries in the books both in respect of losses and gains as per nationally accepted Accounting Standards; (vi) whether the system adopted by the assessee is fair and reasonable or is adopted only with a view to reduce the incidence of taxation.” 12. Further, the Hon’ble Delhi High Court in the case of CIT vs., Woodward Governors India (P.) Ltd., [2007] 294 ITR 451 (Del.) affirmed by the Hon’ble Supreme Court reported in [2009] 312 ITR 254 (SC) and several other Coordinate Benches of the Tribunal have consistently held that, both unrealised loss or gain on restatement of foreign currency items at the year end are to be recognised in computation of income. 13. The ITAT, Mumbai Bench, Mumbai in the case of Mettle Toledo India Pvt. Ltd., vs., ITO (supra) has very clearly held that, once a loss on restatement of liability on the balance sheet is allowable as deduction, then, any gain in a year of restatement of liability on the balance sheet Printed from counselvise.com 20 ITA.No.1030/Hyd./2024 date, also to be taxed. The relevant observations of ITAT, Mumbai Bench, Mumbai are as under : \"We have perused the records and considered the rival contentions carefully. The dispute is regarding allow ability of loss on account of foreign exchange fluctuation in respect of foreign currency loan taken by the assessee. The assessee had been restating foreign exchange loan liability on the balance- sheet date which resulted into loss which has been claimed as deduction. The loss/gain on account of foreign exchange fluctuation on restatement of the loan liability on the balance- sheet date is required to be taken into account in computation of income if the loan is on revenue account or is a working capital loan. Loss is allowable as deduction under section 37(1) as held by the Honorable Supreme Court in the case of Woodward Governor India (P.) Ltd. (supra). The loan in this case had been taken as working capital loan as is clear from the loan agreement wherein the purpose of the loan is clearly mentioned to use it as a working capital to finance the activities of the company. As held by the Honorable Supreme Court in the case of Sutlej Cotton Mills Ltd. v. CIT [1979] 116 ITR 1. foreign currency fluctuation loss is allowable as deduction if the foreign currency is held on revenue account or as trading asset or as part of circulating capital employed in the business. As regards the year of allow ability, the claim has to be allowed on the basis of restatement of the liability on the balance-sheet date as held by the Honorable Supreme Court in the case of Woodward Governor India (P.) Ltd. (supra). Thus, the claim of the assessee is allowable. In case there is gain in a year and the assessee has not offered it to tax, the Revenue is free to take action under law. In these years, admittedly there is loss which is allowable as deduction. We, Printed from counselvise.com 21 ITA.No.1030/Hyd./2024 therefore, set aside the order of the Commissioner of Income-tax (Appeals) and allow the claim of the assessee.\" 14. The sum and substance of ratio laid down by the Hon’ble Supreme Court and Hon’ble Delhi High Court and various other Tribunal Benches are that, “any difference i.e., loss or gain on account of restatement of liability as on the balance-sheet date to adjust the fluctuation of foreign currency, should be recognised as income or expenses for the purpose of computation of income”. Although, the ITAT, Hyderabad Bench in the case of DCIT vs., Cyient Ltd., (supra), has taken a different view, but, in our considered view, since the law has now been settled by the Judgment of Hon’ble Supreme Court in the case of CIT vs., Woodward Governor India (P.) Ltd., (supra), the decision of ITAT, Hyderabad Benches, Hyderabad in the case of DCIT vs., Cyient Ltd., (supra), is not a good law and thus, not followed. 15. In this view of the matter and considering the facts and circumstances of the case, we are of the considered view that, there is no error in the reasons given Printed from counselvise.com 22 ITA.No.1030/Hyd./2024 by the Assessing Officer and the learned CIT(A) to make the addition towards forex gain on account of restatement of liability as on the balance-sheet date as income of the assessee. Thus, we are inclined to uphold the order of the learned CIT(A) and dismiss the appeal filed by the assessee. 16. In the result, appeal of the assessee is dismissed. Order pronounced in the open Court on 06.08.2025. Sd/- Sd/- [VIJAY PAL RAO] [MANJUNATHA G] VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad, Dated 06th August, 2025 VBP Copy to 1. Ocean Sparkle Limited, No.128, Srinagar Colony, Hyderabad – 500 073. Telangana. 2. The DCIT, Circle-5(1), Aaykar Bhawan, Hyderabad. 3. The Pr. CIT, Hyderabad 4. The DR ITAT “A” Bench, Hyderabad. 5. Guard File. //By Order// //True Copy// Printed from counselvise.com "