SITAC RE PVT. LTD.,NEW DELHI vs. DCIT CIRCLE-23(2), NEW DELHI

The present appeal is filed by the assessee against the order dated 21.01.2019 passed by Ld. Commissioner of Income Tax (A)- 23, New Delhi [“Ld.CIT(A)”] in Appeal No.149/17-18 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of the Assessment Order dated 31.03.2016 passed u/s 143(3) of the Act pertaining to Assessment Year 2013-14.

2. The assessee has raised following grounds of appeal:- 1. “That on the facts and law involved the Ld. Assessing Officer [Ld. AO] has erred in making and the Ld. Commissioner of Income Tax (Appeals) [Ld. CIT(A)] has erred in confirming the disallowance of Rs 23,71,973/- being the amount of exchange fluctuation loss provided at year end on business advance of Rs. 11.25 Crore. 1.1 That the said disallowance of exchange fluctuation loss as confirmed by the Ld.CIT(A) is against the binding precedents of the Apex court and Jurisdictional Delhi High Court in the cases reported Page | 1

in [2009] 312 ITR 0254 (SC) - CIT Vs. Woodward Governor India P. Ltd. and 311 ITR 475 (Del.) CIT vs. Taiko Chander Nagar Chemicals P. Ltd. wherein such exchange fluctuation loss has been held allowable as business expenditure u/s 37(1) of the Act. 1.2 That while confirming the disallowance of exchange fluctuation loss of Rs. 23,71,973/- the Ld. CIT(A) has erred on facts and in law in treating the business advance of Rs. 11.25 Crore as non-existent or not payable. The Ld. CIT (A) has not appreciated the fact that the said business advanced is finally settled to be repayable as borne out from the Settlement Agreement and NCLT Order on record. 1.3 That the said disallowance as confirmed by the Ld. CIT(A) is against the consistency principle in as much as in prior years i.e. in AY 2012-13, 2011-12, 2009-10 and 2008-09 similar claim of the appellant has been held allowable by the Ld. CIT(A). Moreover, the exchange gain on such advance in past and in future has been returned and assessed as income of the appellant. Refer decision of Jurisdictional High Court of Delhi in Pr CIT 8 Vs Samwon Precision Mould Mfg. India Pvt. Ltd (Del) - order dated 23.02.2018.

3. That the Ld. CIT(A) has erred on facts and in law in enhancement proceedings in erroneously giving directions beyond his jurisdiction and beyond the limitation period available for: (i) Treating the said business advance of Rs 11.25 Crore as unexplained cash credit u/s 68 in AY 2008-09; and (ii) Disallowance of exchange fluctuation loss in every year where such loss is booked on said business advance.

4. That the Ld. CIT(A) has erred in giving directions u/s 150(1) as in Ground No. 3 above directing the Ld. AO u/s 150(1) to independently examine cases u/s 147/148 and in case the conditions under relevant sections are found to be satisfied, directing that proceedings may be initiated notwithstanding anything contained in Section 149 subject to provisions of Section 150(2).

inferences are unwarranted and are liable to be deleted. The directions given by the Ld. CIT(A) are non-est. 6. That the grounds of appeal as herein are without prejudice to each other.

7. That the appellant respectfully craves leave to add, amend, alter and / or forego any ground(s) at or before the time of hearing.”

been discussed above, we are of the considered view that claim of foreign exchange fluctuation loss is a revenue loss and not capital loss as has been held by the Id. CIT (A) in Assessment Year 2008-09.” 10. Further, the appeal of the Revenue against the order for Assessment Year 2012-13 was dismissed on account of low tax effect vide order dated 28.08.2019 in & Others.

raised by the assessee are allowed.

13. In the result, the appeal of the assessee is allowed.”

5. Since, the issue in the present appeal is identical to the issue involved in the other years and admittedly there is no change in the facts and circumstances of the case therefore, by following the decision of Co-ordinate Bench in the case of assessee itself (supra), the disallowance of INR 23,71,973/- made is hereby, deleted.