DCIT, NOIDA vs. HONDA MOTOR CO LTD, JAPAN

PDF · subscribers
ITITA 37/DEL/2025Status: DisposedITAT Delhi28 July 2026AY 2011-1213 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the findings of the CIT(A) were clear and logical, and there was no need for interference. The CIT(A) had noted that the computation of capital gain in Yen was not disputed, and the sole dispute was the exchange rate for conversion from Yen to INR. The CIT(A) referred to Section 48 of the Act and Rule 115A of the Income Tax Rules, 1962. Rule 115A(d) clearly states that for reconverting capital gains computed in foreign currency, the telegraphic transfer buying rate (TTBR) of such currency, as on the date of transfer of the capital asset, is to be applied. The transfer of shares took place on 22.03.2011. The assessee applied the TTBR of 0.54690/- for reconversion, which was found to be in accordance with Rule 115A(d). Therefore, the addition made by the AO of Rs. 57,78,09,879/- was deleted, and the grounds of appeal were allowed in favor of the assessee. The Tribunal sustained the order of the CIT(A) and dismissed the revenue's appeal.

What were the facts?

The Revenue (DCIT) filed an appeal against the order of the CIT(A), Noida-2, for Assessment Year 2011-12. The appeal challenges the deletion of an addition of Rs. 57,78,09,879/-. The dispute concerns the calculation of capital gains on the sale of shares by the assessee, Honda Motor Co. Ltd., Tokyo, Japan. The Revenue contended that the assessee received sales consideration of Rs. 3841,83,17,438/-, on which TDS was deducted and remitted from India. The capital gain on this amount was Rs. 3797,47,59,306/, but the assessee offered only Rs. 3739,69,49,427/- as long-term capital gains (LTCG) due to reconversion of Yen to INR. The Revenue also argued that the income of Rs. 57,78,09,879/- was earned in India and liable to tax as it accrued, arose, and was received in India.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) erred by deleting the addition of Rs. 57,78,09,879/-, considering that the sales consideration received by the assessee on sale of shares was Rs. 3841,83,17,438/-, on which TDS @ 20% was deducted and remitted from India, resulting in a capital gain of Rs. 3797,47,59,306/, while the assessee offered only LTCG of Rs. 3739,69,49,427/- due to reconversion of Yen to INR. (Section 48 r.w. Rule 115A). - Assessee's contention: The assessee argued that the computation of capital gain in Yen was not disputed, and the dispute was solely regarding the exchange rate applied for converting the capital gain from Yen to Indian currency. The assessee relied on Rule 115A of the Income Tax Rules, 1962, for reconverting capital gains computed in foreign currency using the Telegraphic Transfer Buying Rate (TTBR) as on the date of transfer. - Revenue's contention: The Revenue contended that the CIT(A) erred by deleting the addition, ignoring that the capital gain on the sales consideration was Rs. 3797,47,59,306/, but the assessee offered only Rs. 3739,69,49,427/-. The Revenue also argued that the income of Rs. 57,78,09,879/- was earned in India and was liable to tax as it accrued, arose, and was received in India, yet the assessee failed to offer it under any head.

Which sections of the Income-tax Act were involved?

Section 48

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘D’ NEW DELHI

Before: SH. VIKAS AWASTHY & SH. KRINWANT SAHAYHonda Motor Co. Ltd.

Hearing: 26.05.2026Pronounced: 28.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘D’ NEW DELHI BEFORE SH. VIKAS AWASTHY, JUDICIAL MEMBER AND SH. KRINWANT SAHAY, ACCOUNTANT MEMBER I.T (IT) A.37/DEL/2025 (A.Y 2011-12) DCIT Honda Motor Co. Ltd. Noida Vs. 2-1-1 Minai Aoyama Minato Ku Tokyo Japan PAN No.AACCH3050J

Appellant by: Sh. M. S. Nethrapal, CIT (DR) Respondent by : Sh. Nikhil Agarwal, Advocate Sh. Kamal Sawhney, Advocate (VC)

Date of Hearing 26.05.2026 Date of Pronouncement 28.07.2026 ORDER PER KRINWANT SAHAY AM Appeal in this case has been filed by the revenue against the order dated 24.07.2025 passed by the CIT(A), Noida-2 for the A.Y. 2011-12. Grounds of appeal are as under :-

1 | P a g e

“1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred by deleting addition of Rs. 57,78,09,879/- while ignoring the fact that the sales consideration received by the assessee on sale of shares is Rs. 3841,83,17,438/- on which TDS @ 20% was deducted and the same has been remitted from India. The capital gain on this amount comes out to be Rs. 3797,47,59,306/- However, the assessee has only offered LTCG of Rs. 3739,69,49,427/ on account of reconversion of yen to INR. 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred by not appreciating the fact that the assessee has earned this income of Rs. 57,78,09,879/- on sale of shares in India, however, it had failed to offer this income under any head. This income has accrued, arisen and received in India, it is liable to be taxed. 3. The Appellant craves leave to add, amend, alter vary and / or withdraw any or all the above grounds of Appeal.”

2.

During proceedings before us both the revenue as well as the assessee have filed written submissions which are reproduced as under :-

(i) The Ld. Counsel for the assessee has filed written submissions as under :-

2 | P a g e

3 | P a g e

4 | P a g e

5 | P a g e

The revenue submissions is as under :-

6 | P a g e

7 | P a g e

8 | P a g e

9 | P a g e

3.

The ld. Counsel for the assessee argued on the line of written submission that he has filed and the Ld. DR also argued on the basis of written submission which he has already filed before the Bench.

4.

We have considered the findings given by the authorities below. The written submission filed both assessee and the revenue and the arguments made by them during proceedings before us. We find that in terms of section 48 r.w. rule 115A assessee has computed the capital gains. Further while the AO has agreed on computation in Yen terms but he has not agreed with the rate applied for conversion by the assessee for calculation of capital gains from Yen to INR. We find that the Ld. CIT(A) has given a very clear finding on this issue in the appellate order which is reproduced as under :- “5.1.3. I have carefully gone through the facts of the case and submissions of the appellant. It is seen that computation of capital gain in Yen is not disputed. The only dispute is with respect to the application of exchange rate on conversion of capital gain from Yen to Indian currency. The AO vide assessment order dated 27.12.2022 has applied the exchange rate in real terms of Rs. 0.55535 per 10 | P a g e

Yen i.e. the rate at which the appellant had received the sale consideration, whereas the appellant has claimed the same at Rs. 0.54690 per Yen which is the Telegraphic Transfer Buying Rate as on the date of transfer of shares i.e. 22.03.2011.

In this context, it is important to refer to relevant provisions of the Act and Income-tax Rules 1962, viz. section 48 of the Act read and 115A of Income Tax Rules, 1962.”

5.

On this issue CIT(A)’s finding is also very clear which is as under :- “Now, coming to the applicability of exchange rate, rule115A of the Rules as reproduced above clearly speaks that for converting the cost of acquisition of the capital asset, expenditure incurred, full value of consideration received or accruing as a result of the transfer of the capital asset average of the telegraphic transfer buying rate (TTBR) and telegraphic transfer selling rate (TTSR) of the foreign currency initially utilised in the purchase of the said asset, as on the date of its acquisition (for conversion of acquisition cost) and as on the date of transfer of the capital asset(for conversion of expenditure incurred and full value of consideration) is applied. Further, for reconverting capital gains computed in the foreign currency, the telegraphic transfer buying rate of such currency, as on the date of transfer of the capital asset is to be applied.

5.1.5 In the instant case, transfer of shares took place on 22.03.2011. TTBR and TTSR on the said date was 54690/- and 56380/- respectively. As the shares were purchased in Yen only, the appellant has not applied any exchange rate. For converting the expenditure incurred and full value 11 | P a g e

of consideration received, the appellant has applied average of TTBR and TTSR i.e. .55535/- as per rule 115A of Income Tax rules, 1962. The said foreign currency conversions are not under dispute. What is under dispute is the rate applied for reconversion of capital gain computed in foreign currency to Indian currency. It is seen that the appellant has for rate (TTBR) of 0.54690/- This application of rate is found to be in accordance with the provisions of Rule 115A(d) of the Rules

5.1.6 In view of the above discussion, it is held that exchange rate applied by the appellant for computing capital gain on transfer of shares are in addition made by the AO of Rs. 57.78.09.879/- is deleted. The grounds of appeal accordance with the provisions of the Act and the Rules. Accordingly, the are allowed in favor of the appellant.”

6.

We have gone through the findings given by the Ld. CIT(A) on this issue and we have also gone through the written submission filed by the revenue on this issue.

7.

We find that the findings given by the Ld. CIT(A) is very clear and logical, therefore, in our considered view there is no need to make any interference in the findings given by the Ld. CIT(A). Accordingly, the order of the ld. CIT(A) on this issue is sustained and thus revenue’s appeal on this issue is dismissed.

12 | P a g e

8.

In the result, the appeal filed by the revenue is dismissed. Order pronounced in the Court on 28.07.2026.

Sd Sd/- Sd/-

(VIKAS AWASTHY) (KRINWANT SAHAY) JUDICIAL MEMBER ACCOUNTANT MEMBR Dated : 28/07/2026 *Neha Sr. PS* Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT (Appeals) 5. DR: ITAT

ASSISTANT REGISTRAR ITAT NEW DELHI

13 | P a g e

More judgments on Section 48

All 1,457 judgments and leading authorities on Section 48 →

Recent GST High Court judgments

Search GST case law →