CIT, ROHTAK vs. M/S BHARTI HEALTHCARE LTD.

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No. 192 of 2009 Date of decision 16 .2.2010 The Commissioner of Income Tax, Rohtak ... Appellant Versus M/s Bharti Healthcare Ltd. ... Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JITENDRA CHAUHAN Present: Mr. Aman Bansal,Advocate for the appellant 1.To be referred to the Reporter or not ? 2.Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. The instant appeal filed by the Revenue under Section 260 A of the Income Tax Act, 1961 (for brevity 'the Act') is directed against order dated 18.1.2008 passed by the Income Tax Appellate Tribunal, Delhi Bench, Delhi (for brevity 'the Tribunal') in ITA No. 3051/Delhi 2003 in respect of the Assessment year 1998-99. The Revenue has claimed the following substantive questions of law: “i) Whether the ITAT was right in law in deleting the addition of 1,51,33,826/- made by the AO when the trading results were not verifiable from the RG 1 register maintained by the assessee and which did not represent the true and correct affairs of the business of the assessee. ii)Whether the ITAT was right in law in deleting the addition of Rs.7,15,823/- made by the AO on capitalized expenditures, when no details of the expenditure capitalized was filed by the assessee neither alongwith the return of income nor during the course of assessment proceedings before the AO; iii)Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in deleting the disallowances made on account of depreciation at Rs.8,98,684/- claimed on amount capitalization on account of foreign exchange fluctuations for increase in cost of liability due to capitalization of foreign exchange rate fluctuations when section 43A of the IT Act was not applicable to the facts of the case; iv)Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in deleting the disallowance of Rs. 30,000/- made on account of telephone expenses by treating the personal use of the assessee; v)Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in deleting the disallowance of Rs.1,12,813/- by treating it as revenue expenditure incurred on foreign travel expenses when no business was procured and no business transaction was undertaken by the assessee; and vi)Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law (upholding the order of CIT (A) regarding additions of )in deleting the disallowance at Rs.10,85,167/- made on account of interest payable to the financial institutions which is a statutory liability as per section 43 B of the Act and which has not been paid within the prescribed period ?.” A perusal of the impugned order would show that in respect of question nos. (i), (ii) and (v) the view taken by the Tribunal is that in the previous assessment years, similar relief was granted to the assessee- respondent. Accordingly the principles of consistency were applied. It is now well settled that unless there is change in circumstances the principle of consistency must be followed. In that regard, reliance may be placed on the judgements of Hon'ble the Supreme Court rendered in the case of CIT v. JK Charitable Trust (2009) 308 ITR 161 (SC) and Berger Paints India v. CIT (2004) 266 ITR 99 (SC). In respect of question No. (iii) the issue is covered against the Revenue in view of the Division Bench judgement of the Delhi High Court rendered in the case of CIT v. Woodward Governor India P.Ltd. (2007) 294 ITR 451 (Delhi). Accordingly it has to be held that where fixed assets were purchased by way of import, payments for which were agreed to be made in foreign exchange on a deferred payment basis, the cost of the assets was shown in the accounts of the assessee on the basis of exchange rate on the date of the filing of the bill of entry then any fluctuation in foreign exchange rates would go to increase or decrease the liability on revenue account. It would qualify as business expenditure allowable under Section 37 of the Act despite the fact that the liability had not been discharged in the concerned previous year. It was thus held that increase in liability due to foreign exchange fluctuation as per the exchange rate prevailing on the last day of the financial year was allowable as a deduction and was not notional or contingent. The question having been answered by the Division Bench of Delhi High Court would not require any adjudication by this Court. Likewise, in respect of question No. (iv), the issue is covered against the Revenue by the decision of the Gujarat High Court rendered in the case of Sayaji Iron and Engg.Co v. Commissioner of Income Tax (2002) 253 ITR 749 (Guj). Accordingly the same has to be answered against the Revenue and in favour of the assessee. In respect of issue No. (vi) findings of fact have been recorded by the Tribunal on the basis of evidence available before the CIT (A) and Tribunal has rightly deleted the additions made by the Assessing Officer. Accordingly, the appeal fails and the same is dismissed. (M.M.Kumar) Judge

(Jitendra Chauhan) 16.2.2010 Judge okg