COMMISSIONER OF INCOME TAX DELHI IV vs. INDO RAMA SYNTHETIC (I) LTD.

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ITA - 61 / 2009HC Delhi13 February 20091 pages
For Petitioner: MR.R.D.JOLLY
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose for its consideration. Regarding the first question concerning the deletion of Rs. 43,64,710/- on account of the difference in valuation of closing stock due to a change in method, the Court noted that this issue was covered against the Revenue by its prior order dated January 29, 2009, in ITA 16/2009 titled Commissioner of Income Tax vs. Indo Rama Synthetic (I) Ltd. For the second and third questions, concerning the deletion of additions of Rs. 9,36,31,817/- on account of depreciation on notional increase in the cost of Plant and Machinery due to foreign exchange rate fluctuation, and the deletion of additions of Rs. 59,55,559/- and Rs. 2,87,70,151/- on account of increased loan liability due to foreign exchange rate fluctuation, the Court held that these issues were covered against the Revenue by the decision in (2007) 294 ITR 451 (Delhi) in the case of Commissioner of Income Tax vs. Woodward Governor India P. Ltd. Consequently, the appeal was dismissed.

What were the facts?

This case involves an appeal by the Commissioner of Income Tax (CIT) Delhi IV against an order passed by the Income Tax Appellate Tribunal (ITAT). The assessee is Indo Rama Synthetic (I) Ltd. The appeal concerns assessment year(s) not explicitly stated but implied to be related to the additions made by the Assessing Officer. The order under challenge is the ITAT's decision to delete certain additions made by the Assessing Officer. The amounts in dispute are Rs. 43,64,710/-, Rs. 9,36,31,817/-, Rs. 59,55,559/-, and Rs. 2,87,70,151/-. The procedural history involves the Assessing Officer making additions, the assessee appealing to the ITAT, and the ITAT deleting these additions, leading to the present appeal by the Revenue to the High Court.

What were the issues?

The High Court had to decide three questions of law proposed by the Revenue: 1. Whether the ITAT was correct in law in deleting an addition of Rs. 43,64,710/- made on account of the difference in valuation of closing stock due to a change in the method of valuation adopted by the Assessee (under Section 2(11) or related provisions concerning stock valuation)? 2. Whether the ITAT was correct in law in deleting an addition of Rs. 9,36,31,817/- made by the Assessing Officer by disallowing the claim of depreciation on the notional increase in the cost of Plant and Machinery on account of foreign exchange rate fluctuation (under Section 32)? 3. Whether the ITAT was correct in law in deleting additions of Rs. 59,55,559/- and Rs. 2,87,70,151/- on account of increased liability of loan due to fluctuation in foreign exchange rate (under Section 2(13) or related provisions concerning foreign exchange fluctuations)? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue contended that the ITAT erred in deleting the aforementioned additions. For question 1, the Revenue relied on the fact that the Assessee changed its method of valuing closing stock. For questions 2 and 3, the Revenue's arguments are implied by the questions themselves, relating to depreciation on notional forex fluctuations and increased loan liability due to forex fluctuations.

Which sections of the Income-tax Act were involved?

Section 32

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF DELHI AT NEW DELHI . . ITA 61/2009 . . COMMISSIONER OF INCOME TAX DELHI IV.... Appellant Through Mr.R.D.Jolly, Advocate . versus . INDO RAMA SYNTHETIC (I) LTD. ..... Respondent Through . CORAM: HON'BLE MR. JUSTICE VIKRAMAJIT SEN HON'BLE MR. JUSTICE RAJIV SHAKDHER . . O R D E R 13.02.2009 . CM 741/2009 . Exemption allowed, subject to all just exceptions. . ITA 61/2009 . Following questions of law have been proposed by the Revenue:- a) Whether the ITAT was correct in law in deleting addition of Rs.43,64,710/- made on account of difference in valuation of closing stock due to change in method of valuation of closing stock adopted by the Assessee? b) Whether the ITAT was correct in law in deleting the addition of Rs.9,36,31,817/- made by the Assessing Officer by disallowing the claim of depreciation on notional increase in the cost of Plant and Machinery on account of foreign exchange rate fluctuation? c) Whether the ITAT was correct in law in deleting the addition of Rs.59,55,559/- and Rs.2,87,70,151/- on account of increased liability of loan due to fluctuation in foreign exchange rate? . So far as the first question is concerned it stands covered against the Revenue in terms of our Order dated January 29, 2009 in ITA 16/2009 titled Commissioner of Income Tax ?vs- Indo Rama Synthetic (I) Ltd. Questions B and C are covered against the Revenue in terms of (2007) 294 ITR 451(Delhi); Commissioner of Income Tax vs. Woodward Governor India P. Ltd. No substantial question of law arises for our consideration. Dismissed. . . . . . VIKRAMAJIT SEN,J . . . . RAJIV SHAKDHER, J FEBRUARY 13, 2009 nt . . 6 . . .

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