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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
Before: HON’BLE SHRI SANDEEP GOSAIN, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member): - 1. Aforesaid appeal by revenue for Assessment Year [in short referred to as ‘AY’] 2013-14 contest the order of Ld. Commissioner of Income-Tax (Appeals)-56, Mumbai, [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)—56 DCIT(IT)-2(1)(1)/2016-17/341-C dated 23/11/2017 on following grounds of appeal: -
1. Whether on the facts and circumstances of the case, CIT(A) was right in holding that foreign exchange gain on underlying Forward Foreign Exchange Contracts has to be considered on capital account and hence constitute a capital gain when such a contract is not a capital Asset?
2. Whether on the facts and circumstances of the case, CIT(A) was right in holding that foreign exchange gain on underlying Forward Foreign Exchange Contracts is not taxable under the head Income from Other sources, when Forward Foreign Exchange Contract is neither a Capital Asset nor it is the business of the assessee to enter into such contracts?
3. The Appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer restored.
The assessee, upon receipt of notice of hearing, has filed cross-objections against the same. However, Ld. Sr. Counsel, Shri P.J. Pardiwala, submitted that upon instructions, the assessee is not interested in pursuing the same for this year. Therefore, the cross-objection stand dismissed in limine. 2. So far as the revenue’s appeal is concerned, it is admitted position that the issue is squarely covered by series of Tribunal’s decisions in M/s Citibank Overseas Investment Corporation Assessment Year-2013-14 assessee’s own case for AYs 2001-02, 2006-07, 2007-08, 2009-10 & 2011- 12, the copies of which has been placed on record. The Ld. CIT-DR is unable to controvert the fact that said rulings are squarely applicable to the facts of this year also. In fact, Ld. CIT(A) has deleted the additions by relying upon its own decision in assessee’s own case for AY 2012-13 order dated 18/10/2017 wherein the aforesaid decisions of the Tribunal have been followed.
Facts in brief are that the assessee being foreign company was assessed for impugned AY u/s 143(3) r.w.s. 144C (3) on 09/02/2017. The assessee is stated to be incorporated in and a tax resident of USA. It is a 100% subsidiary of Citibank N.A. USA. It makes investment in Indian companies through Foreign Direct Investment route.
During the year, it earned gains of Rs.85.68 Crores on cancellation and rollover of forward foreign exchange contracts which were claimed to be in the nature of capital receipts not chargeable to tax on the logic that contracts were entered into to protect the investment in India from foreign currency fluctuation and there being no cost for entering into these transactions. In the alternative, the attention was, inter-alia, drawn to the fact that in terms of Tribunal’s decision for AY 2001-02, the gains were to be assessed as Short-Term Capital Gains. However, disregarding the same, Ld. AO proceeded to assess the same under the head Income from other sources. As stated earlier, the first appellate authority concurred with assessee’s stand, relying upon its own decision in AY 2012-13, which, in turn, relied upon Tribunal’s order for other years.
M/s Citibank Overseas Investment Corporation Assessment Year-2013-14 5. Since the impugned decision only follows the orders of Tribunal for other years, no fault could be found in the same. Nothing on record establishes that there is any change in the factual matrix.
In result, the appeal as well as cross-objection stand dismissed. Order pronounced in the open court on 16th July, 2019. Sd/- Sd/- (Sandeep Gosain) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांकDated : 16/07/2019 Sr.PS:-Jaisy Varghese आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकरआयु�(अपील) / The CIT(A) 3. आयकरआयु�/ CIT– concerned 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai 5. गाड�फाईल / Guard File 6.