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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI JOGINDER SINGH, JM & SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R
Per Manoj Kumar Aggarwal (Accountant Member)
Aforesaid appeal by revenue for Assessment Year [AY] 2010-11 contest the order of the Ld. Commissioner of Income-Tax (Appeals)-10 [CIT(A)], Mumbai, Appeal No.CIT(A)-10/DCIT-5(2)/111/2014-15 dated 23/12/2015 qua certain relief provided to the assessee. The assessment Karp Impex Limited Assessment Year-2010-11 for impugned AY was framed by Ld. Deputy Commissioner of Income Tax-5(2), Mumbai [AO] u/s 143(3) read with section 153C of the Act, 1961 on 24/03/2014 wherein the income of the assessee has been assessed at Rs.20.08 Crores as against returned income of Rs.19.29 Crores e-filed by the assessee on 11/10/2010. None has appeared for assessee despite notice and no adjournment application is on record. Left with no option, we proceed to dispose-off the same on the basis of material available on record and after hearing Ld. Departmental Representative Sh. B.Srinivas, CIT(DR). The head of effective grounds raised
before us read as under:- (i) Disallowance of proportionate interest (ii) Disallowance on loss on cancellation of forward contracts
2. Facts in brief are that during assessment proceedings, it was noted that the assessee reflected capital work-in-progress / advances for fixed assets at Rs.462.40 Lacs which represented purchase of office by assessee at Bandra Kurla Complex. The Ld. AO, following earlier years, computed proportionate disallowance of interest u/s 36(i)(iii) against the same at Rs.19.49 Lacs. The second addition pertains to foreign exchange difference loss on forward contracts amounting to Rs.59.52 Lacs which has been treated as speculation loss for want of complete details and explanation.
3. Aggrieved, the assessee contested the same with partial success before Ld. CIT(A) vide impugned order dated 23/12/2015 wherein interest disallowance has been deleted by following the order of this Tribunal in assessee’s own case for AY 2006-07 & 2007-08. A relief of Rs.36.87 Lacs has been provided against exchange loss following the Karp Impex Limited Assessment Year-2010-11 decision of this Tribunal rendered in London Star Diamond Company (I) Ltd. dated 11/10/2013. The balance exchange loss of Rs.22.65 Lacs which has arisen out of premature foreign exchange contracts has been confirmed by Ld. CIT(A). Aggrieved, the revenue is in further appeal before us.
The Ld. DR has contested the stand of Ld. First appellate authority by submitting that the assessee’ failed to supply adequate details of the losses to Ld. AO and therefore, the matter may be remitted back.
We have considered the contentions and perused relevant material on record. So far as the interest disallowance u/s 36(i)(iii) is concerned, we find that Ld. CIT(A) has provided the relief to the assessee by following the decision of this Tribunal for AYs 2006-07 & 2007-08 wherein it has been noted that the assessee has sufficient own funds to make the investments. The revenue is unable to controvert these findings and also could not point out any change in facts or circumstances which necessitate us to take a different view in the matter. Therefore, we see no reason to interfere with the order of Ld. First appellate authority in this regard.
Regarding hedging losses, it is noted that the assessee was engaged in export activities and to hedge the currency fluctuations, it has entered into foreign currency forward contracts. The Ld. CIT(A) has considered the factual matrix and noted that the aggregate losses arose out of concluded contracts as well as pre-matured contracts. The relief has been provided to the assessee in terms of ruling of this Tribunal rendered in London Star Diamonds Company Limited [supra]. The revenue could not controvert the factual matrix. Further, no contrary Karp Impex Limited Assessment Year-2010-11 decision, whatsoever, has been brought on record to contest the stand of first appellate authority. Therefore, considering the same, we see no reason to interfere with the stand of Ld. First appellate authority in this regard.
Resultantly, the revenue’s appeal stand dismissed. Order pronounced in the open court on 04th July, 2018.