DCIT, TIRUPPUR vs. SCN GARNENTS PVT LIMITED, TIRUPPUR

This appeal of the revenue is directed against the order of CIT(A) -3, Coimbatore dated 16.11.2015 and pertains to assessment year 2011-12.

Shri Pathlavath Peerya, the learned representative for the department submitted that foreign exchange derivative loss to the extent of Rs.6,66,15,867/- was disallowed by the assessing officer. However, the CIT(A) by placing reliance on the order of this Tribunal in the assessee’s own case for the assessment year 2010-11 allowed the claim of the assessee. According to the learned representative, the loss suffered by the assessee is a trading loss.

On the contrary, Shri S.Swaminathan, the learned representative for the assessee submitted that in the assessee’s own case for the assessment year 2010-11, this Tribunal examined a similar transaction of foreign exchange derivative loss. This Tribunal found that the assessee can claim the same while computing the total income. The CIT(A) in fact followed the order of this Tribunal.

We have considered the rival submissions on either side and perused the relevant material available on record. As rightly submitted by the learned representative for the assessee, the CIT(A) by placing his reliance on the order of the assessee’s own case for the assessment year 2010-11 found that the foreign exchange derivative loss is a normal business loss. Therefore, it has to be allowed in view of the decision of this coordinate bench of this Tribunal.

The next ground of appeal is with regard to deduction claimed by the assessee under Section 80IA of the Act. The CIT(A) by placing his reliance on the judgment of the Madras high Court in the case of Shri Velayudhaswamy Spinning Mills P.Ltd. allowed the claim of the assessee. We heard Shri Pathlavath Peerya, the learned department representative and also Shri S.Swaminathan, the learned representative for the assessee. The CBDT has also instructed its officers not to file any appeal whenever it is covered by the judgment of the Madras High Court judgment. It is also a fact that recently the Apex Court dismissed the special leave petition filed by the department. In those circumstances, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly, the same is dismissed.

In the result, the appeal of the revenue stands dismissed.