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Income Tax Appellate Tribunal, MUMBAI BENCH “I”, MUMBAI
Before: SHRI G.S. PANNU & SHRI AMARJIT SINGH
The captioned appeal by the Revenue is directed against the order of CIT(A)-38, Mumbai dated 18.09.2014, pertaining to the Assessment Year 2010-11, which in turn has arisen from the order passed by the Assessing Officer dated 26.11.2012 under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).
In this appeal, Revenue has raised the following Ground of appeal:
“1. Whether in the facts and circumstances of the case and in law, the ld. CIT(A) is justified in deleting the addition of Rs.2,19,60,410/- being marked to market losses on account of exchange rate fluctuation without appreciating
2 M/s. Walchandnagar Industries Ltd. the facts that the said loss is a notional loss which is speculative and contingent in nature.”
In brief, the relevant facts are that the respondent-assessee is a company incorporated under the provisions of the Companies Act, 1956. The assessee-company is engaged in the business of manufacture and supply of plant and machinery for sugar plants, boilers, power plants and also equipment for petrochemical and refining. It is also engaged in the activity of fabricating equipment against orders received from Nuclear Power Corporation of India Ltd., Bhabha Atomic Research Centre and Vikram Sarabhai Space Centre. For Assessment Year 2010-11, it filed a return of income declaring total income of Rs.26,02,10,825/-, which was subject to scrutiny assessment whereby the total income has been assessed at Rs.28,40,64,410/-. One of the additions made to the returned income was of a sum of Rs.2,19,60,410/- which represented marked to market loss on account of exchange rate fluctuation. Notably, in the return of income assessee had offered net gain of Rs.6,57,74,712/- on account of exchange rate fluctuation which included a sum of Rs.2,19,60,410/- being marked to market loss on exchange rate fluctuation. The Assessing Officer disallowed the aforesaid loss on the ground that it was speculative in nature and a mere notional loss, which had resulted in reduction of book profit of the assessee-company. On an appeal filed by the assessee, CIT(A) has since set-aside the action of the Assessing Officer by noticing that the Tribunal in assessee’s own case for Assessment Year 2009-10 in dated 21.8.2014, by relying on the judgment of Hon'ble Supreme Court in the case of CIT v.
3 M/s. Walchandnagar Industries Ltd.
Woodward Governor India Pvt. Ltd., 312 ITR 254 (SC), has since allowed the claim of the assessee. Against such a decision, Revenue is in appeal before us.
Before us, it was a common point between the parties that the order of Tribunal in assessee’s case for Assessment Year 2009-10 dated 21.8.2014 (supra) continues to hold the field and as a consequence we do not find any error on the part of the CIT(A) in deleting the disallowance made by the Assessing Officer. The order of CIT(A) is hereby affirmed in view of the aforesaid precedent in the assessee’s own case.
Resultantly, appeal of the Revenue is dismissed.
Order pronounced in the open court on 22nd July, 2016.