JOINT COMMISSIONER OF INCOME TAX, SPECIAL RANGE, PANAJI vs. GOA CARBON LTD., PANAJI

& 178/PAN/2019 (A.Y. 2013-14 & 2016-17) JCIT, SPL Range, vs Goa Carbon Limited, Panaji, Goa Dempo House, D.B. Road, Campal, Panaji, Goa. PAN: AAACG 6842 K Appellant Respondent Assessee by : Shri Mihir Naniwadekar Revenue by : Shri Prabhakar Anand DJ, DR Date of hearing : 04/09/2023 Date of pronouncement : 20/09/2023 O R D E R Per PARTHA SARATHI CHAUDHURY, JM: These appeals preferred by the Revenue emanate from the separate orders of Commissioner of Income Tax (Appeals)-1, Panaji (for short, ‘CIT(A)’) both dated 29.03.2019 for A.Y.2013-14 & 2016-17 as per the grounds of appeal on record.

3. At the outset, ld. counsel for the assessee submitted that in assessee’s own case for A.Y. 2011-12 in vide & 178/PAN/2019 Goa Carbon Limited order dated 07/09/2015, this Tribunal on the same identical facts and circumstances, has remanded both the present issues to the file of the Assessing Officer (AO). The relevant observation of the Tribunal is as follows:- “10. We find that in the paper book filed, the assessee has not certified whether the documents filed at page Nos. 1 to 11 were filed before the Assessing Officer or before the Commissioner of Income Tax (Appeals). We find that the Commissioner of Income Tax (Appeals) while allowing the claim for the assessee as hedging loss in foreign exchange has held that the exchange loan was taken for purchase of raw materials. However, from the order of the Commissioner of Income Tax (Appeals) it is not evident on the basis of which evidence and documents he has arrived at such a finding and conclusion. It is settled position of law that loss suffered on account of fluctuation in rates of foreign exchange is allowable as a business expenditure under sec. 37(1) of the Act as held by the Hon’ble Supreme Court in the case of CIT Vs. Woodward Governor India P. Ltd., 312 ITR 254. Further, the Hon’ble Bombay High Court in the case of CIT Vs. Badridas Gauridu (P) Ltd., 261 ITR 256 has held that loss due to fluctuation in foreign exchange while implementing the export contracts was expenditure incurred towards the business of the assessee and allowable deduction under sec. 37(1) of the Act. Recently, the Chennai Bench of the Tribunal in the case of Majestic Exports Vs. JCIT in I.T.A.Nos. 1336 & 3072/MDS/2014 order dated 24/07/2015 has held that the total transaction considered for determining the exchange fluctuation loss from the hedging contract cannot be more than the total export turnover of the assessee for the assessment year under consideration and if it is in excess then the loss suffered in respect of that operation of the excess transactions is to be considered as speculative loss only as it has no proximity with the export turnover and directed the Assessing Officer to re-compute accordingly. In the instant case, we also find that the documents placed before us in the paper book at page Nos. 1 to 11 are not verified by either of the lower authorities. Therefore, we feel that in order to adjudicate the issue completely, the matter has to be restored back to the file of the Assessing Officer for verifying the same with the documents filed before us by the assessee and to allow the loss incurred by the assessee in hedging transactions of foreign exchange to the extent of imports made by the assessee. If the total of the hedging transactions are more than the total of the imports made by the assessee, then the excess amount is to be considered as speculative loss and disallowed by the Assessing Officer while computing the income of the assessee. Needless to mention that the Assessing Officer shall allow reasonable and proper opportunity to the assessee before adjudicating the issue afresh. Thus, the appeal of the Revenue is allowed for statistical purpose.” & 178/PAN/2019 Goa Carbon Limited 4. Ld.DR fairly conceded that the present issues, following the Tribunal’s order (supra), may be remanded to the file of the Assessing Officer (AO).

Order pronounced in open Court on 20th September, 2023.