×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
The captioned two appeals filed by the Assessee, pertaining to assessment years 2009-10, and 2010-11, are directed against separate orders passed by the learned Commissioner of Income Tax (Appeals), Kolkata (in short the ld. CIT(A)], which in turn arise out of separate assessment orders passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 ( in short the ‘Act’).
2. The appeal filed for Assessment Year 2009-10, is barred by limitation by 360 days. The assessee has moved a petition requesting the Bench to condone the delay. We note that Mr.K.N. Bansal, who looks after taxation matters of the company submitted before the Benchan affidavit stating that he had under gone a heart bye-pas surgery therefore Doctor advised him to take bed rest for a long period. Besides, Mr. Naveen Singh, staff of the company, left the job without handing over all the documents pertaining to appeal for A.Y.2009-10 to Mr. K.N. Bansal and as a result, the appeal could not be filed on time before the Tribunal. We have heard both the parties on this preliminary issue. Having regard to the reasons given in the petition, we condone the delay and admit the appeal for hearing.
3. Since these two appeals filed by the Assessee pertaining to A.Y. 2009-10 and 2010-11 contain the identical and common issues, therefore, these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity.
4.Although, these appeals filed by the Assessee for Assessment Year 2009-10 and A.Y.2010-11 contain multiple ground of appeals. However, at the time of hearing we have carefully perused all the grounds raised by the Assessee. Most of the grounds raised by the Assessee, are either academic in nature or contentious in nature. However, to meet the end of justice, we confine ourselves to the core of the controversy and main grievances of the Assessee. With this background, we summarize and concise the grounds raised by the Assessee as follows: Grounds relating to derivatives:-
(1).GroundNo.2 raised by the assessee in I.T.A. No. 906/Kol/2018 for assessment year 2009-10 and Ground No. 1 raised by the assessee in I.T.A. No. 947/Kol/2016 for assessment year 2010-11 are identical and common which relate to disallowance of crystallized losses of foreign exchange contracts, the details of which are given below.
(i). Disallowance of crystallized losses of Rs. 78,51,250/- on Forex contracts, for assessment year 2009-10.
(ii).Disallowance of crystallized losses of Rs. 1,54,44,375/- on Forex contracts, for assessment year 2010-11.
(2). Foreign Exchange loss of Rs. 4,74,84,669/- on account of cancelled Forex Purchase contracts.
(1). Ground No. 1 raised by the assessee in I.T.A. No. 906/Kol/2018 for assessment year 2009-10 relates to disallowance of Rs. 1,00,000/-being prior period expenses the liability for which crystallized during the relevant previous year.
(2). Ground No. 3 raised by the assessee in I.T.A No. 906/Kol/2018, for assessment year 2009-10 relates to disallowance of Rs. 3,13,43,120/- being replacement cost of seven ring frames treated by the assessee as revenue expenditure u/s 37(1) of the Act, however, AO treated the same as capital
expenditure. Note: Ground No.3 raised by the assessee in A.Y. 2010-11 is not pressed by the assessee.
5.First we take grounds raised by the assessee, relating to derivatives. We note that all the grounds raised by the assessee, relating to derivatives are identical and common therefore for the sake of convenience the facts narrated in assessee`s appeal in I.T.A. No. 906/Kol/2018 for assessment year 2009-10 is taken as the lead case.
6. Brief facts qua the issue are that assessee is a limited company and engaged in the business of manufacturing and trading of Yarn and Fabrics. The assessee company is also engaged in exporting of Yarn and fabrics. In order to hedge the risks of foreign exchange fluctuation loss, the company entered into various derivative contracts. The assessing officer noted that during the previous year the assessee company had deductedfrom its computation of income of Rs. 78,51,250/- as foreign exchange loss amortized. During the assessment proceedings, the