The Tax Publishers2021 TaxPub(DT) 0469 (Chen-Trib)

INCOME TAX ACT, 1961

Section 28

Where there was no dispute on the details furnished by assessee and losses were booked by assessee in compliance of mandatory accounting standard AS-11 from assessment year 2011-12 onwards and it admitted the corresponding profits as income in the respective year, therefore, addition was unsustainable and accordingly, AO was directed to delete the same.

Business loss - Loss on account of FC revaluation which was a marked to market (MTM) loss - Allowability -

Assessee was engaged in the business of tobacco trading and exports, incurred losses on Foreign Currency (FC) utilization, FC cancellation and FC revaluation. AO allowed all the losses except the loss on account of FC revaluation which was a marked to market (MTM) loss, holding that such loss was a notional loss and contingent in nature. Therefore, he disallowed assessee's claim and completed the assessment. Held: In this case, the pending forward contracts were restated on the basis of foreign exchange rate as on 31-3-2013. There was no dispute on the details furnished by assessee. The losses were booked by assessee in compliance of mandatory Accounting Standard AS-11 from assessment year 2011-12 onwards and it admitted the corresponding profits as income in the respective year. Therefore, addition was unsustainable and accordingly, AO was directed to delete the same.

Relied:Oil & Natural Gas Corporation Ltd. v. CIT 2010 TaxPub(DT) 1672 (SC), CIT v. Woodward Governor India P. Ltd. (2009) 312 ITR 254 (SC) : 2009 TaxPub(DT) 1628 (SC) and Emmsons International Ltd. v. Asstt. CIT ITA No. 4603/Del/2019 for the assessment year 2012-13 dt. 14-10-2019 : 2019 TaxPub(DT) 6950 (Del-Trib).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14



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