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2017 (11) TMI 1836 - AT - Income TaxRectification u/s 254 - HELD THAT - CIT (A) after considering the rival submissions had held that in the light of the decision of Hon ble Supreme Court in the case of CIT v. Woodward Governer India (P.) Ltd. 2009 (4) TMI 4 - SUPREME COURT the foreign exchange loss on trading transactions have to be allowed as business loss. CIT (A) directed the AO to allow the loss on realized transaction of foreign exchange as business loss and with regard to quantification of the realized loss the AO was further directed to recalculate the total amount of realized loss. As regards the claim of unrealized loss the CIT (A) agreed with the contention of the AO that it is a contingent liability because it is not ascertainable as to at what exchange rate the transactions of foreign exchange will be realized. Therefore considering the nature of such loss of mark to market basis was disallowed and it was held that the same can only be allowed at the time of actual realization of such loss. The bench after considering the order of revenue authorities had dismissed the appeal of the assessee and uphold the order of CIT (A) therefore there was no mistake in interpreting the judgment of Hon ble Supreme Court. No glaring obvious or patent mistake has been pointed out by the assessee which is apparent from the record therefore we are inclined to dismiss the MA filed by the assessee.
Issues Involved:
1. Recalling of the order dated 14.12.16. 2. Mistake apparent on record. 3. Realized and unrealized exchange loss. 4. Scope and ambit of application under section 254(2) of the Income-tax Act, 1961. Detailed Analysis: 1. Recalling of the Order Dated 14.12.16: The assessee filed a Miscellaneous Application to recall the order dated 14.12.16 passed in ITA No. 1998/Mum/15 for AY 2009-10. The original appeal was against the CIT (A)'s order dated 02.01.15, which was disposed of on merits after hearing both parties. The assessee sought to recall this order, claiming a mistake apparent on record. 2. Mistake Apparent on Record: The assessee's representative argued that the ITAT's order dated 14.12.16 misinterpreted the Supreme Court's decision in CIT v. Woodward Governer India (P.) Ltd., which allows both realized and unrealized exchange losses on a mercantile basis. The ITAT allegedly erred by considering only realized losses and ignoring the mercantile method of accounting and AS 11. The revenue's representative countered that there was no error apparent on record, and the Tribunal had upheld a well-reasoned CIT (A) order. 3. Realized and Unrealized Exchange Loss: The CIT (A) had directed the AO to allow the loss on realized transactions of foreign exchange as business loss, while disallowing unrealized losses as they were contingent liabilities. The AO was instructed to recalculate the realized loss, which the CIT (A) accepted as Rs.1,88,92,811/- instead of the AO's figure of Rs.84,86,181/-. The Tribunal upheld the CIT (A)'s findings, agreeing that unrealized losses are contingent liabilities and should only be allowed at the time of actual realization. 4. Scope and Ambit of Application under Section 254(2): The Tribunal examined whether it had the power to recall its order under section 254(2) of the Income-tax Act, which allows rectification of mistakes apparent from the record. The Tribunal concluded that it does not possess the power to review its own orders, only to rectify obvious and patent mistakes. The Tribunal cited multiple cases, including CIT v. Ramesh Electric and Trading Co., to support its stance that failure to consider an argument is not an error apparent on the record. The Tribunal also emphasized that section 254(2) does not permit rehearing or re-adjudication of the entire subject matter of the appeal. Conclusion: The Tribunal found no glaring, obvious, or patent mistake in its original order and dismissed the Miscellaneous Application filed by the assessee. The Tribunal reiterated that its scope under section 254(2) is limited to rectifying apparent mistakes and does not extend to reviewing or recalling its orders. The appeal filed by the assessee was dismissed, and the findings of the CIT (A) were upheld as judicious and well-reasoned.
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