2019 (3) TMI 745 - HC - Income Tax

Mark to Market loss arising on revaluation of forward exchange contract on the closing date of the previous year - whether not a notional loss and therefore allowable? - HELD THAT - Revenue in support of the Appeal has stated that this issue stands concluded against the Appellant-Revenue and in favour of the Assessee by the decision of this Court in the matter of Commissioner of Income Tax-16 Mumbai v/s. M/s. D Chetan & Co. 2016 (10) TMI 629 - BOMBAY HIGH COURT and Pr. Commissioner of Income Tax 19 v/s. M/s. Polar Star 2018 (12) TMI 1621 - BOMBAY HIGH COURT . The question that is raised before us does not give rise to any substantial question of law as the issue sought to be raised here is already concluded. Hence not entertained. Question arising from the order of the Tribunal - Non taking cognizance of non-uniformity of rates of revaluation adopted for various debtors and also not following the AS-11 categorical guidance on adopting closing rate of currency - HELD THAT - It is an undisputed position that this question does not arise from the order of the Tribunal. The impugned order of the Tribunal does not make any mention of any submission being made on behalf of the Appellant Revenue with regard to the issue sought to be raised here. Hence not entertained. No substantial question of law.

Summary

Issues Involved:
1. Interpretation of "Mark to Market" loss on revaluation of forward exchange contract.
2. Non-uniformity of rates of revaluation for debtors and adherence to AS-11 guidance on currency rates.

Analysis:
1. The appeal challenged the Income Tax Appellate Tribunal's order regarding the "Mark to Market" loss on a forward exchange contract revaluation. The first question of law was whether this loss was allowable. The counsel for the Revenue argued that the issue had been settled in favor of the Assessee in previous court decisions. Citing specific cases, it was contended that the matter was already concluded, and hence, no substantial question of law arose. Consequently, this question was not entertained, leading to the dismissal of the appeal.

2. The second question pertained to the non-uniformity of revaluation rates for debtors and compliance with AS-11 guidelines on currency rates. The court observed that this issue was not raised before the Tribunal during the proceedings, as it was not mentioned in the impugned order. As a result, since the question did not arise from the Tribunal's decision, it was also not entertained. Consequently, both questions were deemed not to give rise to any substantial question of law, leading to the dismissal of the Income Tax Appeal.