2020 (12) TMI 1114 - AT - Income Tax

Allowability of claim - additional claim by way of letter, which are not claimed in the return of income by the assessee - Deduction towards forex loss - HELD THAT - There is a distinction between revised return and correction of return. If the assessee files some application for correcting the return filed or making amends therein, it would not mean that he has filed a revised return. It will retain the character of the original return. But once a revised return is filed, the original return must be taken to have been withdrawn and could have been substituted by a fresh return for the purpose of assessment. In the present case, the assessee filed a letter seeking the deduction towards forex loss. A.O. outrightly rejected it without discussing anything about it. On the contrary the CIT(A) observed that the claim is not relates to the assessment year under consideration and it relates to the earlier assessment year. As gone through the computation statement of forex loss furnished by the assessee, which is placed in paper book page 32 as per which, loss up to 31.3.2013 is at ₹ 20,63,782/- and for the year ended 31.3.2014 cumulatively it is ₹ 62,60,284/-. Thus, it mean that the loss relate to the assessment year under consideration is only ₹ 41,96,702/-. Income Computation Disposal Standard-6 has relevance to the year under consideration and the placing of reliance by A.R. on this standard is misplaced. Coming to the allowability of deduction, in our opinion, assessee is entitled for forex loss relevant to the assessment year under consideration only to the tune of ₹ 41,96,702/- and not entire amount of ₹ 62,60,285/-. Accordingly, we direct the A.O. to grant deduction towards forex loss to the tune of ₹ 41,96,702/- only. This ground of assessee is partly allowed.

Summary

Issues:
1. Claim for deduction of forex loss not originally claimed in return of income.
2. Entitlement to deduction of forex loss as per accounting standards.
3. Authority of assessing officer to entertain new claims without revised return.
4. Consideration of additional claim by appellate authorities.
5. Distinction between revised return and correction of return.

Analysis:
1. The appellant filed a return of income for the A.Y. 2014-15 but later claimed a deduction of forex loss of ?62,60,285, which was not originally claimed. The assessing officer completed the assessment without mentioning this claim.
2. The CIT(A) observed that the appellant's claim was an accounting loss, not a statutory deduction, as per AS-11. The appellant failed to comply with AS-11 by not recognizing the forex loss in the relevant financial year despite reflecting liabilities in the balance sheet.
3. The question arose whether the assessing officer could consider additional claims made through a letter, not in the original return. The Circular by CBDT emphasized assessing the taxpayer reasonably. The Tribunal noted that the assessing officer cannot entertain claims not in the return unless revised. However, the appellate authorities can consider such claims.
4. The appellate tribunal considered the appellant's claim for deduction of forex loss. The appellant argued that the deduction should be allowed, even if not claimed initially, and authorities should not take advantage of the taxpayer's ignorance. The tribunal partially allowed the claim for a reduced amount of ?41,96,702 for the assessment year under consideration.
5. The tribunal distinguished between revised and corrected returns. It held that the assessing officer cannot accept claims made through a letter if not in the return. However, the appellate authorities have the discretion to consider such claims. The tribunal directed the assessing officer to grant a deduction of ?41,96,702 towards forex loss for the assessment year under consideration.

This detailed analysis covers the issues raised in the legal judgment regarding the deduction of forex loss and the authority of the assessing officer and appellate authorities to consider such claims.