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TMI Blog2013 (3) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... ch remained included in the WDV in the plant and machinery which was covered under the provisions of sub-section 43A - CIT(A) deleted the disallowance - Held that:- Finding agreement with the CIT(A) that before the amendment to section 43A any loss suffered by assessee on account of foreign exchange fluctuation has to be capitalized in the year of such fluctuations if the asstt. order is prior to asstt. year 2003-04. The amendment to section 43A has rightly been considered as prospective in nature. Accordingly, no infirmity in the order of the CIT hence, we uphold the same - against revenue. Disallowance of set off of unabsorbed depreciation on the ground that no adjustment is possible in view of business losses being NIL - Held that:- CIT(A) observed that in view of the decision of the Met mine Investment & Trading Pvt. Ltd. vs. I.T.O.[2008 (12) TMI 631 - ITAT MUMBAI] the assessee was not entitled for set off of unabsorbed depreciation - against assessee. - ITA NOS. 798-802/DEL/2010 - - - Dated:- 15-3-2013 - R. P. Tolani And Shamim Yahya,JJ. Sh. Ashwani Kumar, Dr. Sudha Kumari, C.I.T. (D.R.) ORDER These appeals by the assessee and revenue emanate out of orders of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06/-. This difference of Rs. 91,84,006/- was assessed and added as suppression of sales as below:- S.No. Financial year Assessment Differential value on year sale of waste (Rs.) 1 2000-01 2001-02 37,23,324/- 2 2001-02 2002-03 17,88,990/- 3 2002-03 2003-04 27,29,513/- 4 2003-04 2004-05 31,71,944/- 5 2004-05 2005-06 11,21,235/- Total 91,84,006/- 91,84,006/- 3. Before the Ld. Commissioner of Income Tax (A) assessee submitted that the allegations of suppression of sales against the assessee was erroneous. It was submitted that certain documents were seized by the Excise authorities which allegedly indicated evasion of excise duty. That the assessee company with the primary objective to avoid prolonged litigation, continue its business unhindered, buy peace with the authorities, amicably resolve all differences and disputed, filed an application for settlement of its case with the Excise Settlement Commission, on 22.2.2007. The Settlement Commission accepted the application in terms of its order dated 18.2.2007. The assessee company paid excise duty of Rs. 143,73,644 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not tenable. It was assessee's own admission before the excise department that it has suppressed the sales amounting to Rs. 91,84,006/- pertaining to asstt. year 2001-02 to 2005-06. Thus, we find that there is no infirmity in the orders of the authorities below in this regard. Hence, we affirm the order of the Ld. Commissioner of Income Tax (A) on this issue and decide the case against the assessee. 6. Another common issue raised in the Revenue appeals asstt. year 2003-04 to 2006-07 is that Ld. Commissioner of Income Tax (A) has erred in deleting the disallowance on account of foreign exchange fluctuation loss which remained included in the WDV in the plant and machinery which was covered under the provisions of sub-section 43A of the Act. 7. On this issue assessee has capitalized adverse impact on foreign exchange fluctuation, the same was included in the value of plant and machinery. The depreciation on the said amount was disallowed, as the Assessing Officer considered that this is notional loss. Hence, depreciation on this account was disallowed. The Assessing Officer relied upon the provisions of section 43A in this regard. In this regard, assessee has claimed that prior a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons if the asstt. order is prior to asstt. year 2003-04. Accordingly, Ld. Commissioner of Income Tax (A) allowed the assessee appeal on this issue. 10. Against the above order the Revenue is in appeal before us. 11. We find that in this case there has been adverse impact of foreign exchange fluctuation on the cost of assets. The cost of assets went up because due to devaluation. Assessing Officer was of the opinion that provision of section 43A are applicable. Assessee has submitted before the Assessing Officer that prior to amendment to section 43A, it was permissible for the assessee to increase the value of asset by an amount due to loss suffered due to foreign exchange fluctuation. However, this plea was not accepted by the Assessing Officer. Upon assessee's appeal Ld. Commissioner of Income Tax (A) considered the issue. He observed that on this issue provision of section 43A prior to amendment is to be applied. He opined that before the amendment to section 43A any loss suffered by the assessee on account of foreign fluctuation has to be capitalized in the year of such fluctuation if the assessment order is prior to assessment year 2003-04. 11.1 We have carefully conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f making the payment shall be so adjusted that the total amount added to, or, as the case may be, deducted from, the actual cost or expenditure or cost of acquisition, is equal to the increase or reduction in the aforesaid liability taken into account at the time of making payment." 11.2. We find that the above said section 43A was substituted by the Finance Act, 2002 w.e.f. 1.4.2003. Prior to its substitution section 43A read as under:- "43A. Special provisions consequential to changes in rate of exchange of currency. - (1) Notwithstanding anything contained in any other provision of this Act, where an assessee has acquired any asset from a country outside India for the purpose of his business or profession and, in consequence of a change in the rate of exchange at any time after the acquisition of such asset, there is an increase or reduction in the liability of the assessee as expressed in Indian currency for making payments towards the whole or a part of the cost of the asset or for repayment of the whole or a part of the moneys borrowed by him from any person, directly or indirectly, in any foreign currency specifically for the purpose of acquiring the asset (being in ei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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