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TMI Blog2014 (5) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... the foreign exchange loan as provided under section 43A. On the other hand, in its return, the assessee claimed this amount also as loss instead of claiming higher amount of depreciation. This is not a case of concealment of income or furnishing of inaccurate particulars. This is a case of a mistake or an oversight or at the best, a case of wrong claim. There is no scope to invoke section 271(1)(c) in the present case. - Decided in favour of assesse. X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome- tax (Appeals) examined the issue and held that the assessee ought to have considered the foreign exchange loss on fixed assets as provided under section 43A, irrespective of the method of accounting followed by the assessee. The Commissioner of Income-tax (Appeals) held that the assessee, on the other hand, has tried to claim the foreign exchange loss by way of deduction under section 37, under the guise of Accounting Standards. He accordingly, held that the assessee has furnished inaccurate particulars regarding the income of the assessee. He has relied on the decisions of the hon'ble Supreme Court in the cases of Sutlej Cotton Mills Ltd. v. CIT [1979] 116 ITR 1 (SC) and CIT v. Bharat Heavy Electricals Ltd. [1999] 239 ITR 756 (Del), to hold that the additional liability incurred by an assessee on account of variation in foreign exchange rate was an allowable trading liability, where the foreign exchange is utilised on revenue account and not allowable in case foreign exchange is utilised on capital account. He held that the claim of the assessee was against the above judgments. The Commissioner of Income-tax (Appeals) also considered the various decisions relied on by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o furnishing of inaccurate particulars of income and no penalty is leviable. (e) The learned Commissioner of Income-tax (Appeals) ought to have considered the decisions cited namely in the case of (a) Sara vana Bhavan (b) CIT v. SSP Ltd. [2010] 328 ITR 643 (P&H), (c) Price Waterhouse Coopers P. Ltd. v. CIT [2012] 348 ITR 306 (SC), Gem Granites (Mad) in justification for cancellation of penalty." 10. It is true, as seen from the facts of the case that the assessee had to revalue its foreign exchange liability as provided in the Accounting Standards made mandatory to limited companies. Therefore, the assessee has revalued such foreign exchange liability and worked out a loss of ₹ 4,41,769,165 towards loss on account of currency fluctuation. This loss was claimed by the assessee in the return filed by it as a deduction. It is on the basis of the above computation that the assessee has returned a loss of ₹ 6,76,37,054. 11. But in the course of the assessment proceedings, it was found that the foreign currency fluctuation loss to the extent of ₹ 1,93,13,616 related to acquisition of fixed assets and, therefore, cannot be claimed as a loss as such but has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accurate ; but while making the claim of deduction, the assessee instead of taking shelter under section 43A, proceeded under section 37 ; that too in respect of only a portion of the loss. There is no rule that a mistake should never happen. If no mistake should ever happen, there is even no need of scrutiny assessment. The scrutiny assessment is provided under section 143(3) to examine the correctness of the income or loss returned by the assessee. Section 143(3) itself contemplates that there could be a lot of adjustments in the final determination of income or loss on the basis of the examination of the details carried out in the course of scrutiny assessment. When the inadmissible portion of the loss was picked out by the assessing authority, he was only discharging the legitimate duty cast on him under section 143(3). It is not a case of detecting concealment of income. The consequential disallowance made by the assessing authority cannot be treated as a case of furnishing of inaccurate particulars or concealment of income. 14. Coming to the order of the Commissioner of Income-tax (Appeals), he has considered the issue in a very detailed manner. The only thing is that he w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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