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TMI Blog2018 (5) TMI 1587X X X X Extracts X X X X X X X X Extracts X X X X ..... direction of the CIT is contrary to the decision of the Hon'ble Supreme Court delivered in the case of in Woodward Governor India private Ltd. (2009 (4) TMI 4 - SUPREME COURT ). Accordingly, we allow second ground of appeal. MAT - Disallowance of production u/s. 80 IC in respect of voluntary transfer pricing adjustment undertaken by the assessee, invoking the provisions of section 92C(4) - Held that:- After considering the computation of total income under the normal provisions and the MAT provisions, we find that the order of the AO was not prejudicial to the interest of the Revenue, as disallowance of deduction u/s. 80 IC to the extent of 9, 86, 657/-did not affect the tax calculation. Therefore, we decide this ground of appeal in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds. 3. First effective ground of appeal(GOA-2)is about Foreign Exchnage(FE)loss. With regard and unrealised exchange loss on purchase of assets of ₹ 10. 3 crores, the CIT observed that while computing the income under the Act any deviation of accounting standard from the provisions of the Act had to be factored. He made a reference to the provisions of section 43 A and observed that same dealt with the rate of exchange of currency and the treatment to be given for fluctuation in foreign exchange transactions, that provisions of the Act had to be applied while computing the income of an assessee irrespective of the mandate of the accounting standards. He referred to the Instruction No. 3 of 2010, issued by the CBDT, wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cases of Bharat Serums And Vaccines Ltd. (ITA 3091 and 3375/ Mumbai/2012, dated 15/02/2017), Haldia Petrochemicals Ltd. (70 taxmann. com. 70)Vinergy International Private Ltd. (Income tax appeal number 376 of 2014, dated 11/08/2016 of honorable Bombay High Court)and D Chetan and Co. (390 ITR 36). The Departmental Representative (DR) supported the order of the CIT and stated that he had rightly applied the instruction number three of 2010. 5. We have heard the rival submissions and persued the material before us. We find that the assessee had added back unrealised exchange loss on purchase of assets of ₹ 10. 3 crores to the income chargeable to tax under normal provisions of the Act, that it had claim any unrealised exchange gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it was provision and not an ascertained liability, as specified in Explanation 1 to clause (c) to the provisions of section 115JB. Therefore, he added Rs. 4. 74 crores to the book profit of the assessee. 4. 1. After considering the submission of the assessee, the FAA held that the assessee had borrowed funds in foreign currency, that in order to hedge against the exchange fluctuation it had entered into foreign currency swap agreements, that the contracts were of one year, that the loss claimed by the assessee could not be allowed for the year under consideration, that it was a notional /contingent loss, that it was allowed in the next assessment year. 4. 2. Before us, the AR relied upon the case of M/s. D. Chetan & Co. (Income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y debited to the profit and loss account. The First Appellate Authority allowed the loss incurred on the forward contracts as a business loss. The Tribunal confirmed this. On appeal to the honorable High Court, the matter was decided as under: " ……the Tribunal concluded that the transaction entered into by the assessee was not in the nature of speculative activities. Further the hedging transactions were entered into so as to cover variation in foreign exchange rate which would impact its business of import and export of diamonds. These concurrent findings of fact were not shown to be perverse in any manner. The Assessing Officer in the assessment order did not find that the transaction entered into by the assessee was specu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the issue arising year in would be covered by the principle laid down by the Apex Court in Woodward Governer India private Ltd. (supra)……. " Considering the above, we are of the opinion that order of the AO is neither erroneous not prejudicial to the interest of the revenue. We further hold that the loss is not of contingent nature and the direction of the CIT is contrary to the decision of the Hon'ble Supreme Court delivered in the case of in Woodward Governor India private Ltd. (supra). Accordingly, we allow second ground of appeal. 6. Next ground of appeal is about disallowance of production u/s. 80 IC in respect of voluntary transfer pricing adjustment undertaken by the assessee, invoking the provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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