9911796707
TMI Blog2007 (4) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax having been fully supported by a direct ruling of the Calcutta High Court reported in Indian Leaf Tobacco Development Co. Ltd. v. CIT [1982] 137 ITR 827 could still be said to be unsustainable to justify the respondent's action in treating it as a prima facie adjustment? 3. Whether, the judgments of the Supreme Court relied upon by the respondent for justifying the action having been considered by the Calcutta High Court in the judgment referred above was not sufficient to render the issue a debatable one and as such take it outside the scope of prima facie adjustment within the meaning of section 143(1)(a) of the Act?" The facts in brief are as under: During the previous year ended on March 31, 1991, the appellant had realised a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain in exchange on export realization does not represent any trading receipt arising out of such business activity as the assessee is not a dealer in foreign exchange. The said gain represents the excess realisation on export sales consequent to a more favourable rate of exchange prevailing on the date of realization of invoice as compared to the date on which the shipment was effected. Such excess realization due to fluctuations in the rates of exchange cannot be regarded as trading receipt. Reliance was placed on the judgment of the Calcutta High Court. They are justified in claiming a prima facie adjustment in the case on hand. He finds fault with the order of the Assessing Officer. He makes the same grievance with regard to the orders p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r documents accompanying it shall be rectified; (ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, in prima facie admissible but which is not claimed in the return shall be allowed; (iii) any loss carried forward, deduction, allowance of relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed: Provided further that an intimation shall be sent to the assessee whether or not any adjustment has been made under the first proviso and notwithstanding that no tax or interest is due from him." Section 143(1A) would provide for an add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first impression namely, prima facie impression in terms of section 143 of the Act, in the light of the law declared by this court in terms of the apex court judgment. Let us see as to whether "the prima facie adjustment" in the light of the Calcutta High Court judgment would stand the test of law. The Calcutta High Court has considered the profit due to fluctuation in exchange rate. The Calcutta High Court has come to a conclusion that where a surplus arises due to a fluctuation in the exchange rate, the true test to find out if such surplus arose out of any trading activity. It must be a result of a trading activity of the assessee or it must arise or result from the trading activity of the assessee. Merely because the holder of a cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lcutta High Court has chosen to take a different view in terms of the judgment as referred to by the assessee. Therefore in our view the assessing authority is justified in rejecting the prima facie adjustment in the light of two judgments of the jurisdictional High Court in the case on hand. The same has been noticed by the Commissioner and the Tribunal as mentioned earlier in terms of the law governing prima facie adjustment. The case of the assessee cannot be accepted in the light of two clear pronouncements of this court available on record on the date when the letter was sent to the authorities. The authorities are therefore justified in our view in accepting the case of the Revenue. We are not impressed that a prima facie case has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s unsustainable in law. At this stage, we should say that levy of additional income-tax is not penalty. In fact when this provision was challenged before the Supreme Court in Asst. CIT v. J. K. Synthetics Ltd. [2001] 251 ITR 200, this section was upheld by the Supreme Court. In so far as non-leviability of additional income-tax is concerned, though this argument is attractive, the same cannot be accepted in the absence of any foundation as such laid by the appellant. Nowhere in the proceedings before the authorities this point has been urged or canvassed on behalf of the assessee. None of the authorities have given any finding with regard to this contention which is raised before us for the first time. Even the questions of law framed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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