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TMI Blog2018 (12) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on account of claim of loss arising out of foreign currency term loan - Held that:- AR, while fairly conceding that the issue stood against the assessee by the order of this Tribunal in immediately preceding AY 2009-10, submitted that the fact that the machinery was already put to us by the assessee has not been considered by the Tribunal and therefore, the same was rendered on erroneous assumption of facts. However, since a view has already been taken by the Tribunal on identical facts and circumstances, refraining from adjudicating the same and respectfully following the same, we conclude that the loss was not allowable as revenue expenditure. Ground Number-4 & 9 stands dismissed. However, we find force in the alternative plea that the same should be treated as capital expenditure and eligible for depreciation. Therefore, the matter stand remitted back to the file of Ld. AO to consider the alternative plea as raised by Ld. AR before us and re-adjudicate as per law. - I.T.A. No.3768/Mum/2014 - - - Dated:- 11-12-2018 - SHRI JOGINDER SINGH, VP AND HON BLE SHRI MANOJ KUMAR AGGARWAL, AM For The Assessee : Shri Nishit Gandhi-Ld. AR For The Revenue : Shri D.G. Pansari- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of VAT under a suspicious presumption of non-payment by Supplier to Government. 8. The Ld.CIT(A) erred in confirming the addition of ₹ 19,11,000/- out of other purchases and thereby adding an amount of ₹ 4,39,00,166/- as the income of the Appellant as against the amount of ₹ 4,19,89,166/- surrendered by the Appellant. The assessee has raised additional Grounds of appeal also. Since the same are legal grounds and do not require appreciation of new facts, the same are admitted and renumbered as ground numbers 9 10. The same reads as under:- 9. The Id. AO as well as the Id.CIT (A) have failed to appreciate the fact that the appellant had purchased Machinery from India, and has availed the facility of borrowings in the terms of Indian Currency, subsequently the loan was converted into foreign currency. The appellant for the year under consideration had incurred loss on account of fluctuation of foreign currency and claimed the same loss as revenue expense. 10. The Ld.AO as well as the Id. CIT (A) disallowed the revenue expenditure and added back to the income of the appellant. Though the expenditure claimed as revenue expenditure is disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation triggered survey action upon assessee u/s 133A on 22/11/2012 wherein the assessee declared additional income on account of alleged bogus purchases aggregating to ₹ 9.27 Crores for financial years 2008-09 to 2011-12. For impugned AY, this declaration amounted to ₹ 4.39 Crores. 3.3 During assessment proceedings, the assessee was directed to substantiate the purchases made from these parties and show-caused as to why the aforesaid additional income was not to be added to the income of the assessee. The assessee defended the purchases vide submissions dated 28/02/2013, inter-alia, by submitting that the material purchased from these parties was utilized for testing purposes in their laboratory, quality control department and to produce the final products. It was further submitted that since the material issued to lab testing department was in very small quantities, no details thereof were recorded. It was also submitted that the statement during survey operations was given in confused state of mind and under pressure and therefore, the additions were not justified. The attention was drawn to the fact that the purchases were duly supported by valid docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain information regarding hawala dealers indulging in issuing bogus bills without carrying out any actual business , the assessee was subjected to survey proceedings and confronted with the information so obtained. It is also undisputed fact that the assessee has booked purchases made from these dealers in its books of accounts and during survey proceedings, the assessee has admitted to have obtained bills from these parties and also admitted additional income of ₹ 439 Lacs in respect of these purchases. Subsequently, the assessee, explaining the circumstances, retracted from the statement / surrender on 28/02/2013 and submitted that the surrender was made to buy peace, and avoid protracted litigation of calling these parties, cross examine them and avoid further legal process which would disturb the business to great extent with a request not to levy interest and penalty. It has further been submitted that the said surrender was made in a confused state of mind without considering the actual consumption of the purchased material for Lab testing purposes and requirement of the same in manufacturing of the final products. The attention was drawn to the fact that more th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before Sales Tax Authorities and filed affidavits in that regard. Incidentally, this adverse material was never confronted to the assessee. 6.3 Proceeding further, it is noted that majority of the sales made by assessee were by way of exports and the sales figures have not been disturbed / disputed by the revenue. As evident from Tax Audit Report, the Net Profit Rate and material consumption rate of 6.74% 90.05% respectively are in line with corresponding rate of 5.26% 90.42% as reflected by the assessee for immediately preceding year. 6.4 So far as the documentary evidences with respect to impugned purchases are concerned, we find that the assessee is in possession of primary purchase documents viz. purchase invoices, purchase orders, delivery challans, goods receipt note etc. The quantitative details of the finished goods and raw materials was adequately maintained which is also evident from Tax Audit Report. Further, the specific quantitative details of material purchased from alleged bogus suppliers and corresponding consumption of the said material in Laboratories / manufacturing of finished goods has also been provided by way of various Annexure filed along wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the action of first appellate authority in not adjudicating the additional grounds of appeal as raised by the assessee. We have already considered the totality of facts and circumstances and taken care of these arguments raised in the said ground. Ground Number-2 stand partly allowed whereas ground numbers-3,5,6 7 stand dismissed. Ground Number-8 agitates the addition of ₹ 19.11 Lacs from a supplier against which the surrender was not made by the assessee. However, as noted by lower authorities, the purchases made from this supplier were also not proved conclusively as in the case of suspicious dealers. Therefore, the same stand on similar footing. This ground stand dismissed. 7. Ground Numbers-4,9 10 are related with second addition on account of claim of loss arising out of foreign currency term loan. The Ld. AR, while fairly conceding that the issue stood against the assessee by the order of this Tribunal in immediately preceding AY 2009-10, submitted that the fact that the machinery was already put to us by the assessee has not been considered by the Tribunal and therefore, the same was rendered on erroneous assumption of facts. However, since a view has already ..... X X X X Extracts X X X X X X X X Extracts X X X X
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