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TMI Blog2019 (4) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... ure facility , it was entitled to the said benefit u/s 80IA - no Substantial Question of Law arises Allowability of fluctuations in Foreign Currency as revenue expenses u/s 37 - capital vs revenue - HELD THAT:- in our opinion, the authorities below have rightly found that the same did not pertain to any capital asset and such loss had occurred to the Assessee in the ordinary course of business, and, therefore, allowed it towards business expenditure u/s 37(1) - no Substantial Question of Law arises - T.C.A.Nos.196 TO 201 of 2019 - - - Dated:- 7-3-2019 - Dr. Justice Vineet Kothari And Mr. Justice C.V. Karthikeyan For the Appellant : Mr.T.R.Senthil Kumar, Senior Standing Counsel, assisted by Mrs.K.G.Usha Rani, Junior Standing Counsel. For the Respondent : Mr.T.Ramesh Kutty JUDGMENT DR.VINEET KOTHARI, J . Revenue has filed these Appeals under Section 260A of the Income Tax Act, 1961, in short, ''Act'', raising the following purported Substantial Questions of Law arising from the order of the learned Income Tax Appellate Tribunal, for brevity, ''Tribunal'', dated 25.01.2017, in and by which, the learned Tribunal dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal authorities , State Government authorities for execution of projects for development of new water treatment plants, whereas, the Assessing Officer considered that the assessee is not a developer of the projects but is a mere contractor and sub-contracts part of the work. The ld. AR filed the chart of Turnkey Projects Annexure-3 with details of different projects and claim made in the assessment orders. The Ld. AO disallowed these claims of projects considering as sub-contracts, whereas, the Ld. CIT(A) has relied on the explanations on the projects with financial investment and new infrastructure facilities in developing and supply of sewerage system in order to cater to the population of Chennai city. The Ltd. AO main contention that the assessee is only the contractor and not a developer but the person who develops the infrastructure facilities pursuant to contract with the Statement Government shall be considered as developer. We found the co-ordinate bench decision of East Coast Constructions (Supra) and Bombay Bench decision BT Patil and Jaipur Bench decision of Om Metal Infra Projects (Supra) and Hon'ble High Court of Bombay in the case of ABG Heavy Industries Ltd., 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R elaborately demonstrated the facts and dealt on specific findings in the order of CIT(A) and supported with paper book containing details of copies of contracts and financial statements. We find that Ld. AO has placed reliance on the Tribunal decision of the Indwel Lining (P) Ltd., 122 TTJ 137 (Mds) which was considered by the East Coast Constructions Ltd., (Supra) and was distinguished where assessee was only civil contractor and did only civil works. Whereas, Ld. DR focussed on the later decision of the Tribunal in ACIT Vs. Sree Sella Infrastructure Projects Ltd., in ITA No.1294/Mds/2011 for the assessment year 2008- 09 dated 28.09.2012 at Page 7 Para 6 where deduction u/s.80IA (4) was denied as under : 'We have heard both the sides, perused the records and gone through the orders of the authorities below. The issue involved in this appeal is whether the assessee is eligible for the deduction u/s. 80IA (4) of the Act or not. According to the Assessing Officer, the assessee company had constructed water treatment plant for CMWSSB and some private entities and as per the construction contract the assessee had simply executed works contract on job work basis for CM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31 of order as under : 'The law may therefore, now be taken to be well settled that where profit or loss arises to assessee on account of appreciation or depreciation in the value of foreign currency held by it, on conversion into another currency, such profit or loss would ordinarily be trading profit or loss if the foreign currency is held by the assessee on revenue account or as a trading asset or as part of circulating capital embarked in the business. But, if on the other hand, the foreign currency is held as a capital asset or as fixed capital such profit or loss would be of capital nature.' We find the loss due to forex exchange difference as on the date of balance sheet is expenditure falls u/s.37 (1) of the Act . The outstanding liability relating to the import of raw material based on closing rate of foreign exchange and if any difference by loss or gain arising on conversion liability should be routed through profit and loss account. Hence, we do not find any infirmity in the order of the CIT(A) and upheld the same and dismiss the ground of the Revenue. In the result, the Revenue appeal is dismissed. 5. Sub-section (4) of Section 80IA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway, inland port or navigational channel in the sea. 6. Having heard the learned counsel for the parties, we are satisfied that the findings of facts rendered by the learned Tribunal as well as the First Appellate Authority do not deserve any interference by this Court under Section 260A of the Act and no Substantial Question of Law arises in these Appeals filed by the Revenue. Since the Assessee admittedly entered into contract with Local Bodies or Municipal Bodies for undertaking the contract works for developing the infrastructure-sewage system, he is directly entitled to get the benefit of such deductions under Section 80IA (4) of the Act. The said Section, in fact, even extends the benefit to the Contractor, who is transferred with such Infrastructure Facility for operating and maintaining the same as per the Proviso to Section 80IA (4) of the Act. We have already dealt with this controversy in a judgment delivered by us in the case of Commissioner of Income Tax v. M/s.Chettinad Lignite Transpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , could not be sustained. The learned Tribunal, in our opinion, has rightly held that the Proviso does not require that there should be a direct agreement between the transferee enterprise and the specified authority for availing the benefit under Section 80IA of the Act. There is no dispute before us that the Assessee was duly recognised as transferee or assignee of the principal contractor M/s.ST-CMS Company Private Limited and was duly so recognised by the Railways to operate and maintain the said railway sidings at Vadalur and Uthangalmangalam Railway Stations. The findings of fact with regard to the said position recorded by the learned Tribunal are, therefore, unassailable and that clearly attracted the first Proviso to Section 80IA(4) of the Act. 10. The learned counsel for the Revenue relied upon a decision of this Court in the case of M/s.Covanta Samalpatti Operating Private Limited, Chennai-20 v. The Assistant Commissioner of Income Tax, Company Circle I (3), Chennai-34, reported in (2018) 93 Taxmann 38. In the said case, the claim of the Assessee company, which was engaged in power generation, for deduction under Section 80IA of the Act was denied by the Revenue on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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