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TMI Blog2021 (8) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in ITA No. 1956/Mum/2014 for A.Y. 2009-10 vide order dated 10.4.2019. 2. The assessee s plea is as under :- 1 The Applicant had filed an appeal before the Hon'ble Income Tax Appellate Tribunal ('ITAT/ Tribunal'), Mumbai for AY 2009-10. 2 This appeal filed by the Applicant was heard on January 1, 2019. The Hon'ble ITAT disposed-off the aforesaid appeal by an order dated April 4,2019. [Copy of the ITA T order is attached ('ITA T order') at Page No. 5 to 45]. Inadvertent Mistake in not adjudicating the issue of allowance of depreciation 3 In the grounds of appeal filed before the Hon'ble ITAT, the applicant had raised the issue of disallowance of difference in exchange loss claimed as revenue expenditure ₹ 251,63,00,000/-. via Ground no. 16 of the Grounds of appeal. [ Copy of the Form No. 36B along with grounds of appeal is attached at Page No. 46 to 60]. For ready reference Ground No. 16 raised before the Hon'ble ITAT reads as follows: 16. Disallowance of deduction for Difference in Exchange of ₹ 251.63 crores On the facts and in the circumstances of the case and in law the learned Addl C.I.T. erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with the above said expeditions. In this view of the matter, we do not find any infirmity in the order of DRP, hence, we are upholding the same. 6 Therefore, the applicant submits that the Hon'ble ITAT upheld the view of the lower authorities that foreign exchange gain or loss incurred on acquisition of capital asset has to be adjusted with the cost of capital asset. The Hon'ble ITAT held that the foreign exchange loss be treated as capital in nature. 7 Thereafter, the applicant filed a miscellaneous application being MA No. 446/Mum/2019 ('first MA application'). [Copy of the Miscellaneous application is attached at Page No. 61 to 67]. In the said MA, the applicant had raised the issue that since the Hon'ble ITAT had treated the foreign exchange gain or loss as capital in nature, the Hon'ble ITAT did not adjudicate the without prejudice issue of allowance of depreciation raised vide ground of appeal no. 16 in the grounds of appeal filed before the Hon'ble ITAT. Therefore, we pray that there is a mistake apparent from record in the ITAT order which required rectification. 8 The Hon'ble ITAT vide its order ('MA ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judication as outlined above is mistake apparent from record in the MA order and the ITAT order and has caused prejudice to the Applicant and the applicant request the Hon'ble ITAT to kindly: a. recall the order dated April 10, 2019 in ITA No. 1956/M/2014 read with order dated February 21, 2020 in MA No. 446/M/2019 and b. rectify the aforesaid mistake apparent from record in the MA order and ITAT order for AY 2009-10. 14 As per section 254(2) of the Act, the ITAT can amend any order passed by it within six months from the end of the month in which the order requiring rectification was passed. The MA order was passed on February 21, 2020. Therefore, as per section 254(2) of the Act, the last date to amend the order was August 31, 2020. However, on March 31, 2020 the president promulgated the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020. (the ordinance is attached at Page No. 77 to 82). As per section 3(1) of the Ordinance due dates under the Act falling during the period of March 20 to June 29, 2020 were extended to June 30, 2020. On June 24,2020 the Central Board of Direct Taxes ('CBDT') issued a notification and a press rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure in lakhs Forex reserve Rs. In lakhs Unutilisation of forex reserve Zero coupon foreign currency convertible bonds loan 19507 16496 3011 Investment in Mahindra Gears International Ltd. Mauritius and Mahindra overseas Investment company (Mauritius) Ltd. HSBC Loan 5181 4904 277 Investment in Mahindra Gears International Limited, Mauritius and Mahindra Overseas Investment Company (Mauritius) Ltd. Union Bank of India 145T 1455 General working capital purpose CITI Bank DBS 3 3 General working capital purpose ICS S Given 0982 -982 Total 25164 21400 3764 36. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed assets ₹ 1291 crore during the year. The capital WIP on 31st March is 646.73 crores whereas in the preceding year it was 546.45 crores. 21.6. The addition to the assets have been made under various heads including land, building, plant and machinery, furniture fittings and vehicles, development and software expenditure. The assessee pas not furnished details of foreign exchange loss attributable to various items of capital assets and WIP. In absence of details of application of foreign exchange loans to different items of capital assets it is not possible to attribute such loss to any item of capital asset as cost of acquisition of such asset and allow depreciation. From application of loan as given in the table, it is evident that loan has been applied also for investment in equity of Foreign subsidiaries. Therefore the order of the AO regarding disallowance of foreign exchange loss to the tune of ₹ 214 crores is upheld. 21.7. Regarding the balance foreign exchange loss of ₹ 37.64 crores claimed as revenue expenditure, as per information submitted, the loss of ₹ 32.88 crores has been incurred in relation to investment in the equity of Mahindra Ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng amount of fixed assets for exchange differences; On the other hand, Para 13 of if AS 11 revised in 2003 provides that exchange differences arising on settlement or revaluation of monetary items should be treated as income or expense of the relevant period. Similarly, Income Computation and Disclosure Standards notified under s 145(2) we-f AY 2017-18 provide in Para 5(1) that expenses differences should be recognized as income or expense in the relevant year. In his submissions before the Delhi High Court in the case of Chamber of Tax Consultants wherein the constitutional validity of ICDS was challenged the Additional Solicitor General. Appearing on behalf of the Union of India submitted that the changes brought about (by ICDS) are only aimed at bringing uniformity and clarity in the computation of income. Therefore in terms of AS 11 (revised 2003) and ICDS VI, all exchange differences relating to monetary items (revision of liability designated in foreign currency) would have to be recognized as income or expense.‖ 41. Upon hearing both the Counsel and perusing the records, we find that Hon ble Apex Court in the case of Satlej Cotton Mills Ltd., v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee states as under :- 10. The mistake that is apparent from record is that the Honorable Tribunal has not considered the decision of Chennai Tribunal in the case of Hyundai Motor India Ltd (supra), which in turn followed the decision of the Pune Bench in the case of Cooper Corpn. (P.) Ltd. v. Dy. CIT [2016] 69 taxmann.com 244/159 ITD 165 (Pune - Trib.) where in Supreme Court decision in Sutlej Cotton Mills was considered and distinguished. 11. Further, the Honorable Tribunal has not adjudicated the following related issues :- allowability of depreciation in respect of foreign exchange loss related to acquisition of capital assets without there being any need to furnish details of put to use of individual assets, foreign exchange loss transferred to FCMITDA (forming part of total disallowance contested before Honorable Tribunal); foreign exchange gain of ₹ 9.82 crores in respect of ICDs (forming part of total disallowance contested before Honorable Tribunal) and loan form Union Bank (which has been upheld to be loan in local currency by Ld. DRP) is also loan in foreign currency. 7. We have heard both the Counsel and perused the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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