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TMI Blog2021 (9) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer. Therefore, this addition was based only on the assumption and surmises which cannot sustain under the law. - Decided in favour of assessee. Addition on account of exchange rate fluctuation loss - Non affording any opportunity to the assessee for explaining the nature and justification for the allowability - HELD THAT:- The loss suffered by the assessee on account of the exchange difference on the particular date is indicated in the balance sheet and the same is an item of expenditure u/s 37(1) of the Income Tax Act, 1961. It is an allowable expenditure. In-fact, no adjustment on account of provisions u/s 43A of the Act was reported by the tax auditor in schedule relating to depreciation in Form 3CA-CD. These facts were not disputed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Assessment Year 2011-12 declaring an income of ₹ 198,35,504/-. The return was processed u/s 143(1) of the Act and was selected for scrutiny assessment and statutory notices u/s 143(2) of the Act were issued to the assessee. All the data, information, clarifications, details sought by the Assessing Officer was duly filed by the assessee. The assessment order u/s 143 (3) of the Act was passed on 14/3/2014 assessing the total income of the assessee at ₹ 1,67,15,540/- after making certain disallowances and additions, details of which are as under:- Sr. Nature of disallowance/addition Amount (Rs.) 1. Disallowance of 25% of advertisement & sales promotion exp, treating it as capital in nature 43,20,942/- 2. Addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arketing in which the assessee is doing business. The Assessing officer made the addition in respect of these two creditors u/s 68. At the Appellate proceedings before the CIT(A), the assessee filed certain additional evidences in respect of bonafide business relation with these creditors consisting of copy of ledgers of these parties in the books of assessee, copy of TDS Certificates issued to these parties in respect of expenses accounted for, copies of invoices rest by these parties on the assessee to establish that these parties were regular trading parties with the assessee. The Ld. AR submitted that the assessee also explain that payments to these parties have been made in the subsequent years as well. Some further transactions had ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. However, the Assessing Officer accepted the genuineness of the four parties for which confirmation was furnished by the assessee and treated remaining two parties as in genuine and made addition of the closing balance of the said two parties u/s 68 of the Act, merely on the ground that the assessee was not able to furnish the balance confirmations. The Ld. AR pointed out that from the ledger of these parties it can be seen that assessee has booked the invoices for services rendered by these parties in the nature of Advertisement & Marketing and paid these parties from the banking channels. The Ld. AR further relied upon the decision of the Hon'ble High Court in case of CIT Vs. Rice India Exports Pvt. Ltd (I2010-TIOL-583-HC-Del-IT) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same would amounts to double tax of the said amount in the above two years. 6. The Ld. DR relied upon the order of the CIT(A) and Assessment Order. 7. We have heard both the parties and perused all the relevant materials available on record. From the perusal of the records and the submissions of the Ld. AR the confirmations and the ledger accounts along with other documentary evidence were produced before the CIT(A) for which the Assessing Officer in his remand report never doubted the genuineness. In-fact, the two parties regarding which the outstanding balances were pending has been written back by the assessee and was offered to tax in Assessment Year 2014- 15. The purchases as well as the corresponding sale were also accepted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard Governor India Pvt. Ltd. 312 ITR 254 (S.C) as well as Oil and Natural Gas Corporation Ltd. Vs. CIT 332 ITR 180 (S.C). The Ld. AR also relied upon the decision of the Hon'ble Madhya Pradesh High Court in case of MP Financial Corporation Vs. CIT 165 ITR 765. 9. The Ld. DR relied upon the order of the CIT(A) and Assessment Order. 10. We have heard both the parties and perused all the relevant materials available on record. The loss suffered by the assessee on account of the exchange difference on the particular date is indicated in the balance sheet and the same is an item of expenditure u/s 37(1) of the Income Tax Act, 1961. It is an allowable expenditure. In-fact, no adjustment on account of provisions u/s 43A of the Act was reported b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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