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TMI Blog2022 (12) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... f Principal Commissioner of Income Tax vs. Suzlon Energy Ltd.[ 2018 (2) TMI 1789 - GUJARAT HIGH COURT] and the Court held that the decision of the Tribunal in so far as deleting the disallowance being notional loss on outstanding foreign derivative contracts was approved by holding that the decision is in-conformity with the decision of the Hon ble Supreme Court in Woodward Governor India [P] Ltd. Ors[ 2009 (4) TMI 4 - SUPREME COURT] . The revenue had filed a Special Leave Petition In the case of the same assessee, namely Suzlon Energy Limited, the Hon ble Supreme Court in Principal Commissioner of Income Tax vs. Suzlon Energy Ltd.[ 2020 (1) TMI 1505 - SC ORDER] approved the decision of the High Court upholding the order of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta (Tribunal) in ITA Nos.1195 1776/Kol/2019 for the assessment year 2011-12. The revenue has raised the following substantial questions of law for consideration :- i) Whether on the facts and circumstances of the case and in law the Learned Income Tax Appellate Tribunal is erred in deleting the disallowance on account of foreign exchange fluctuation loss (mark to market) wherein the loss being provisions for future is notional in nature ? ii) Whether the order of the Income Tax Appellate Tribunal in deleting the disallowance/addition made by the Assessing Officer was perverse having regard to the evidence and materials on record ? We have heard Mr. Smarajit Roychowdhury, learned standing counsel appearing for the appellant/rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stipulations in accounting standard no.11 whereunder it is compulsory to give effect to foreign currency transaction as per the foreign exchange rates as on the date of the balance sheet. Alternate submission was made before the CIT[A] contending that if such loss is not allowable on accrual basis then the effect of such loss arisen in subsequent year on maturity of contract should be allowed. The CIT[A] by order dated 27.02.2014 allowed the alternate submissions made by the assessee. Aggrieved by the same, the assessee preferred appeal to the Tribunal. The assessee apart from placing materials from the paper book before the Tribunal placed reliance on the decision of the Hon ble Supreme Court in the case of Commissioner of Income Tax vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circular no.3 of 2010 dated 23.03.2010 contending that the said instruction was issued post the decision in Woodward Governor India [P] Ltd. Ors.. In our considered view, the circular instruction issued by the Board may bind the authority but it would not bind the Court more so when the law has been laid down by the Hon ble Supreme Court as rightly pointed out by the Tribunal the facts are not in dispute and the revenue did not dispute that the loss is arising in respect of forward contract, which have been expired on the last day of the accounting year and it was also not disputed by the revenue that the assessee was following the mercantile system of accounting. Further, on perusal of the circular, we find that it is not a possibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r India [P] Ltd. Ors. The revenue had filed a Special Leave Petition in Special Leave to Appeal [C] No[s].1422/2019 which was dismissed by order dated 17.01.2020. In the case of the same assessee, namely Suzlon Energy Limited, the Hon ble Supreme Court in Principal Commissioner of Income Tax vs. Suzlon Energy Ltd. [2020] 121 taxmann.com 137[SC] approved the decision of the High Court upholding the order of the Tribunal allowing the assessee s claim of foreign exchange fluctuation loss on mark to market basis. In the light of the above, we find no grounds to interfere with the order passed by the Tribunal. Accordingly, the appeal filed by the revenue is dismissed and the substantial questions of law are answered against the revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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