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TMI Blog2018 (5) TMI 2135X X X X Extracts X X X X X X X X Extracts X X X X ..... es takes us to the CIT(A)'s detailed discussion qua the instant issue reading as under:- "4. Ground No. 1 & 2 This ground is directed against the action of the AO of disallowing market-to-market loss on restatement of foreign exchange contracts of Rs.449.18 lacs. In the P&L A/c the appellant had debited net loss of Rs.1028.52 lacs by way of loss on foreign currency transaction and translation under the head 'Other Expenses". Before the AO, the appellant had furnished the break-up of such net loss of foreign currency transaction and translation. The AO noted that the said loss included market-to-market loss of Rs.44918 lacs in relation to derivative contracts at the year-end which has been claimed as business expenditure by the appellant. The AO required the appellant to explain as to why such loss should not be disallowed. In response the appellant furnished an explanation explaining the nature of derivative contracts and the manner in which the MTM loss was booked to show that the loss was real & ascertained. The AO however did not agree with the explanation of the appellant. Referring to the CBDT Instruction No 3/2010 dated 23.03.2010, the AO held that such MTM loss was noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stently followed by the assessee in the past and accordingly the income or loss arising from restatement of outstanding foreign exchange denominated /. Forward contracts were offered as income or claimed as loss in the earlier years. The method followed by the assessee is in conformity with accounting standard and guidance note issued by ICAI and the same has consistently been followed by the appellant in the past as well in the subsequent year. It is pertinent to state that the foreign exchange forward contracts were entered into by the appellant with reference to underlying which were export orders to be executed by the appellant in the ordinary course of its export business. In the circumstances' the loss which accrued or arose on account of restatement foreign exchange forward contracts was a loss incurred in the ordinary course of assessee's business. The issue as to whether the loss arising on account of restatement of liabilities arising from exchange rate variation is a contingent loss or ascertained was considered by the Hon'ble Apex Court in its judgment in the case of Woodward Governor of India Ltd vs. CIT (312 ITR 254) as also in the case of CIT Vs. ONGC Ltd in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ONG vs. CIT (supra). In fact this view finds support in the appellate order assed by my predecessor for AYs 2008-09, 2009-10 & 2010-11 respectively. Following these appellate orders, the AO is directed to allow the deduction for market-to-market loss of Rs.449.18 lacs. [Ground No 1 is therefore allowed]." It is apparent at the outset that CIT(A) has followed his order in assessee's case itself for AYs 2008-09 to 2010-11 deciding the very issue is its favour. We sought to know with the final status thereof. Both parties are very fair in pointing out that various co-ordinate benches decisions have already upheld the CIT(A)'s similar action in the said preceding assessment years. Their respective orders dated 08.03.2017, 25.10.2017 and 14.02.2018 form part of case record(s) before us. Learned Departmental Representative is very fair in not indicating any distinction on facts or law therein. We therefore conclude that the CIT(A) has rightly deleted the impugned market-to-market loss disallowance of Rs.449.18 lakhs. The Revenue's former substantive ground fails. 3. Mr. Dasgupta now invites our attention to Revenue's latter substantive ground averring that the CIT(A) has erred in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of additional depreciation. The AR also filed copies of the appellate orders passed by the Hon'ble ITAT, Kolkata in appellant's own case for AY 2007-08 & my predecessors for AYs 2008-09 to 2010-11 wherein on identical facts, the remaining claim of 50% of additional depreciation on the new asset put to use for less than 180 days was allowed in the succeeding year. The relevant extracts of the submissions are as follows:- 'Ground No. 4 is against Assessing Officer's decision of not allowing 50% of additional depreciation of Rs.55,13,634/- with reference to cost of plant and machinery which was put to use for period less than 180 days in the immediate preceding assessment year. During the FY 2010-11 relevant to AY 2011-12 the assessee had purchase and installed new plant & machinery and put to use for period less than 80 days during the relevant year. In terms of Sec 32(1)(iia) of the IT Act the assessee was entitled for additional depreciation @ 20% of the actual cost. In view of second proviso to Sec 32(1) the said additional depreciation was however restricted to 50% of the deduction amount allowable @ 20%. Accordingly in respect of actual cost of machinery installed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the year of installation and then there is no bar in the Act which provide that the deduction cannot be allowed for the remaining 50% in the subsequent year. The appellant submits that the interpretation of clause (iia) as made by the appellant was accepted by your predecessor while deciding the appeals for the AYs 2008-09 & 2009-10. Copies of the appellate orders are enclosed for your ready reference and record. It is further material to submit that the view expressed by the CIT(A) is supported by the decision of the ITAT Delhi in the case of DCIT vs. Cosmos Films Ltd (24 Taxman.com 189) Your attention is also invited to the "proviso" which was inserted after the second proviso to Sec 32(1) by the Finance Act 2015 which reads as follows:- 'Provided also that where an asset referred to in clause (iia) or the first proviso to clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business for a period of less than one hundred and eighty days in that previous year, and the deduction under this sub section in respect of such asset is restricted to fifty percent of the amount calculated at the percentage pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on put in place by the second proviso to Section 32(1). In order to remove the ambiguity, the proviso further inserted by the Finance Act, 2015 and thereby clarity was brought about the Legislature. The Constitution Bench of the Hon'ble Supreme Court in the case of Vatika Township Ltd vs. CIT (367 ITR 466) has held that where an amendment is carried out in the Act which is curative in nature and removes the ambiguity I the existing provision or an amendment which is intended to remove unintended hardships should be considered retrospective in operation. Applying the ratio laid down in the said judgment of the Apex Court therefore, I find that the proviso inserted by the Act, 2015 being curative in nature was retrospective in operation since it merely removes the unintended hardship. Moreover the said amendment is in consonance with the judicial interpretation placed on the provisions of Section 432(1)(iia) of the Act and therefore I direct he AO to allow the appellant benefit of additional depreciation of Rs.55,13,634/- in relation to actual cost of plant and machineries installed in AY 2011-12 but put to use for period less than 180 days 'Ground No. 4 is therefore allowed]." ..... X X X X Extracts X X X X X X X X Extracts X X X X
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