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TMI Blog2022 (12) TMI 1350X X X X Extracts X X X X X X X X Extracts X X X X ..... ed therein. There was complete application of mind on the issue and the same was one of the possible views since as rightly argued by Ld. AR, foreign borrowings would always come in foreign currency notwithstanding the fact that in the relevant contracts, the terms of loan has been denominated in Indian Rupees. Nevertheless, the matter was duly examined by Ld. AO while finalizing the order and a plausible view was taken in the matter. This being so, the order could not be termed as erroneous and therefore, the impugned revision could not be sustained in law. Appeal stand allowed. - ITA No.70/Chny/2021 - - - Dated:- 7-12-2022 - Hon ble Shri Mahavir Singh, Vice President And Hon ble Shri Manoj Kumar Aggarwal, AM For the Appellant : S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e essential requisite for issuing the show cause notice was absent and hence the proceedings is nullity in law. (see CIT v. Karam Chand Thapar and Sons Ltd )186 ITR 372) The learned Commissioner of Income tax (International Taxation) ought to have appreciated that his directions in the order contrary to the Circular issued by the CBDT and FEMA regulations and Reserve Bank guidelines e) The settled law is the beneficial provision must be interpreted liberally. f) The presumption u/s; 114 (e) of the Indian Evidence Act 1872 applies viz that judicial and official acts have been regularly performed; and g) when there exists two opinion, the opinion favourable to the assessee should be adopted h) the provision is not mandatory ad is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nguage used. Lord Reid has said that he prefers to see a mistake on the part of the draftsman in doing his revision rather than a deliberate attempt to introduce an irrational rule : 'the canons of constructions are not so rigid as to prevent a realistic solution'. 3. The learned Commissioner of Income tax (International Taxation) sings the same song that Indian currency is not foreign currency and fails to note the maxim viz . Lex Non Cogit ad impossibilia is an age old maxim meaning that the law does not compel a man to do which he cannot possibly perform. In Hughey v. JMS Development[l], (Justice Owens of the United States Court of Appeals) no international transaction can be done rupee currency and only foreign currency can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebt, or moneys borrowed and used, for the purpose of the business or profession carried on such person outside India or for the purpose of making or earning any income from any source outside India;... and hence there exists nil liability to pay deduct any tax, In the assessee's case, the money borrowed from the German non-resident was used for the purpose of its export business as explained by the binding decision of the jurisdictional Madras High Court in CIT v Aktiengesellschaft Kuhnle Kopp ( 262 ITR 513,) income from exports arises from a source outside India 2. The Ld. AR advanced arguments supporting the order passed by Ld. AO which has been controverted by Ld. CIT-DR. Having heard rival submissions and after perusal of case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ECB (Circular No.17 dated 16.01.2019). 6. However, Ld. CIT maintained that foreign currency would mean any currency other than Indian currency. As per contractual terms, the loans were taken in Indian currency on which interest @8% was payable. The repayment was also to be made in Indian currency. The higher interest rate is charged in such case in comparison to when the loan is obtained in foreign currency on which interest is payable at less rate and there is leaser outgo of money out of India when the loan is in foreign currency. The rupee denominated borrowing could not be said to be monies borrowed in foreign currency and Sec.194LC would apply only to foreign currency denominated borrowings when it comes to borrowings. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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