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TMI Blog2024 (10) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 23.3.2017 wherein it was held that the losses / gains arising by valuation of monetary assets and liabilities of the foreign operations as at the end of the year cannot be treated as real income of the assessee. This Circular has been heavily relied upon in the case of Chamber of Tax Consultants vs Union of India [ 2017 (11) TMI 465 - DELHI HIGH COURT] - We do not find any infirmity in the said action of the CIT(A) granting relief to the assessee. Accordingly, the Ground No.1 raised by the revenue is dismissed. Nature of receipt - treating the excise duty refund as capital receipt, which were earlier treated as revenue receipt - HELD THAT:- The intention behind the exemption scheme was to attract fresh investment so as to generate employment and for industrial development of the region. The subsequent notifications issued in the year 2008 substantially diluted the benefit granted by the original notification on the ground that there was substantial revenue loss to the Government. The Hon ble High Court held that the notifications issued in the year 2008 to be invalid to the extent they were sought to be applied to the new unit set up in the Kutch District of Gujarat in compli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erseas branch in United States of America (USA) whose financial results were merged into the accounts of the assessee. The translation income / loss arrived at while converting the balance sheet and profit and loss account of the US Branch from USD to INR , being notional in nature, was not given effect to while computing the taxable income by the assessee company. This conversion of the balances from USD to INR were indeed made in accordance with Accounting Standard - 11 (AS 11) The Effect of Changes in Foreign Exchange Rates issued by Institute of Chartered Accountants of India (ICAI) . The conversion made at different exchange rates may either result in translation loss / gain such transaction loss / gain being notional in nature is neither claimed as deduction nor offered to tax in the return of income. This method has been consistently followed by the assessee from the beginning and accepted by the revenue in earlier and subsequent years. During the year under consideration, the conversion resulted in translation gain of Rs 3,32,46,356/- which was excluded by the assessee while computing the taxable income as it being notional in nature. The workings for the said translation g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional High Court in the case of Chamber of Tax Consultants vs Union of India reported in 400 ITR 178 (Del). We do not find any infirmity in the said action of the ld. CIT(A) granting relief to the assessee. Accordingly, the Ground No.1 raised by the revenue is dismissed. 4. The next issue to be decided in the appeal of the revenue is as to whether the ld. CIT(A) was justified in treating the excise duty refund of Rs 1,63,15,661/- as capital receipt, which were earlier treated as revenue receipt, in the facts and circumstances of the case. 4.1. We have heard the rival submissions and perused the materials available on record. In the wake of devastation caused by earthquake in the Kutch District of Gujarat, the Central Government, in public interest, issued Notification No. 39/2001 Central Excise dated 31.7.2001. The salient features of the said Incentive Scheme and behavior of the assessee qua the same are as under:- a) It shall apply only to new industrial units which are set up on or after 31.7.2001 in the Kutch District but before 31.7.2003. b) The assessee had undisputedly set up an eligible unit and entitled to the incentive under Notification No. 39/2001 dated 31.7.2001. c) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate authorities are duly entitled to admit the additional ground if it is legal in nature and goes to the root of the matter and not requiring verification of fresh facts. All the facts relevant for adjudication of the said additional ground was already available on record before the ld. CIT(A). Since the same being legal ground, there was nothing wrong in the action of the ld. CIT(A) admitting the said additional ground, eventhough the same was offered to tax by the assessee voluntarily in the return of income. It is trite law that there is no estoppel against the statute . Reliance in this regard is placed on the decision of Hon ble Supreme Court in the case of Taparia Tools Ltd vs JCIT reported in 372 ITR 605 (SC). Hence the objection raised by the revenue before us in this regard is hereby dismissed. 4.5. The Incentive scheme 2001 for Economic Development of Kutch District dated 9.11.2001 issued by Government of Gujarat is enclosed in Pages 71 to 81 of the Paper Book. The Central Excise Notification No/. 39/2001 dated 31.7.2001 is enclosed in Pages 82 to 84 of the Paper Book. The Certificates issued by Chief Commissioner of Central Excise Customs, Ahmedabad and Principal Secr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally diluted the benefit granted by the original notification on the ground that there was substantial revenue loss to the Government. The Hon ble High Court held that the notifications issued in the year 2008 to be invalid to the extent they were sought to be applied to the new unit set up in the Kutch District of Gujarat in compliance of the original notification in the year 2001 on the ground that it was contrary to the principles of promissory estoppel. Further it was clearly held by the Hon ble Gujarat High Court that the purpose of the original notification issued in the year 2001 was to incentivize and promote setting up of industries in the Kutch Region of Gujarat thereby clearly satisfying the purpose test thereon. Hence it could be safely concluded that the excise duty refund received is clearly in the nature of capital receipt not chargeable to income tax. We find that the ld. CIT(A) had rightly decided the issue in favour of the assessee and we do not find any infirmity in the said order granting relief to the assessee. Accordingly, the Ground No. 2 raised by the revenue is dismissed. 5. The Ground Nos. 3, 4 5 raised by the revenue are general in nature and does not req ..... X X X X Extracts X X X X X X X X Extracts X X X X
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