| The Tax Publishers2022 TaxPub(DT) 2830 (Sur-Trib) INCOME TAX ACT, 1961
Section 263
Where assessee furnished details of expenses including loss of foreign currency and further furnished the fluctuation account/export, as recorded there was no reference in assessment order about the verification of the issue, however, it was clearly discernible from the copy of show-cause notice and the reply thereto and relevant evidence in support of such claim that issue was examined by AO, therefore, order of AO in allowing the foreign exchange loss in assessment order would not render his action as erroneous
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Revision under section 263 - Validity - Allowability of foreign exchange fluctuation loss - AO adopted one of possible view
Assessee claimed carried forward loss of current year. The case was selected for scrutiny and AO after making certain enquiries passed assessment order under section 143(3) after making certain disallowance under section 40(a)(via). Order was revised by PCIT by invoking his power jurisdiction under section 263. On perusal of records noted that on perusal of Profit and Loss Account it was seen that financial cost included foreign exchange loss. Further, it was noted that at the year ended on 31-3-2013, the auditor had qualified foreign exchange loss in absence of requisite details. The above qualification made by auditor's raises serious doubts on the correctness of foreign exchange loss by assessee-company was ascertainable and same was required to be disallowed. Held: There was no dispute that in the assessment order there was no reference about the examination of foreign exchange fluctuation loss. However, during the assessment proceedings, AO issued notice first and sought various information therein. Assessee furnished the details of expenses including loss of foreign currency. Assessee further in response furnished the fluctuation account/export. Thus, the issue was examined and verified by AO. As recorded there is no reference in the assessment order about the verification of the issue. However, it was clearly discernible from the copy of show-cause notice and the reply thereto and relevant evidence in support of such claim that issue was examined by AO. Therefore, the order of AO in allowing the foreign exchange loss in assessment order would not render his action as erroneous
Followed:CIT v. M/s. Woodward Governor India (P) Ltd. & M/s. Honda SIEL Power Products Ltd. (2009) 179 Taxman 326 (SC) : 2009 TaxPub(DT) 1628 (SC), Aryan Arcade Ltd v. Pr. CIT (2019) 412 ITR 277 (Gujarat) : 2018 TaxPub(DT) 5827 (Guj-HC), Aryan Arcade Ltd. v. CIT-I (2017) 250 Taxmann 138 (Guj HC) : 2017 TaxPub(DT) 3984 (Guj-HC), CIT v. Nirma Chemicals Works (P) Ltd. (& vice versa) (2009) 309 ITR 67 (Guj) : 2009 TaxPub(DT) 0308 (Guj-HC), The Sasme Co-Op. Society Ltd. v. The Pr. CIT [ITA No. 185/SRT/2020 (Surat)] : 2021 TaxPub(DT) 2225 (Surat-Trib), Gujarat JHM Hotels Ltd. v. The Income Pr. CIT [ITA No.301/SRT/2018, dt. 19-7-2019] and Tata Consultancy Services Ltd. v. The CIT (2019) 108 taxmann.com 41 (Mumbai Tribunal) : 2019 TaxPub(DT) 3143 (Mum-Trib)
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
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