Income Tax Appellate Tribunal - Mumbai
Saam Textiles P. Ltd, Mumbai vs Acit 8(3), Mumbai on 7 July, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL "E", BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM ITA No.6123/Mum/2012 (Assessment Year :2009-10) M/s. Saam Textiles Pvt. Ltd., Vs. ACIT 8 (3), R.NO.204, 2 n d th 4 Floor, B-4060-63 Oberoi Floor garden Estate, Chandivali Farm Aayakar Bhavan, Road M.K.Road, Mumbai Chandivali, Andheri- East, Mumbai-400072 PAN/GIR No. AAFCS0433B Appellant) .. Respondent) Assessee by Shri Prakash G. Jhunjhunwala Revenue by Shri Ram Tiwari Date of Hearing 06/07/2017 Date of Pronouncement 07/07/2017 आदे श / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by the assessee against the order of CIT(A)- 18, Mumbai dated 13/07/2012 for the A.Y.2009-10 in the matter of order passed u/s.143(3) of the IT Act.
2. In this appeal, assessee is aggrieved for disallowance of deduction claimed for unrealized foreign exchange gain of Rs.53,67,488/-.
3. Rival contentions have been heard and record perused.
4. Facts in brief are that the assessee is an exporter wherein debtors are not realized immediately on exports. There is a time gap between the date of export and the realization thereof. As a result of which, there is a difference in the exchange rate at the date of export and the date of 2 ITA No.6123/Mum/2012 M/s. Saam Textiles Pvt. Ltd., realization of the exports. Sometimes, the export is made in year 1, but is realized in the year 2, i.e., in the subsequent year. In such unrealized exports - debtors are measured at the exchange prevailing at the end of year 1. This results either in "Unrealized" exchange gain or losses. Such unrealized gains or losses are deducted or added back to the profit as per books to arrive at the taxable profit, for the reasons that they are unrealized secondly, such unrealized gains or losses keep on changing, till they are actually realized, depending on exchange rates fluctuations.
While computing the taxable income the assessee had' reduced the Unrealized Gain of Rs 53,67,488/- from the book profit. The assessee had reversed the above unrealized gain in FY 2009-10, thereby recognising the actual Realized gains on the date of realization of debtors. The Learned ACIT did not agree with this reduction of the unrealized gain from the book profit. Consequently,' the taxable income has gone up by Rs.53,67,488/- on account of unrealized gain.
5. By the impugned order CIT(A) confirmed the action of the AO relying on the decision of Hon'ble Supreme Court in the case of Woodward Governor 312 ITR 254.
6. Learned AR fairly conceded that issue is covered against the assessee by the decision of Hon'ble Supreme Court.
7. In view of the decision of the Hon'ble Supreme Court in the case of Woodward Governor (supra), we do not find any infirmity in the order of the lower authorities for disallowing assessee's claim of deduction on account of unrealized foreign exchange gain. However, while making 3 ITA No.6123/Mum/2012 M/s. Saam Textiles Pvt. Ltd., adjustment at the end of the year, the AO has not made corresponding adjustment in the opening value of the debtors, we therefore, direct the AO to value the opening debtors also at the prevailing exchange rate and to give deduction for the same to the assessee. We direct accordingly.
8. In the result, appeal is allowed in part for statistical purposes.
Order pronounced in the open court on this 07/07/2017
Sd/- Sd/-
(AMARJIT SINGH) (R.C.SHARMA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai; Dated 07/07/2017
Karuna Sr.PS
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. The CIT(A), Mumbai.
4. CIT
DR, ITAT, Mumbai
5. BY ORDER,
6. Guard file.
सत्यापित प्रतत //True Copy//
(Asstt. Registrar)
ITAT, Mumbai