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In the instant case, the AO while passing the assessment order made various additions/ disallowance including the adjustment of 13.52 Crore on account of Transfer Pricing Adjustment, disallowed 12.24 Crore under section 14A, disallowed 3.28 Crore on account of Employee Stock Option Scheme. In the case the fluctuation loss was in relation to a foreign currency asset, whereas the assessee has entered in to foreign currency swap agreement to hedge foreign exchange fluctuation risk of liability of foreign currency. The ld. PCIT has not given any finding how the order is erroneous; therefore, the order is not valid being bad in law. The amendment of Explanation inserted in section 263 is not applicable for the year under consideration, which may be applicable from Assessment Year 2015-16 onward. Held that— Admittedly the loss on currency swap is an event subsequent to the acquisition and put to use of the asset for business and therefore, following the ratio of the Supreme Court decision in Tata Iron Steel Co. Ltd [1997] [SUPREME COURT], which has been relied by coordinate bench of Pune Tribunal in Cooper Corporation (P) Ltd [2016] [ITAT PUNE], such loss cannot alter the cost of asset and is rather allowable as revenue expenditure. Thus, the ratio of the judgment of Hon’ble Sutlej Cotton Mills Ltd [1978] [SUPREME COURT] is not applicable in the instant case and the assessment order cannot be erroneous in law. Therefore, clause (d) of Explanation 2 of section 263 is not fulfilled. The loss claimed by assessee on account of fluctuation loss is revenue loss and the assessee is entitled for its deduction. Therefore, the order passed by assessing officer is not erroneous. Considering the fact that the twin condition as enunciated by Hon’ble Apex Court in case of Malabar industrial companies Ltd [2000 (2) TMI 10 - SUPREME COURT] are not fulfilled, therefore, the order passed by assessing officer cannot be subject matter of revision. Therefore, the revision order passed by learned PCIT is not sustainable - Decided in favor of assessee.

Shanti Prime Publication Pvt. Ltd.

Section 37, 263 of Income Tax Act, 1961—Revision order u/s 263—In the instant case, the AO while passing the assessment order made various additions/ disallowance including the adjustment of 13.52 Crore on account of Transfer Pricing Adjustment, disallowed 12.24 Crore under section 14A, disallowed 3.28 Crore on account of Employee Stock Option Scheme.

In the case the fluctuation loss was in relation to a foreign currency asset, whereas the assessee has entered in to foreign currency swap agreement to hedge foreign exchange fluctuation risk of liability of foreign currency. The ld. PCIT has not given any finding how the order is erroneous; therefore, the order is not valid being bad in law. The amendment of Explanation inserted in section 263 is not applicable for the year under consideration, which may be applicable from Assessment Year 2015-16 onward.

Held that— Admittedly the loss on currency swap is an event subsequent to the acquisition and put to use of the asset for business and therefore, following the ratio of the Supreme Court decision in Tata Iron Steel Co. Ltd [1997] [SUPREME COURT], which has been relied by coordinate bench of Pune Tribunal in Cooper Corporation (P) Ltd [2016] [ITAT PUNE], such loss cannot alter the cost of asset and is rather allowable as revenue expenditure.

Thus, the ratio of the judgment of Hon’ble Sutlej Cotton Mills Ltd [1978] [SUPREME COURT] is not applicable in the instant case and the assessment order cannot be erroneous in law. Therefore, clause (d) of Explanation 2 of section 263 is not fulfilled.

The loss claimed by assessee on account of fluctuation loss is revenue loss and the assessee is entitled for its deduction. Therefore, the order passed by assessing officer is not erroneous. Considering the fact that the twin condition as enunciated by Hon’ble Apex Court in case of Malabar industrial companies Ltd [2000 (2) TMI 10 - SUPREME COURT] are not fulfilled, therefore, the order passed by assessing officer cannot be subject matter of revision. Therefore, the revision order passed by learned PCIT is not sustainable - Decided in favor of assessee.[M/S JBF INDUSTRIES LTD. VERSUS PCIT-4, MUMBAI] [2018] [7] [ITCD Online] [32] [ITAT MUMBAI]