Itxa/1097/2017 Of Pr. Commissioner Of Income Tax-10 v. M/S. Hotel Leela Venture Ltd

JPP IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1097 OF 2017 Pr. Commissioner of Income Tax-10 … Appellant V/s. M/s. Hotel Leela Venture Ltd. ... Respondent. Mr. Akhileshwar Sharma for the Appellant. CORAM : M.S. SANKLECHA & NITIN JAMDAR, JJ. DATE : 5 NOVEMBER 2019. P.C.:- This Appeal filed under Section 260A of the Income Tax Act, 1961 (the Act) challenges the judgment and order dated 24August 2016 passed by the Income Tax Appellate Tribunal, Mumbaiin ITA No. 6170/Mum/2014. The relevant Assessment Year is2009-10. 2.The Respondent – Assessee is a company engaged inbusiness of five star deluxe hotels. For the relevant assessment year,the Respondent – Assessee filed a return of income declaring total income of Rs.43,17,69,664/-. The return was subjected to scrutinyassessment and the total income was assessed at Rs.62,66,74,561/-.The Assessing Officer made an addition of Rs.10,47,08,044/- to thebook profit on account of foreign currency transaction difference.The Assessing Officer added the amount treated it as contingent innature. The Assessing Officer passed an order under Section 154 ofthe Act on 3 October 2013 computing the total income atRs.62,75,74,561/-. The Respondent – Assessee filed an appealbefore the Commissioner of Income Tax (Appeals). TheCommissioner (Appeals) partly allowed the appeal of theRespondent deleting the addition on the ground that the liability wasnot a contingent liability. The Appellant – Revenue filed an appealbefore the Income Tax Appellate Tribunal. By the impugned orderthe appeal filed by the Appellant – Revenue was dismissed. 3.We have heard Mr. Sharma, learned Counsel for theAppellant. 4.The Appeal is seeking to raise the following question as asubstantial question of law :- “ Whether on the facts and in the circumstances inthe case and in Law, the Hon’ble ITAT errerd inupholding the claim of the assessee that the amortizedamount of exchange difference arising out of foreigncurrency borrowings are not contingent liability andshould not form part of computation of Book Profit for the purpose of 115JB of the Income Tax Act, 1961without appreciating that loss on account of foreignexchange fluctuation is contingent in nature and hencecannot be taken into account while computing bookprofit as per companies Act ?” 5.Mr. Sharma, learned Counsel for the Appellant reiteratedthe contentions raised before the Tribunal. The Tribunal hasapproved the decision of the Commissioner (Appeals), which is adetailed one. The Tribunal and the Commissioner (Appeals) heldthat the forward foreign exchange contract entered into by theassessee to buy or sell foreign currency at an agreed price at a a futuredate cannot be considered as a contingent in nature as it creates acontinuing binding obligation on the date of the contract against theassessee. We find no error in the view taken by the Tribunal that inthe present case where an obligation was undertaken to meet aliability and only consequential effect was to be determined, it couldnot be said that the amount in question was in a nature of contingentliability. Nothing is shown to us how the view taken is erroneous inlaw or on facts. 6.During the course of the argument, Mr. Sharma soughtto urge an additional question of law to the effect that the Tribunalerred in not treating Rs.10,47,08,044/- as capital expenditure forcomputation of book profit under Section 115JB of the Act when 6.During the course of the argument, Mr. Sharma soughtto urge an additional question of law to the effect that the Tribunalerred in not treating Rs.10,47,08,044/- as capital expenditure forcomputation of book profit under Section 115JB of the Act when this amount was treated by the Assessing Officer and accepted byAssessee as a capital expenditure. Not only this point was not urgedbefore the Tribunal but it does not even find reference in the presentappeal memo. The appeal was filed before the Tribunal on a soleground of the amount in question being a contingent liability. Inview of such single focused ground before the Tribunal, the decisionof the Tribunal was restricted only on that ground. The argument ofMr.Sharma that there was only a mistake in choosing the wordswherein instead of the words - capital expenditure, the words -contingent liability were used, cannot be accepted, as why theamount was to be treated as contingent in nature was also specifiedin the said ground stating that the losswas on account of foreignexchange fluctuation. It is not permissible for the Appellant to urgesaid question for the first time in this Court, that too during thecourse of the oral argument. 7.substantial question of law. The Appeal is dismissed. The question as proposed does not give rise to any NITIN JAMDAR, J. M.S. SANKLECHA, J.