Principal Commissioner Of Income Tax-4, Kolkata ….Appellant(S v. Hindustan Gum And Chemicals Ltd

HIGH COURT AT CALCUTTA(ORIGINAL SIDE) ITAT/40/2020 IA NO.GA/1/2020 (OLD NO.GA/1196/2020)GA/2/2020(OLD NO.GA/1197/2020)(Through Video Conferencing) PRINCIPAL COMMISSIONER OF INCOME TAX-4, KOLKATA ….Appellant(s) Through: Mr. P.K. Bhowmick with Mr.Ashok Bhowmick, Advocates v/s HINDUSTAN GUM AND CHEMICALS LTD. . ….Respondent(s) Through: Mr. J.P. Khaitan, SeniorAdvocate (VC) with Mr. SanjayBhaumik, Ms. Swapna Das, Mr.Siddhertho Das, Advocates Coram : HON’BLE MR. JUSTICE RAJESH BINDAL, JUDGE HON’BLE MR. JUSTICE ANIRUDDHA ROY, JUDGE O R D E R 1. Challenging the order passed by the Income Tax AppellateTribunal passed in ITA No. 891/Kol/2017 for assessment year 2012-13dated 31.05.2018, the present appeal has been filed in this Court.2.The appeal is accompanied by an application seeking 2.The appeal is accompanied by an application seekingcondonation of delay of 497 days in filing thereof. The following substantialquestions of law were sought to be raised :- (i)Whether on the facts and circumstances of the case theLearned Income Tax Appellate Tribunal is justified inlaw in not considering the CBDT Instruction No. 3/2010dated 23[rd] March, 2010 which stipulates that notional lossof Foreign Exchange derivative is not to be allowed to bededucted from total income but to be added back to thetotal income, while the Learned Tribunal allowed reliefsto the assessee company on account of Marked to Marketloss ? (ii)Whether on the facts and circumstances of the case theLearned Income Tax Appellate Tribunal has erred in lawin deleting the additions made by the Assessing Officeron the question of Marked to Market loss incontravention to the provision of section 37(1) of theIncome Tax Act, 1961 which stipulates thatcapital/speculation expenditure is not an allowableexpenditure for deduction ? (iii)Whether on the facts and circumstances of the case theLearned Income Tax Appellate Tribunal justified in lawin allowing relief to the assessee company on account ofadditional depreciation without considering the thirdproviso to section 32(1)(ii) which came into effect on 1[st]April, 2016 by virtue of the Finance Act, 2016 withoutretrospective effect ?Learned Income Tax Appellate Tribunal justified in lawin allowing relief to the assessee company on account ofadditional depreciation without considering the thirdproviso to section 32(1)(ii) which came into effect on 1[st]April, 2016 by virtue of the Finance Act, 2016 withoutretrospective effect ? (iv)Whether on the facts and circumstances of the case theLearned Income Tax Appellate Tribunal is justified inlaw in properly not applying the test of application ofLearned Income Tax Appellate Tribunal is justified inlaw in properly not applying the test of application of Third proviso of the section 32(1)(ii) of the Income TaxAct, 1961 ? (iv)Whether on the facts and circumstances of the case theLearned Income Tax Appellate Tribunal is justified inlaw in properly not applying the test of application ofLearned Income Tax Appellate Tribunal is justified inlaw in properly not applying the test of application of Third proviso of the section 32(1)(ii) of the Income TaxAct, 1961 ? 3. At the very outset learned Counsel for the Revenue submittedthat question Nos. 1 and 2 were decided against the Revenue by the IncomeTax Appellate Tribunal (for short ‘the Tribunal’) vide order dated 14[th]February, 2018, passed in I.T.A. No. 1410 (Kol) of 2016 and 1601 (Kol) of2016 for the Assessment Year 2010-11.4. In ITAT 320 of 2018 filed in this Court, order dated 14[th]February, 2018, passed by the Tribunal, was challenged. The aforesaidappeal was admitted only for issues pertaining to interpretation of Section14A of the Income Tax Act, 1961 read with Rule 8D(2)(ii) of the IncomeTax Rules, whereas the aforesaid two questions at Sr.Nos (i) & (ii), were notentertained considering the fact that the Tribunal had followed its earlierorder passed in the case of assessee for the earlier assessment year, whichhad attained finality, keeping in view of the judgments of the Hon’bleSupreme Court in the case of CIT vs. Woodward Governor India (P) Ltd.(312 ITR 254) and ONGC vs. CIT (322 ITR 180)5. If aforesaid questions of law are not entertained, the learnedCounsel for Revenue fairly submits that tax effect relating to question Nos. 3and 4 would be less than Rs.1 crore. In view of the circular No.17/2019F.No.279/Misc.142/2007-ITJ(Pt.) dated August 8, 2019 issued byGovernment of India, Ministry of Finance, Department of Revenue, CentralBoard of Direct Taxes Judicial Section, whereby the monetary limit forfiling appeals before the High Court has been increased to ₹1 crore and thetax effect in the present being less than that, he may be permitted towithdraw the present appeal. 6.The prayer made by learned counsel for the revenue is allowed,however, keeping the legal issue open. KOLKATA13.01.2021GH/S.Das. (ANIRUDDHA ROY) JUDGE (RAJESH BINDAL) JUDGE