The Commissioner Of Income Tax-11, Mumbai v. A.f. Ferguson & Co., Mumbai

IN THE HIGH COURT OF JDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO. 87 OF 2011 The Commissioner of Income Tax-11, Mumbai Vs. A.F. Ferguson & Co., Mumbai ...Appellant. ..Respondent. Ms. S.V. Bharucha for the Appellant. Mr. Porus Kaka with Sameer Chitnis with Rajesh Singh i/by Crowford Bayley & Co. for the Respondent. CORAM : J.P. DEVADHAR AND A.A. SAYED, JJ. DATE : 21ST JULY, 2011. P.C. Two questions of law raised by the Revenue in this appeal, which read thus: " (a) Whether on the facts and circumstances of the case and in law the Hon'ble Tribunal was justified in upholding order of the CIT(A) deleting the addition made by Assessing Officer disallowing payment of Rs. 32,85,000/- made to ex-partner/spouses of deceased partners, by holding that payment has been paid on account of overriding title on the profits and allowing claim of the Assessee? (b)Whether on the facts and circumstances of the case Hon'ble Tribunal was justified in deleting the addition Rs. 7,41,262/- made on account of difference between the book value of amount lying Exchange Earner Foreign Currency Account on ground that the national accretion can not form part of income in cash system of accounting?" 2.As regards question (a) is concerned, learned Counsel for the revenue states that similar question raised by the Revenue in the case of the Commissioner of Income Tax-11 Vs. M/s C.C. Chokshi & Co. in Income Tax Appeal Nos. 209 of 2008 and 193 of 2008 has been rejected by this Court on 25 July, 2008. For the reasons stated therein, the question No.1 cannot be entertained. 3.As regards question (b) is concerned, the finding of fact recorded by the ITAT is that the assessee firm had an Exchange Earners' Foreign Currency (EEFC) Account, the balance of which in the current account as on 31st March, 2003 was U.S. dollars 2,38,168.84/- The rupee valuation of this balance amount in the books was Rs.12,672,436/-. If the said balance was restated at the prevailing rate on 31st March, 2003 it would amount to Rs. 12,413,698/-. The assessing officer sought to tax the differential amount, which was deleted by the ITAT on the ground that the assessee has been following cash system of accounting and therefore gain on account of exchange rate can be brought to tax only when the amounts lying in the EEFC account were utilized by the assessee. No fault can be found in the reasoning of the ITAT. Thus, the second question cannot be entertained. 4.Accordingly, appeal is dismissed. ( A.A. SAYED, J. ) ( J.P. DEVADHAR , J.)