The Commissioner Of Income Tax, Rohtak v. M/S Bharti Healthcare Ltd

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No. 192 of 2009Date of decision 16 .2.2010 The Commissioner of Income Tax, Rohtak... Appellant Versus M/s Bharti Healthcare Ltd.... Respondent CORAM:HON'BLE MR. JUSTICE M.M. KUMARHON'BLE MR. JUSTICE JITENDRA CHAUHAN Present:Mr. Aman Bansal,Advocate for the appellant 1.To be referred to the Reporter or not ? 2.Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. The instant appeal filed by the Revenue under Section 260 A of the Income Tax Act, 1961 (for brevity 'the Act') is directed against orderdated 18.1.2008 passed by the Income Tax Appellate Tribunal, DelhiBench, Delhi (for brevity 'the Tribunal') in ITA No. 3051/Delhi 2003 inrespect of the Assessment year 1998-99. The Revenue has claimed thefollowing substantive questions of law: “i) Whether the ITAT was right in law in deleting the additionof 1,51,33,826/- made by the AO when the trading results werenot verifiable from the RG 1 register maintained by the assesseeand which did not represent the true and correct affairs of thebusiness of the assessee. ii)Whether the ITAT was right in law in deleting the addition ofRs.7,15,823/- made by the AO on capitalized expenditures,when no details of the expenditure capitalized was filed by the assessee neither alongwith the return of income nor during thecourse of assessment proceedings before the AO; iii)Whether on the facts and in the circumstances of the case,the Hon'ble ITAT was right in law in deleting the disallowancesmade on account of depreciation at Rs.8,98,684/- claimed on amount capitalization on account of foreign exchangefluctuations for increase in cost of liability due to capitalizationof foreign exchange rate fluctuations when section 43A of theIT Act was not applicable to the facts of the case; iv)Whether on the facts and in the circumstances of the case,the Hon'ble ITAT was right in law in deleting the disallowanceof Rs. 30,000/- made on account of telephone expenses bytreating the personal use of the assessee; v)Whether on the facts and in the circumstances of the case, theHon'ble ITAT was right in law in deleting the disallowance ofRs.1,12,813/- by treating it as revenue expenditure incurred onforeign travel expenses when no business was procured and nobusiness transaction was undertaken by the assessee; and vi)Whether on the facts and in the circumstances of the case,the Hon'ble ITAT was right in law (upholding the order of CIT(A) regarding additions of )in deleting the disallowance atRs.10,85,167/- made on account of interest payable to thefinancial institutions which is a statutory liability as per section43 B of the Act and which has not been paid within theprescribed period ?.” A perusal of the impugned order would show that in respect of ITA 192 of 2009 question nos. (i), (ii) and (v) the view taken by the Tribunal is that in theprevious assessment years, similar relief was granted to the assessee-respondent. Accordingly the principles of consistency were applied. It isnow well settled that unless there is change in circumstances the principle ofconsistency must be followed. In that regard, reliance may be placed on thejudgements of Hon'ble the Supreme Court rendered in the case of CIT v. JKCharitable Trust (2009) 308 ITR 161 (SC) and Berger Paints Indiav. CIT(2004) 266 ITR 99 (SC). A perusal of the impugned order would show that in respect of ITA 192 of 2009 question nos. (i), (ii) and (v) the view taken by the Tribunal is that in theprevious assessment years, similar relief was granted to the assessee-respondent. Accordingly the principles of consistency were applied. It isnow well settled that unless there is change in circumstances the principle ofconsistency must be followed. In that regard, reliance may be placed on thejudgements of Hon'ble the Supreme Court rendered in the case of CIT v. JKCharitable Trust (2009) 308 ITR 161 (SC) and Berger Paints Indiav. CIT(2004) 266 ITR 99 (SC). In respect of question No. (iii) the issue is covered against theRevenue in view of the Division Bench judgement of the Delhi High Courtrendered in the case of CIT v. Woodward Governor India P.Ltd.(2007) 294ITR 451 (Delhi). Accordingly it has to be held that where fixed assets werepurchased by way of import, payments for which were agreed to be madein foreign exchange on a deferred payment basis, the cost of the assets wasshown in the accounts of the assessee on the basis of exchange rate on thedate of the filing of the bill of entry then any fluctuation in foreign exchangerates would go to increase or decrease the liability on revenue account. Itwould qualify as business expenditure allowable under Section 37 of theAct despite the fact that the liability had not been discharged in theconcerned previous year. It was thus held that increase in liability due toforeign exchange fluctuation as per the exchange rate prevailing on the lastday of the financial year was allowable as a deduction and was not notionalor contingent. The question having been answered by the Division Bench ofDelhi High Court would not require any adjudication by this Court. Likewise, in respect of question No. (iv), the issue is coveredagainst the Revenue by the decision of the Gujarat High Court rendered in ITA 192 of 2009 the case of Sayaji Iron and Engg.Co v. Commissioner of Income Tax(2002) 253 ITR 749 (Guj). Accordingly the same has to be answered againstthe Revenue and in favour of the assessee. In respect of issue No. (vi) findings of fact have been recordedby the Tribunal on the basis of evidence available before the CIT (A) andTribunal has rightly deleted the additions made by the Assessing Officer. Accordingly, the appeal fails and the same is dismissed. (M.M.Kumar) Judge 16.2.2010okg (Jitendra Chauhan)Judge