Commissioner of Income-tax (Central), Kanpur v. M/S. Jai Prakash Associates Ltd
[Citation -2017-LL-0330-16]

Citation 2017-LL-0330-16
Appellant Name Commissioner of Income-tax (Central), Kanpur
Respondent Name M/S. Jai Prakash Associates Ltd.
Court HIGH COURT OF ALLAHABAD AT LUCKNOW
Relevant Act Income-tax
Date of Order 30/03/2017
Assessment Year 1998-99
Judgment View Judgment
Keyword Tags foreign currency • foreign exchange
Bot Summary: This appeal under Section 260-A of Income Tax Act, 1961 has been filed challenging the judgment and order dated 13.10.2006 passed by Income Tax Appellate Tribunal, Lucknow Bench 'B', Lucknow in Income Tax Appeals No. 743/Luc of 2004 and 748/Luc of 2004 for Assessment Year 1998-99. Whether Tribunal erred in law in holding that durable structures made of cement, bricks and steel and designed to last 10 to 15 years qualified as purely temporary structures eligible for depreciation at the rate of 100 per cent under the Income Tax Rules, 1962. So far as question-(i) is concerned, we find that there is a 2 finding of fact recorded by Tribunal after noticing that Assessing Officer computed the foreign currency translation difference as income as per accounting principle and only on notional basis. As could be seen from the computation reproduced by the AO in assessment order, this difference had arisen on the translation of the overseas account in the Head Office account at the end of the year on exchange rate prevalent on the last day of the accounting year. The amount of this difference was notional debit/credit and did not represent any loss or income for the purpose of computing the taxable income under the Income-Tax Act. So far as Question-(iii) is concerned, counsels for parties state 3 that it is squarely covered by judgment of this Court dated 24.01.2017 passed in Income Tax Appeal No. 87 of 2008 wherein similar question was answered against Revenue and in favour of Assessee. For the reasons stated in our judgment dated 24.1.2017 passed in Income Tax Appeal No. 87 of 2008 Question-(iii) is also answered against Revenue.


Court No. - 3 Case :- INCOME TAX APPEAL No. - 24 of 2007 Appellant :- Commissioner of Income Tax (Central) Tilak Nagar Kanpur Respondent :- M/S. Jai Prakash Associates Ltd. Park Road Lucknow Counsel for Appellant :- P. Agarwal, Alok Mathur Counsel for Respondent :- Namit Sharma Hon'ble Sudhir Agarwal, J. Hon'ble Ravindra Nath Mishra-II, J. 1. Heard Sri Alok Mathur, for appellant and Sri Namit Sharma, Advocate, for respondents. 2. This appeal under Section 260-A of Income Tax Act, 1961 (hereinafter referred to as "Act, 1961") has been filed challenging judgment and order dated 13.10.2006 passed by Income Tax Appellate Tribunal, Lucknow Bench 'B', Lucknow (hereinafter referred to as "Tribunal") in Income Tax Appeals No. 743/Luc of 2004 and 748/Luc of 2004 for Assessment Year 1998-99. It has raised following substantial questions of law: "(i) Whether Tribunal erred in law in holding that Foreign Exchange Translation difference of Rs. 7,57,91,928/- represented only notional credit and did not constitute income liable to tax. (ii) Whether Tribunal erred in law in holding that durable structures made of cement, bricks and steel and designed to last 10 to 15 years qualified as purely temporary structures eligible for depreciation at rate of 100 per cent under Income Tax Rules, 1962 (hereinafter referred to as "Rules, 1962"). (iii) Whether Tribunal erred in law in holding that interest as per agreement receivable on over due bills did not accrue even through liability to pay interest to respondent was not denied by debtor, respondent is indeed bad debt." 3. So far as question-(i) is concerned, we find that there is 2 finding of fact recorded by Tribunal after noticing that Assessing Officer computed foreign currency translation difference as income as per accounting principle and only on notional basis. In this regard, Tribunal has recorded its finding which reads as under: "8. As could be seen from computation reproduced by AO in assessment order, this difference had arisen on translation of overseas account in Head Office account at end of year on exchange rate prevalent on last day of accounting year. AO in assessment year 1993- 94, had observed that this difference arose as it was in different accounts appearing in books at exchange rate prevailing on first day of accounting year were translated in Indian Rupees at closing date. difference was adjusted in accounts of foreign currency translation difference. amount of this difference was notional debit/credit and did not represent any loss or income for purpose of computing taxable income under Income-Tax Act. entries on this account were made only for balancing books. Therefore, this exercise was merely done on account of incorporating trial balance appearing in Iraqi branch in Head Officer books in Indian currency. Since no actual gain accrued to assessee, there was no question of taxing this amount. We, accordingly, confirm order of ld. CIT(A) following precedent and in view of aforementioned discussion." 4. aforesaid finding having not been shown to be incorrect or contrary to record, we answer Question-(i) against Revenue. 5. So far as Question-(ii) is concerned, it is purely question of fact and does not give rise to any substantial question of law, hence need not be answered. 6. So far as Question-(iii) is concerned, counsels for parties state 3 that it is squarely covered by judgment of this Court dated 24.01.2017 passed in Income Tax Appeal No. 87 of 2008 (Commissioner of Income Tax Vs. M/S Jai Prakash Industries Pvt. Ltd.) wherein similar question was answered against Revenue and in favour of Assessee. 7. For reasons stated in our judgment dated 24.1.2017 passed in Income Tax Appeal No. 87 of 2008 (supra) Question-(iii) is also answered against Revenue. 8. In result, appeal fails and is dismissed accordingly. Dt. 30.03.2017 PS Commissioner of Income-tax (Central), Kanpur v. M/S. Jai Prakash Associates Ltd
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