Inconsistency In Treatment Of Forex Loss Without Plausible Reason For Deviation, Justifies Revisionary Interference: Hyderabad ITAT

The Bench comprising Rama Kanta Panda (Vice President) and K. Narasimha Chary (Judicial Member) observed that “non-considering of the consistent treatment given by the assessee to the foreign exchange gain/loss either prior or subsequent to 2017-18 amounts to error insofar as it is prejudicial to the interest of Revenue and, therefore, we find it difficult to hold that the CIT(IT&TP) committed anything illegality or irregularity in setting it aside and directing the learned TPO to consider the issue afresh”. (Para 16)

The Bench noted that assessee had considered forex loss as operating while computing the ALP for AYs between 2015-16 and 2020-21 except for the impugned AY when forex loss was considered non-operating.

The Bench further noted that neither assessee provided any plausible reason for deviating in the present AY nor TPO dealt with the same, hence, CIT set aside the assessment order and directed TPO to compute ALP afresh.

“In this case, the non-consideration of the consistent economic policies and the accounting treatment given by the statutory auditors of the assessee to the foreign exchange gain/loss, impacts the correctness of the conclusions to be reached by the learned TPO insofar as the application of the correct precedent to such facts is concerned”, added the Bench.

The Bench highlighted that assessee cannot approbate and reprobate w.r.t the nature of forex gain/loss, and emphasizes that consistency is the prime factor to ascertain the intention of assessee in giving treatment to the transaction.

Hence, the ITAT held that CIT did not commit illegality or irregularity in setting aside the assessment order.

Counsel for Appellant/ Assessee: Sandeep Bansal

Counsel for Respondent/ Revenue: TH Vijaya Lakshmi

Case Title: Corteva Agriscience Services India Pvt. Ltd vs DCIT

Case number: ITA No 275/Hyd/2023

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