Mahindra and Mahindra Financial Services Ltd Vs DCIT (ITAT Mumbai)
Section 80JJAA Claim Rejected for Omission in Return; Section 80G Issue Remanded: ITAT Mumbai
The Income Tax Appellate Tribunal (ITAT), Mumbai, decided cross appeals filed by the assessee and the Revenue arising from the order of the Commissioner of Income-tax (Appeals) for AY 2020-21. The assessee challenged, among other issues, rejection of its claims relating to foreign exchange gains, club expenses, deduction under Sections 80G and 80JJAA, and certain consequential matters. The Revenue challenged the deletion of penalty proceedings under Section 270A.
Regarding foreign exchange gains, the assessee stated that it had borrowed in foreign currency and entered into derivative contracts to hedge exchange fluctuation risks. It had disallowed notional foreign exchange loss arising from revaluation of borrowings but inadvertently failed to exclude corresponding notional gains on derivative contracts from taxable income. During assessment, it made an additional claim seeking exclusion of the notional gains, or alternatively, deduction of the revaluation loss if the gains were taxed. The Assessing Officer rejected the claim relying on Goetz (India) Ltd., and the CIT(A) upheld the rejection, observing that no revised return had been filed and expressing concerns regarding the claim and supporting reconciliation.
