PRINCIPAL COMMISSIONER OF INCOME TAX Vs. KALYAN JEWELLERS

JUDGEMENT

(1.) The appellant calls into question the correctness of the order of the learned Income Tax Appellate Tribunal Cochin Bench ('ITAT' for short) in ITA No.363/Coch/2023, asserting that its findings are wrong and contrary to the declarations of law by the Hon'ble Supreme Court in Commissioner of Income Tax, Delhi v. Woodward Governor India (P.) Ltd. [(2009) SCC OnLine SC 710].

(2.) Sri.Jose Joseph learned counsel for the appellant, argued that, when the respondent assessee, admitted that they had included notional profits in their accounts - which they gained out of a 'mark-to-market' instrument in respect of a Forward Contract in Commodity Derivatives, the said amount was taxable; but that the Tribunal has held otherwise. He prays that, consequently, the impugned order be set aside.

(3.) Sri.R.Jaikrishnan learned counsel for the respondent, on the other hand, submitted that the learned Tribunal has relied upon Woodward Governor India (Supra), as also on Godhra Electricity Co. Ltd., Ahmedabad v. Commissioner of Income Tax, Gujarat-II [(1997) 225 ITR 746], to hold correctly that notional profits or notional losses cannot either be treated as income or expenditure respectively, until the same is to accrue. He pointed out that, in Woodward Governor India (Supra), the Hon'ble Supreme Court has categorically held that no prudent trader would show anticipated profit, in the shape of appreciated value of the closing stock, before it is actually realized; and that, this is the same with anticipated loss also. He argued that, as also declared by the afore two judgments, unless such principles stand superseded or modified by legislative enactments, unrealized profits in the shape of appreciated value of goods, remaining unsold at the end of the accounting year and carried over to the following years account, is a continuing business alone.