Court maintained that established accounting practices allow for claiming notional losses as deductions, emphasizing consistency and prior judgments covering these issues.

JUDGMENT

Rajiv Shakdher, J. (Oral)--This appeal is directed against the order dated 16.10.2019 passed by the Income Tax Appellate Tribunal [hereafter referred to as the `Tribunal'] rendered in ITA 4808/Del/2016 concerning the assessment year [in short `AY'] 2010-2011.

2. The appeal is preferred under Section 260A of the INCOME TAX ACT , 1961 [in short `the Act']. In this appeal, which is, instituted by the revenue, the following substantial questions of law have been suggested for being framed and adjudicated upon by this Court:

"a) Whether in the facts and circumstances of the case and in law, ITAT misinterpreted the scope of Section 14A(1) of the Act and errored in holding that Section 14(A) can only be invoked if the Respondent has earned exempted income during the assessment year ignoring the fact that Section 14A doesn't lay down such requirement and the only precondition for invoking Section 14A is that there must be "expenditure incurred in relation to such income which does not form part of the total income under this Act"?

b) Whether in the facts and circumstances of the case and in law, ITAT errored in interpreting the Circular No. 5 of 2014 of the CBDT which clarifies the true scope and meaning of Section 14A of the Act?

c) Whether in the facts and circumstances of the case and in law, ITAT failed to appreciate that the AO, having regard to the accounts of the Respondent, was not justified with the correctness of such claim of the Respondent in respect of such expenditure in relation to income which does not form part of the total income under this Act?

d) Whether in the facts and circumstances of the case and in law, ITAT errored in deciding upon the true nature of the license fee paid to the Department of telecommunication by the assessee, which clearly established that the expenditure was a capital expenditure and wrongly relied upon the decision in CIT V Bharti Hexacom Limited, 221 Taxman 323(Delhi)?

e) Whether in the facts and circumstances of the case and in law, ITAT errored in holding that the exemption under section 10A of the Act should not be computed after excluding telecommunication expenses and foreign currency expenditure from the export turnover?

f) Whether in the facts and circumstances of the case and in law, ITAT erred in deleting the disallowance of unrealized foreign exchange loss on account of reinstatement of assets and liabilities of Rs.15,97,25,873/- ignoring the fact that this is a notional loss and not allowable to be set off against the taxable income in view of the CBDT's instruction no. 3 of 2010 dated 23.03.2010?"

3. Insofar as the first three questions of law i.e. (a), (b) and (c), as suggested by the revenue, are concerned, Mr. Raghvendra Kishore Singh, who appears for the revenue, fairly submits that they are covered by the judgement of the coordinate Bench of this Court rendered in Joint Investments (P.) Ltd. vs. Commissioner of Income-tax, (2015) 372 ITR 694 (Delhi).

4. As regards the fourth question of law, that is set out in clause (d) above, as suggested by the revenue, is concerned, once again, Mr. Singh submits that the same is covered by the judgement of the coordinate Bench of this Court in Commissioner of Income-tax vs. Bharti Hexacom Ltd., (2014) 221 Taxman 323 (Delhi).

5. We may also indicate that the Tribunal in its order has referred to the view taken in the assessee's case in respect of an earlier AY (i.e. AY 2007-2008).

5.1. The Tribunal rendered its order in respect of the said assessment year on 15.01.2015. This order was passed in ITA 4546/Del./ 2013.The