Nabros Pharma Pvt.Ltd., Ahmedabad V. The Dy.CIT.,Circle-5, Ahmedabad

ITA 1179/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9531 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-01-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 29-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VILAS V SHINDE
• Assessee Lawyers: S N SOPARKAR WITH PARIN SHAH
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NOS: 1179 & 1604/AHD/2013 (ASSESSMENT YEAR: 2002-03) NABROS PHARMA PVT. LTD., 3 RD FLOOR, NABROS HOUSE, OPP. ART GALLERY, LAW GARDEN, ELLIS BRIDGE, AHMEDABAD-6 ACIT, CIRCLE-5, AHMEDABAD V/S V/S DCIT, CIRCLE-5, AHMEDABAD NABROS PHARMA PVT. LTD., 3 RD FLOOR, NABROS HOUSE, OPP. ART GALLERY, LAW GARDEN, ELLIS BRIDGE, AHMEDABAD-6 (APPELLANT) (RESPONDENT) PAN: AAACN 7886N APPELLANT BY: SHRI S.N. SOPARKAR WITH PARIN SHAH, A.R RESPONDENT BY : SHRI VILAS V. SHINDE, SR. D.R. ( )/ ORDER DATE OF HEARING : 02-01-2017 DATE OF PRONOUNCEMENT : 05-01-2017 ITA NOS. 117 9 & 1604/AHD/2013 . A.Y.2002-03 2 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NOS. 1179 & 1604/AHD/2013 ARE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE PREFERRED AGAINST THE VERY SAME ORDER OF TH E LD. CIT(A)-XI, AHMEDABAD DATED 15.03.2013 PERTAINING TO A.Y. 2002- 03. 2. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE DISP OSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 1179/AHD/2013 ASSESSEES APPEAL FOR A.Y. 20 02-03 3. THE FIRST GRIEVANCE OF THE ASSESSEE RELATES TO THE ADDITION OF RS. 1,36,59,714/- IN RESPECT OF COMMISSION EXPENSES. TH IS DISPUTE ON EARLIER OCCASION HAD TRAVELLED UP TO THE TRIBUNAL AND THE T RIBUNAL VIDE ORDER DATED 03.04.2009 IN ITA NO. 562/AHD/2006 HAS SET ASIDE TH IS ISSUE TO THE FILE OF THE A.O. FOR VERIFICATION FOLLOWING THE ORDER OF TH E TRIBUNAL IN ITA NO. 90/AHD/2005 FOR A.Y. 2001-02. 4. THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH IN A .Y. 2001-02 IN ITA NO. 90/AHD/2005 READS AS UNDER:- 12. AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBMIS SIONS AND THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION TH AT THE LD. CIT(A) HAS ACCEPTED THE ASSESSEES CLAIM FOR HAVING PAID COMMISSION WIT H RESPECT TO REMAINING YEARS BY ACCEPTING THE ASSESSEE'S PLEA THAT THE COMMISSIO N WAS NOT DEBITED IN THOSE YEARS BECAUSE OF SOME DISPUTE WAS GOING ON AND BY N OT ACCOUNTING FOR THE COMMISSION IN THE RELEVANT YEAR, THE ASSESSEE HAD D ECLARED MORE INCOME, WITHOUT REFERRING TO ANY MATERIAL AS TO WHETHER THIS STANDS OF THE ASSESSEE WAS CORRECT OR ITA NOS. 117 9 & 1604/AHD/2013 . A.Y.2002-03 3 NOT AND HOW THE LIABILITY ON ACCOUNT OF COMMISSION FOR EARLIER YEARS COULD BE ALLOWED IN THIS YEAR WHEN THE ASSESSEE ITSELF HAS C LAIMED THE COMMISSION ON THE SALES MADE IN THE CURRENT IN THIS VERY YEAR ITSELF. 13. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE ARE OF THE OPINION THAT THIS ISSUE ALSO REQUIRES RECONSIDERATION AT THE END OF THE CIT(APPEALS) AND, THEREFORE, THIS ISSUE IS RESTORED BACK TO THE FILE OF GIT (APPEALS) WITH THE DIRECTIONS THAT THE SAME MAY BE DECIDED AFRESH IN 'ACCORDANCE WITH LAW BY PASSING A SPEAKING ORDER AN D AFTER ALLOWING BOTH PARTIES PROPER OPPORTUNITIES OF BEING HEARD. 5. DURING THE SET ASIDE ASSESSMENT PROCEEDINGS, THE AS SESSEE FILED FOLLOWING REPLY IN SUPPORT OF ITS CLAIM:- 5.2 IN REPLY DATED 28/06/2009, THE ASSESSEE HAS SU BMITTED AS UNDER: 'WE HAVE DEBITED RS.136,59,714/- TO PROFIT AND LOSS ACCOUNT FOR THE FINANCIAL YEAR 2001-02 (I.E. ASSESSMENT YEAR 2002-03) UNDER CONSID ERATION WHICH RELATES TO PAST YEAR EXPORTS SALES. FURTHER TO ABOVE WE HAVE TO DRAW YOUR KIND ATTENTIO N TO THE MATTER THAT AS PER MERCANTILE SYSTEM OF ACCOUNTING THE MOMENT AN EXPEN DITURE ACCRUES OR CRYSTALLIZES THE SAME HAS TO BE CLAIMED IN THE YEAR IN WHICH SUCH ACCRUAL TAKE PLACED. WITH REFERENCE TO THE ABOVE REFERRED SALES COMMISSI ON FOREIGN OF RS.1,36,59,714/- WE HAVE TO STATE THAT THE AMOUNT O F SUCH COMMISSION WAS NOT CERTAIN IN THE YEAR OF EXPORT SALES ITSELF. THE DIS PUTE WITH THE PARTIES OF RECIPIENTS OF SUCH SALES COMMISSION- FOREIGN WAS GOING ON AT T HE TIME OF BALANCE SHEET. WE WOULD LIKE TO DRAW YOUR KIND ATTENTION TO THE MATTE R THAT THE AMOUNT OF COMMISSION IS NOT PAID OR PAYABLE ONLY AFTER SALES IS EFFECTED. THE FOREIGN COMMISSION AGENT HAS TO FULFILL SOME OTHER CONDITIO NS ALSO. HE HAS ALSO PROVIDE AFTER SALES SERVICES LIKE COORDINATION WITH THE PAR TIES. PAYMENT REALIZATION, MARKET SURVEY AND TREND, HELPING FOREIGN BUYERS TO MARKET OUR PRODUCTS. HELPING IN CUSTOM OR OTHER GOVERNMENT RELATED WORK TO FOREI GN BUYERS ETC. ITA NOS. 117 9 & 1604/AHD/2013 . A.Y.2002-03 4 FURTHER TO ABOVE THE FOREIGN COMMISSION AGENT IS AL SO HAS TO SUBMIT PERIODICAL STATEMENT AND REPORTS TO US. ALL THE ABOVE AND OTHE RS SERVICES HAS TO BE COMPETE BY THE FOREIGN COMMISSION AGENT, THEN WE MAKE PAYME NT TO THEM. SINCE IN RELATION TO ABOVE SALES COMMISSION- FOREIGN THERE WAS SOME D ISPUTES WITH FOREIGN COMMISSION AGENT WITH REGARDS TO COMMISSION AMOUNT TO BE PAID THE SAME WAS NOT CRYSTALLIZED IN THE YEAR OF EXPORTS. WE THEREFORE, HAS MADE PAYMENT OF SUCH SALES COMMIS SION- FOREIGN AND DEBITED SUCH AMOUNT OF SALES COMMISSION - FOREIGN IN THE YE AR UNDER CONSIDERATION AS THE SAME WERE CRYSTALLIZED.' 6. THE A.O. DISMISSED THE CLAIM OF THE ASSESSEE BY MAK ING FOLLOWING OBSERVATIONS:- 5.3 THE ABOVE SUBMISSIONS OF THE ASSESSEE HAVE BEEN CONSIDERED. THE CONTENTION OF THE ASSESSEE IS THAT THE AMOUNT OF COMMISSION WA S NOT CERTAIN IN THE YEAR OF EXPORTS ITSELF, AS THERE WAS A DISPUTE WITH RECIPIE NT OF SALES COMMISSION. SINCE THE COMMISSION AGENT FAIL TO FULFILL VARIOUS CONDITIONS OF SERVICES, THE COMMISSION WAS NOT PAID IN THE YEAR OF EXPORT. THEREFORE, AFTER RE SOLUTION OF DISPUTE SALES COMMISSION WAS CRYSTALLIZED IN THE ASSESSMENT YEAR UNDER CONSIDERATION. IT IS SEEN THAT THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENTARY EVIDENCE TO PROVE THAT THERE WAS ACTUALLY ANY DISPUTE WITH THE COMMISSION AGENT, CAUSING THE ASSESSEE TO WITHHOLD THE PAYMENT IN THE YEAR OF EXPORT. THE ASS ESSEE HAS NOT FURNISHED ANY CORRESPONDENCE ETC. SUGGESTING THAT DISPUTE WITH TH E COMMISSION AGENT OCCURRED AND THE SAME WAS RESOLVED DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2002-03 AND THE LIABILITY WAS CRYSTALLIZED DUR ING THIS YEAR. THE ASSESSEE HAS ALSO HOT FURNISHED EVEN COPY OF AGREEMENT, ENTERED INTO WITH THE COMMISSION AGENT, TO SUGGEST THAT THERE WAS ACTUALLY ANY AGREE MENT BETWEEN THEM. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HE LD THAT THE AMOUNT OF COMMISSION OF RS.1,36,59,714/- DEBITED TO THE P & L A/C. WAS N OT IN ACCORDANCE WITH THE MERCANTILE SYSTEM OF ACCOUNTING WHICH THE ASSESSEE WAS FOLLOWING. THEREFORE THE ITA NOS. 117 9 & 1604/AHD/2013 . A.Y.2002-03 5 EXPENSES BEING PRIOR PERIOD EXPENSES ARE NOT ALLOWA BLE IN THIS YEAR HENCE THE SAME ARE DISALLOWED AND ADDED TO THE ASSESSEE'S INC OME. 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 8. THE RELEVANT FINDINGS OF THE FIRST APPELLATE AUTHOR ITY READS AS UNDER:- 2.4 IT IS CLEARLY OBSERVED BY THE HONBLE ITAT IN I TA NO. 562/AHD/2006 THAT THE APPELLANT WAS HAVING DISPUTE WITH THE COMMISSION AG ENTS AND ACCORDINGLY THE COMMISSION EXPENSES WERE NOT DEBITED IN THE YEARS W HEN THE SAME HAD ACCRUED. THE APPELLANT HAS MADE THE SAME CONTENTIONS DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, THE APPELLATE PROCEEDINGS AND DURING T HE SET ASIDE ASSESSMENT PROCEEDINGS ALSO. PERUSAL OF THE HON'BLE ITAT'S ORD ER REVEALS THAT THE HON'BLE I TAT WAS NOT SATISFIED WITH THE CONCLUSIONS DRAWN BY THE CIT(A) IN RESPECT OF ALLOWANCE OF EARLIER YEAR COMMISSIONS DURING THE YE AR UNDER CONSIDERATION WITHOUT VERIFYING THE FACT WHETHER ASSESSEE'S CONTE NTIONS WERE CORRECT AND HOW THE COMMISSION EXPENSES OF EARLIER YEAR COULD BE AL LOWED IN THIS YEAR. THIS FACT MAKES IT VERY CLEAR THAT THE HON'BLE ITAT HAS DIREC TED THE A.O. TO VERIFY THE FACT OF DISPUTES; THE APPELLANT WAS HAVING WITH THE COMM ISSION AGENTS. DURING THE APPELLATE PROCEEDINGS THE APPELLANT HAS NOT FURNISH ED ANY EVIDENCE TO SUBSTANTIATE THE FACT OF DISPUTE. DURING THE APPELL ATE PROCEEDINGS ALSO THE APPELLANT HAS NOT FURNISHED ANY EVIDENCE TO SUBSTAN TIATE THE FACT OF DISPUTE WITH THE COMMISSION AGENTS. ON THE OTHER HAND THE APPELL ANT CONTENDED THAT THE COMMISSIONS WERE PAID AT THE TIME OF REALIZATION OF SALE PROCEEDS. THE APPELLANT HAS ALSO CONTENDED THAT IN ADDITION TO THE REALIZAT ION OF SALE PROCEEDS THE COMMISSION AGENTS ARE ALSO REQUIRED TO RENDER AFTER SALE SERVICES LIKE CO- ORDINATION WITH PARTIES, PAYMENT REALIZATION, MARKE T SURVEY AND TREND HELPING FOREIGN BUYERS TO MARKET OUR PRODUCT, HELPING IN CU STOM OR OTHER GOVERNMENT RELATED WORK TO FOREIGN BUYERS ETC. THIS WAY THE AP PELLANT HAS SUBMITTED ENTIRELY DIFFERENT FACTS DURING THE APPELLATE PROCEEDINGS AN D THESE FACTS WERE NOT THERE BEFORE THE HON'BLE ITAT AT THE TIME OF SETTING ASID E THIS ISSUE TO THE FILE OF A.O. IN ITA NOS. 117 9 & 1604/AHD/2013 . A.Y.2002-03 6 MY CONSIDERED OPINION, DURING THE APPELLATE PROCEED INGS THE APPELLANT CAN TAKE A NEW LEGAL GROUND BUT GROUNDS BASED ON DIFFERENT FAC TS CANNOT BE TAKEN. SINCE THE HON'BLE ITAT HAD SPECIFICALLY ASKED TO EXAMINE THE FACT OF DISPUTE WITH THE COMMISSION AGENTS, ACCORDINGLY, I HOLD THAT THE APP ELLANT CAN MAKE SUBMISSIONS TO PROVE THE FACT OF DISPUTE WITH THE COMMISSION AGENTS AND IT CANNOT TAKE A DIFFERENT FACTUAL POSITION DURING THE ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS. IT IS A MATTER OF FACT THAT DURING THE APPELLATE AS WELL AS ASSESSMENT PROCEEDINGS, THE APPELLANT HAS FAILED TO FILE ANY DOCUMENTARY EV IDENCE TO PROVE THE FACT OF DISPUTE WITH THE COMMISSION AGENTS, ACCORDINGLY, I AM INCLINED TO AGREE WITH THE COMMISSION AGENTS. IT WILL ALSO BE PERTINENT TO MEN TION THAT DURING THE REMAND REPORT PROCEEDINGS THE A.O. HAD SPECIFICALLY INQUIR ED ABOUT THE DISPUTE WITH THE COMMISSION AGENTS. THE APPELLANT ONCE AGAIN FAILED TO FILE THE EVIDENCES TO PROVE THE FACT OF DISPUTE WITH THE COMMISSION AGENTS. IN VIEW OF ABOVE FACTS, I HOLD THAT THE COMMISSION LIABILITY OF RS. 1,36,59,714/- WHICH ACCRUED TO THE APPELLANT IN EARLIER YEARS CANNOT BE CLAIMED IN THE CURRENT ASSE SSMENT YEAR. ACCORDINGLY, ADDITION OF RS. 1,36,59,714/- IS CONFIRMED. THIS GR OUND OF APPEAL IS DISMISSED. 9. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. THE L D. COUNSEL FOR THE ASSESSEE STATED THAT THE COMMISSION HAS BEEN PAID T O THE DEL-CREDRE AGENTS OF THE ASSESSEE WHICH MEANS THAT THE AGENTS ARE ENT ITLED FOR THE COMMISSION ONLY WHEN THE ASSESSEE HAS REALIZED THE SALE CONSIDERATIONS. IT IS THE SAY OF THE LD. COUNSEL THAT THOUGH THE SALES WERE MADE IN EARLIER YEARS, THE CONSIDERATION HAS BEEN REALIZED ONLY DUR ING THE YEAR UNDER CONSIDERATION; BECAUSE OF WHICH THE COMMISSION HAS BEEN CHARGED TO THE PROFIT AND LOSS ACCOUNT. THEREFORE, IT SHOULD BE AL LOWED DURING THE YEAR UNDER CONSIDERATION. PER CONTRA, THE LD. D.R. SUPP ORTED THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. ITA NOS. 117 9 & 1604/AHD/2013 . A.Y.2002-03 7 10. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW AND WITH THE ASSISTANCE OF THE LD. COUNSEL; W E HAVE GONE THROUGH THE RELEVANT DOCUMENTARY EVIDENCES PLACED BEFORE US IN THE FORM OF A PAPER BOOK IN THE LIGHT OF RULE 18(6) OF THE INCOME TAX A PPELLATE TRIBUNAL RULES. IT IS NOT IN DISPUTE THAT THE SALES WERE MADE IN EARLI ER YEARS THOUGH THE COMMISSION HAS BEEN PAID DURING THE YEAR UNDER CONS IDERATION. A PERUSAL OF THE COMMISSION STATEMENT MARKED AS EXHIBIT 85 IN THE PAPER BOOK SHOWS THAT THE SALE CONSIDERATIONS HAVE BEEN REALIZED DUR ING THE YEAR UNDER CONSIDERATION. THEREFORE, WE FIND FORCE IN THE CONT ENTION OF THE ASSESSEE THAT AS PER THE AGREEMENTS WITH THE AGENTS WHICH AR E ALSO PART OF THE PAPER BOOK, THE AGENTS ARE ENTITLED FOR SALES COMMISSION ONLY WHEN THE ASSESSEE HAS REALIZED THE SALE CONSIDERATIONS. 11. WE ALSO DO NOT FIND ANY MERIT IN THE OBSERVATIONS O F THE LOWER AUTHORITIES THAT SINCE THE TRIBUNAL IN THE FIRST ROUND OF LITIG ATION HAS RESTORED THIS ISSUE TO THE FILES FOR VERIFICATION OF THE CLAIM, THE ASS ESSEE IS NOT ENTITLED TO ADDUCE EVIDENCES IN SUPPORT OF ITS RENEWED/FRESH CL AIM OF THE SAME DISPUTED SALES COMMISSION. THE TRIBUNAL HAS DIRECTE D TO VERIFY THE CLAIM OF THE ASSESSEE AFRESH. THEREFORE, THE CLAIM OF THE AS SESSEE HAS TO BE CONSIDERED IN THE LIGHT OF THE AGREEMENTS WITH THE SALE COMMISSION AGENTS. 12. CONSIDERING THE FACTS IN TOTALITY, IN OUR CONSIDERE D OPINION, THE ASSESSEE IS ENTITLED FOR THE DEDUCTION OF SALES COMMISSION DURI NG THE YEAR UNDER CONSIDERATION. WE ACCORDINGLY DIRECT THE A.O. TO AL LOW THE CLAIM OF RS. 1,36,59,714/- IN RESPECT OF COMMISSION EXPENSES. ITA NOS. 117 9 & 1604/AHD/2013 . A.Y.2002-03 8 13. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO THE D ISALLOWANCE ON ACCOUNT OF DEDUCTION U/S. 80HHC OF THE ACT ON INTEREST ON B ANK FIXED DEPOSITS. 14. THE ASSESSEE, DURING THE COURSE OF THE ASSESSMENT P ROCEEDINGS HAD CLAIMED THAT THE FDR INTEREST EARNED BY THE ASSESSEE HAS TO BE NETTED OFF WITH THE INTEREST PAID BY THE ASSESSEE FOR DETERMINING THE C LAIM OF DEDUCTION U/S. 80HHC OF THE ACT. THIS PLEA OF NETTING OFF OF INTER EST WAS DENIED BY THE A.O. AND CONFIRMED BY THE FIRST APPELLATE AUTHORITY. 15. IN OUR CONSIDERED OPINION, THIS ISSUE IS NO MORE RE S INTEGRA. THE HONBLE SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULE S PVT. LTD. 343 ITR 89 HAS LAID DOWN THE FOLLOWING RATIO:- FOR THE PURPOSE OF SECTION 80HHC OF THE INCOME-TAX ACT, 1961, IT IS NOT THE ENTIRE AMOUNT RECEIVED BY THE ASSESSEE ON SALE OF DEPB CRE DIT, BUT THE SALE VALUE LESS THE FACE VALUE OF THE DEPB THAT WILL REPRESENT PROF IT ON TRANSFER OF DEPB CREDIT BY THE ASSESSEE. TOPMAN EXPORTS V. CIT [2012] 342 ITR 49 (SC) FOLLOW ED. UNDER CLAUSE (1) OF EXPLANATION (BAA) TO SECTION 80 HHC OF THE ACT, NINETY PER CENT. OF ANY RECEIPTS BY WAY OF BROKERAGE, COMMISSI ON, INTEREST, RENT, CHARGES OR ANY OTHER RECEIPT OF A SIMILAR NATURE INCLUDED IN A NY SUCH PROFITS ARE TO BE DEDUCTED FROM THE PROFITS OF THE BUSINESS AS COMPUT ED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. THE EXPRESSIO N INCLUDED ANY SUCH PROFITS WOULD MEAN ONLY SUCH RECEIPTS BY WAY OF BROKERAGE, COMMISSION, INTEREST, RENT, CHARGES OR ANY OTHER RECEIPT WHICH ARE INCLUDED IN THE PROFITS OF THE BUSINESS AS ITA NOS. 117 9 & 1604/AHD/2013 . A.Y.2002-03 9 COMPUTED UNDER THE HEAD PROFITS AND GAINS OF BUSIN ESS OR PROFESSION. THE QUANTUM OF THE RECEIPTS BY WAY OF BROKERAGE, COMMIS SION, INTEREST, RENT, CHARGES OR ANY OTHER RECEIPT OF A SIMILAR NATURE IS ALLOWED AS EXPENSES UNDER SECTIONS 30 TO 44D OF THE ACT AND IS NOT INCLUDED IN THE PROFIT S OF BUSINESS AS COMPUTED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSIO N NINETY PER CENT. OF SUCH QUANTUM OF RECEIPTS CANNOT BE REDUCED UNDER CLAUSE (1)OF EXPLANATION (BAA) FROM THE PROFITS OF THE BUSINESS. IN OTHER WORDS, ONLY N INETY PER CENT. OF THE NET AMOUNT OF ANY RECEIPT OF THE NATURE MENTIONED IN CLAUSE (1 ) WHICH IS ACTUALLY INCLUDED IN THE PROFITS OF THE ASSESSEE IS TO BE DEDUCTED FROM THE PROFITS OF THE ASSESSEE FOR DETERMINING PROFITS OF THE BUSINESS OF THE ASSESS EE UNDER EXPLANATION (BAA) TO SECTION 80HHC. 16. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE H ONBLE SUPREME COURT (SUPRA), WE DIRECT THE A.O. TO RE-COMPUTE THE DEDUC TION U/S. 80HHC OF THE ACT AFTER NETTING OFF OF THE IMPUGNED INTEREST. 17. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO THE L EVY OF INTEREST U/S. 234A, 234B, 234C & 234D OF THE ACT. THE LEVY OF INTEREST IS MANDATORY THOUGH CONSEQUENTIAL. THE A.O. IS DIRECTED TO CHARGE INTER EST AS PER THE PROVISIONS OF THE LAW. 18. THE OTHER GRIEVANCE OF THE ASSESSEE RELATES TO THE INITIATION OF PENALTY U/S. 271(1)(C) OF THE ACT. THIS GRIEVANCE OF THE ASSESSE E IS PREMATURE AND IS ACCORDINGLY DISMISSED. 19. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NOS. 117 9 & 1604/AHD/2013 . A.Y.2002-03 10 ITA NO. 1604/AHD/2013 REVENUES APPEAL FOR A.Y. 2002-03 20. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN ALLOWING ASSESSEES CLAIM FOR DEDUCTION U/S. 80HHC ON EXCHAN GE RATE DIFFERENCE OF RS. 2,25,67,392/-. 21. IN THE FIRST ROUND OF LITIGATION, THE TRIBUNAL HAS DIRECTED THE A.O. TO FOLLOW THE RULING OF HONBLE GUJARAT HIGH COURT IN THE CAS E OF AMBA IMPEX 284 ITR 144 FOR DETERMINING THE CLAIM OF DEDUCTION U/S. 80H HC OF THE ACT IN RESPECT OF CURRENCY RATE DIFFERENCE OF RS. 2,25,67,392/-. T HE A.O. ONCE AGAIN DENIED THE CLAIM OF DEDUCTION BY OBSERVING THAT THE ASSESS EE HAS FAILED TO FURNISH ANY DETAIL TO PROVE THAT IT HAS FULFILLED THE CONDI TIONS AS STIPULATED IN SECTION 80HHC OF THE ACT. 22. BEFORE THE LD. CIT(A), THE ASSESSEE ONCE AGAIN MADE THE CLAIM OF DEDUCTION RELYING UPON THE DECISION OF THE HONBLE GUJARAT HI GH COURT IN THE CASE OF AMBA IMPEX (SUPRA). THE FIRST APPELLATE AUTHORITY H ELD AS UNDER :- 4.2 I HAVE CAREFULLY CONSIDERED THE RIVAL CONTEN TIONS. IT IS SEEN THAT THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS AS WELL AS APPELL ATE PROCEEDINGS CONTENDED THAT THE CURRENCY EXCHANGE DIFFERENCE HAD ACCRUED T O IT IN THE PROCESS OF EXPORT SALES REALIZATION. ACCORDINGLY, THE APPELLANT CONTE NDED THAT DEDUCTION U/S.80HHC SHOULD BE ALLOWED TO IT. RELIANCE IN THIS REGARD IS PLACED ON THE CASE OF AMBA IMPEX 284 ITR 14 (GUJ). TAKING ENTIRETY OF FACTS IN VIEW, I AM INCLINED TO AGREE WITH THE CONTENTIONS OF ID. A.R. THAT THE DED UCTION U/S.80HHC IS ALLOWABLE TO THE APPELLANT ON EXCHANGE RATE DIFFERENCE AS THE SAME HAS BEEN EARNED IN THE PROCESS OF EXPORT PROFITS REALIZATION. IT WILL ALSO BE WORTHWHILE TO MENTION THAT THE ITA NOS. 117 9 & 1604/AHD/2013 . A.Y.2002-03 11 HON'BLE ITAT IN THE CASE OF THE APPELLANT IN ITA NO .3241/AND/2008 A.Y.2001-02 DATED 30.11.2010 HAD ALLOWED DEDUCTION U/S.80HHC ON EXCHANGE RATE DIFFERENCE. THE HON ITAT ALLOWED THIS DEDUCTION WITH THE FOLLOW ING OBSERVATIONS :- '6. ON HEARING BOTH THE SIDES WE ARE OF THE VIEW TH AT THE A.O. HAD NOT CORRECTLY APPRECIATED ALL THOSE FACTS WHICH WERE CLAIMED TO H AVE BEEN PLACED BEFORE HIM VIDE A DETAILED LETTER DATED 10.12.2007. IT WAS EXP LAINED THAT AT THE END OF THE YEAR THERE WAS OUTSTANDING SALE CONSIDERATION. THE SAME WAS CONVERTED INTO INDIAN CURRENCY FROM FOREIGN CURRENCY AT THE PREVAI LING EXCHANGE RATE AND DULY RECORDED IN THE BOOKS AS IT WAS CONSISTENTLY DONE I N THE PAST. THEREAFTER, THE DIFFERENCE BETWEEN THE EXCHANGE RATE AND THE ACTUAL REALIZATION WAS EITHER DEBITED OR CREDITED TO CURRENCY RATE DIFFERENCE A/C . IT WAS ALSO INFORMED THAT THE SAID METHOD OF ACCOUNTING WAS AS PER THE ACCOUNTING STANDARD 11 PRESCRIBED. HENCE THE CURRENCY RAT DIFFERENCE WAS CLAIMED AS BU SINESS INCOME FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S.SEC. 80HHC. CASE LAWS RELIED UPON WERE CIT VS AMBA IMPEX 282 ITR 144 (GUJ.), GAMI EXP ORTS 94 TTJ 557 (AHD.) ALONG WITH THE COPY OF THIS LETTER THE ASSESSEE HAS ALSO PLACED BEFORE US A CHART TO EXPLAIN THAT THE REALIZATION WAS DONE WITHIN THE ST ATUTORY PERIOD. ASSESSEE HAS ANNEXED 'BANK CERTIFICATE OF EXPORT AND REALIZATION '. ONCE ALL SUCH DETAILS WERE VERY MUCH AVAILABLE BEFORE THE LOWER AUTHORITIES TH EN IT NOT FAIR ON THE PART OF THE REVENUE TO AGAIN CHALLENGE THOSE FACTUAL FINDINGS. APPLYING THE PRINCIPAL LAID DOWN BY THE HON'BLE COURTS LT CIT(A) HAS RIGHTLY AL LOWED THE CLAIM. RESULTANTLY THIS GROUND IS HEREBY DISMISSED.' 4.3 IN VIEW OF ABOVE, THE A.O. IS DIRECTED TO ALLOW DEDUCTION U/S.80HHC ON EXCHANGE RATE DIFFERENCE OF RS. 2,58,22,615/-. THIS GROUND OF APPEAL IS ALLOWED. 23. AS NO DISTINGUISHING DECISION HAS BEEN BROUGHT ON R ECORD RESPECTFULLY FOLLOWING THE FINDINGS OF THE HONBLE JURISDICTIONA L HIGH COURT (SUPRA), WE DECLINE TO INTERFERE. ITA NOS. 117 9 & 1604/AHD/2013 . A.Y.2002-03 12 24. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 05 - 01- 20 17. SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 05/01/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD