DCIT, Circle-1(2), Hyd, Hyderabad V. BA Continuum India Pvt.Ltd., Hyd, Hyderabad

ITA 1257/HYD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6629 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 03-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SIRI KUMAR
• Assessee Lawyers: SAMPATH RAGHUNATHAN
• Section: 80HHC; 80IB; 10B; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS. 1257/HYD/2015 & 1146/H/14 ASSESSMENT YEAR: 2010-11 & 2008-09 DY. COMMISSIONER OF INCOME- TAX, CIRCLE 1(2), HYDERABAD. VS. BA CONTINUUM INDIA PVT. LTD., HYDERABAD PAN AACCC2310 C (APPELLANT) (RESPONDENT) REVENUE BY : SHRI J. SIRI KUMAR ASSESSEE BY : SHRI SAMPATH RAGHUNATHAN DATE OF HEARING 18-04-2016 DATE OF PRONOUNCEMENT 29-04-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THESE APPEALS ARE PREFERRED BY THE REVENUE AGAINST THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) FOR AYS 2010-11 AND 2008-09. AS IDENTICAL ISSUES ARE INVOLVED IN BO TH THESE APPEALS, THEY WERE CLUBBED AND HEARD TOGETHER AND THEREFORE, A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. 2. GROUND NO. 1 IN AY 2010-11 AND GROUND NOS. 2 & 3 IN AY 2008- 09 ARE AGAINST THE ACTION OF THE CIT(A) IN HOLDING THAT THE COMMUNICATION EXPENSES SHOULD BE EXCLUDED FROM THE TOTAL TURNOVER FOR COMPUTING DEDUCTION U/S 10A OF THE IT ACT. 3. WHILE COMPUTING DEDUCTION U/S 10A AND SECTION 10 AA OF THE ACT, THE AO EXCLUDED COMMUNICATION EXPENSES AMOUNTI NG TO RS. 10,10,66,262/- FROM THE EXPORT TURNOVER. 2 ITA NOS. 1257 /HYD/2015 AND 1146/H/14 BA CONTINUUM INDIA PVT. LTD. 4. ON AN APPEAL, BEFORE THE CIT(A), THE ASSESSEE CO NTENDED THAT THE AO SHOULD NOT HAVE EXCLUDED COMMUNICATION EXPEN SES FROM EXPORT TURNOVER FOR COMPUTING DEDUCTION U/S 10A OR ALTERNATIVELY SHOULD HAVE REDUCED THESE EXPENSES FROM BOTH THE EX PORT TURNOVER AND TOTAL TURNOVER. HE SUBMITTED THAT THE ITAT, HYD ERABAD BENCH IN ASSESSEES OWN CASE FOR AYS 2005-06 AND 2006-07 CON FIRMED THE ACTION OF THE CIT(A) IN REDUCING THE COMMUNICATION EXPENSES FROM BOTH THE EXPORT TURNOVER AND TOTAL TURNOVER. ACCORD INGLY, CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE AND EXCLUDED THE COMMUNICATION EXPENSES BOTH IN THE EXPORT TURNOVER AS WELL AS IN THE TOTAL TURNOVER. 5. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER O F THE AO. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERU SED THE MATERIAL FACTS ON RECORD. WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF THE CIT(A) IN DIRECTING THE AO TO EXCLUDE COMMUNICATIO N EXPENSES FROM THE EXPORT TURNOVER AS WELL AS FROM TOTAL TURNOVER BY RELYING ON THE DECISION OF THE ITAT, HYDERABAD BENCHES IN ASSESSEES OWN CASE. MOREOVER, THE DECISION OF THE CIT(A) IS IN CONFORMITY WITH THE RATIO LAID DOWN B Y THE HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS. GEM PLUS JEWELLERY (330 IT R 175) AS WELL AS DIFFERENT BENCHES OF TRIBUNAL INCLUDING ITAT, CHENNAI BENCH ( SB) IN THE CASE OF ITO VS. SAK SOFT (313 ITR (AT) 853) WHEREIN IT IS HELD THAT COMMUNICATION CHARGES ATTRIBUTABLE DIRECTLY TO THE EXPORT OF ARTICLE OR THING OUTSIDE INDIA HAS TO BE EXCLUDED BOTH FROM EXPORT TURNOVER AS WELL AS TOT AL TURNOVER WHILE COMPUTING EXEMPTION U/S 10A OF THE ACT. ACCORDINGLY, WE UPHO LD THE DECISION OF THE CIT(A) AND DISMISS THE GROUND RAISED BY THE REVENUE IN BOTH THE YEARS UNDER CONSIDERATION. 7. GROUND NO. 4 IN AY 2008-09 OF ITA NO. 1146/HYD/1 4 IS DIRECTED AGAINST THE ACTION OF THE CIT(A) IN HOLDING THAT THE FOREIG N EXCHANGE GAIN OF RS. 3,08,38,858/- IS ENTITLED FOR DEDUCTION U/S 10A(4) OF THE ACT DISREGARDING THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF SH AH ORIGINAL (2010) 191 TAXMAN 81). 3 ITA NOS. 1257 /HYD/2015 AND 1146/H/14 BA CONTINUUM INDIA PVT. LTD. 8. THE AO DID NOT ALLOW 10A DEDUCTION ON FOREIGN EX CHANGE GAIN RELYING ON THE DECISION OF SHAH ORIGINALS (MUMBAI) 191 TAXMANN 81 WHEREIN 10A DEDUCTION WAS NOT ALLOWED AS THERE WAS NO DIRECT NE XUS OF FOREIGN EXCHANGE GAIN WITH THE EXPORTS. THE AO HELD THAT SUCH GAIN I S NOTIONAL AND THE ASSESSEE HIMSELF SHOWN SUCH GAIN UNDER THE HEAD OTHER INCOM E. 9. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT T HE COMPANY BILLED ITS EXPORTS IN US $, THE DIFFERENCE BETWEEN THE AMOUNT I.E., BILLED AND REALIZED WAS SHOWN AS GAIN OR LOSS WHICH IS DIRECTLY RELATED TO THE TURNOVER. HE FURTHER SUBMITTED THAT THE FACTS OF SHAH ORIGINALS (SUPRA) ARE DIFFERENT WHEREIN FOREIGN EXCHANGE GAIN OR LOSS WAS ON ACCOUNT OF RE-STATEMEN T OF EEFC. HE PLACED RELIANCE ON VARIOUS CASE LAWS, WHICH WERE MENTIONED BY THE CIT(A) AT PAGE 6 OF HIS ORDER. 10. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE, THE CIT(A) OBSERVED THAT THE FOREIGN EXCHANGE GAIN OR LOSS PERTAINS TO DIFFERENCE BETWEEN BILLED AMOUNT AS PER THE INVOICES AND THE REALIZED AMOUNT, WHICH IS NOTHING BUT THE TURNOVER OF THE ASSESSEE. IT IS NOT A CASE WHERE TH E EXCHANGE GAIN OR LOSS PERTAINS TO SOME LOAN ACCOUNT OR EEFC ACCOUNT. HE, THEREFORE, HELD THAT SINCE THE FOREIGN FLUCTUATION FORMS PART OF SALE PROCEEDS SUCH GAIN IS ENTITLED FOR BENEFIT U/S 10A(4). 11. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PER USED THE MATERIAL FACTS ON RECORD. WE AGREE WITH CIT (A) THAT FOREIGN EXCHA NGE FLUCTUATION GAIN WHEN IT IS FROM SALE PROCEEDS THEN IT IS PART OF EXPORT TUR NOVER. THIS ISSUE IS ALSO COVERED BY VARIOUS DECISIONS IN FAVOUR OF THE ASSES SEE WHEREIN IT HAS BEEN HELD THAT FOREIGN EXCHANGE FLUCTUATION GAIN IS A PA RT OF EXPORT TURNOVER AND ALSO ELIGIBLE FOR DEDUCTION U/S 10 A OF THE INCOME-TAX ACT , 1961. THE FOREIGN EXCHANGE FLUCTUATION GAIN IS PART OF THE SALE PROC EEDS AND THE FOREIGN EXCHANGE FLUCTUATION GAIN IS TAXABLE AS BUSINESS PR OFIT, AS HELD IN VARIOUS CASES. IN THE CASE OF SUJATA GROVER VS. DCIT - 74 T TJ 347, ITAT, DELHI HELD AS UNDER :- 4 ITA NOS. 1257 /HYD/2015 AND 1146/H/14 BA CONTINUUM INDIA PVT. LTD. THE GAINS MADE FROM EXCHANGE RATE FLUCTUATION IS P ART OF THE EXPORT TURNOVER. IT IS NOT IN THE NATURE OF BROKERAGE ETC. MENTIONED IN THE EXPLANATION (BAA). THEREFORE, THE INCOME FROM FOREI GN EXCHANGE FLUCTUATION WOULD BE ELIGIBLE FROM DEDUCTION UNDER SECTION 80HHC .' IN THE CASE OF SONY INDIA (P) LTD. VS. DCIT - 118 T TJ 865, ITAT, DELHI BENCH HELD AS UNDER :- '23. WHILE FINALIZING ITS BOOKS OF ACCOUNT, THE FOR EIGN CURRENCY TRANSACTIONS WERE REINSTATED BY THE TAXPAYER COMPANY AT THE EXCH ANGE RATE PREVAILING ON THE BALANCE SHEET DATE AND THE RESULTING LOSS ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION ON SUCH REINSTATEMENT OF CURRE NT ASSETS OR LIABILITIES AMOUNTING TO RS.31,33,745 WAS DEBITED TO THE PROFIT AND LOSS ACCOUNT. SIMILARLY, THE GAIN DUE TO FLUCTUATION IN FOREIGN E XCHANGE AMOUNTING TO RS.14,00,761 WAS CREDITED IN THE PROFIT AND LOSS AC COUNT. ACCORDING TO THE ASSESSING OFFICER, THE CORRESPONDING LIABILITIES HA VING NOT BECOME DUE IN THE YEAR UNDER CONSIDERATION AND THE SAME WERE PAYA BLE IN THE SUBSEQUENT YEARS, THE LOSS CLAIMED BY THE TAXPAYER ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION WAS ONLY NOTIONAL. HE, THEREFO RE, DISALLOWED THE SAID LOSS. THE LEARNED CIT(A), HOWEVER, ALLOWED THE CLAI M OF THE TAXPAYER COMPANY FOR THE SAID LOSS HOLDING THAT IT WAS NOT A NOTIONAL LOSS AS ALLEGED BY THE ASSESSING OFFICER. 24. AT THE TIME OF HEARING BEFORE US, THE LEARNED R EPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THIS ISSUE IS SQUARELY C OVERED BY THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. WOODWARD GOVERNOR INDIA P. LTD . 294 ITR 451 WHEREIN IT WAS HELD THAT THE LIABILIT Y ARISING OUT OF CONTRACTS HAD ALREADY ACCRUED THE MINUTE THE CONTRA CT WAS ENTERED INTO AND THE MERE POSTPONEMENT OF THE PAYMENT OF SUCH LI ABILITY TO A FUTURE DATE WOULD NOT EXTINGUISH THE SAME SO AS TO RENDER IT NOTIONAL OR CONTINGENT. IT WAS ALSO HELD THAT ANY INCREASE IN S UCH LIABILITY AS A RESULT OF FLUCTUATION IN THE VALUE OF FOREIGN CURRENCY IN REL ATION TO INDIAN CURRENCY THUS WAS A FATE ACCOMPLI AND SUCH INCREASE IN LIABI LITY AS PER THE EXCHANGE RATE PREVAILING ON THE LAST DATE OF THE FI NANCIAL YEAR WAS ALLOWABLE AS DEDUCTION BEING NOT NOTIONAL OR CONTIN GENT. RESPECTFULLY FOLLOWING THE SAID CO NO.391/DEL/2010 JUDGMENT OF H ON'BLE JURISDICTIONAL HIGH COURT, WE UPHOLD THE IMPUGNED ORDER OF THE LEA RNED CIT(A) ON THIS ISSUE AND DISMISS GROUND NO.6 OF THE REVENUE'S APPE AL.' IN THE CASE OF CIT VS. RACHNA UDHYOG - 230 CTR 72, HON'BLE BOMBAY HIGH COURT HELD AS UNDER :- '5. HAVING HEARD THE LEARNED COUNSEL APPEARING ON B EHALF OF THE APPELLANT AND LEARNED COUNSEL APPEARING FOR THE ASSESSEE, WE ARE OF THE VIEW THAT THE DIFFERENCE ON ACCOUNT OF EXCHANGE RATE FLUCTUAT ION IS LIABLE TO BE ALLOWED UNDER SECTION 80IB . THE EXCHANGE RATE FLUCTUATION ARISES OUT OF AND IS DIRECTLY RELATED TO THE SALE TRANSACTION INV OLVING THE EXPORT OF GOODS OF THE INDUSTRIAL UNDERTAKING. THE EXCHANGE RATE FL UCTUATION BETWEEN THE 5 ITA NOS. 1257 /HYD/2015 AND 1146/H/14 BA CONTINUUM INDIA PVT. LTD. RUPEE EQUIVALENT OF THE VALUE OF THE GOODS EXPORTED AND THE ACTUAL RECEIPTS WHICH ARE REALIZED ARISES ON ACCOUNT OF TH E SALE TRANSACTION. THE DIFFERENCE ARISES PURELY AS A RESULT OF A FLUCTUATI ON IN THE RATE OF EXCHANGE BETWEEN THE DATE OF EXPORT AND THE DATE OF RECEIPT OF PROCEEDS, SINCE THERE IS NO VARIATION IN THE SALE PRICE UNDER THE C ONTRACT. THE VIEW WHICH WE HAVE TAKEN IS ALSO CONSISTENT WITH THE VIEW TAKE N BY A DIVISION BENCH OF THIS COURT ON 15TH DECEMBER 2009 IN THE CASE OF SYNTEL LIMITED (INCOME TAX APPEAL NOS.1974, 1976 AND 1978 OF 2009) . IN THE CIRCUMSTANCES, WE WOULD AFFIRM THE JUDGMENT OF THE TRIBUNAL IN SO FAR AS THE QUESTION OF EXCHANGE RATE FLUCTUATION IS CONCER NED.' IN THE CASE OF SHARP CREDIT LIMITED VS. DCIT - 83 T TJ 1056, THE ITAT, DELHI HELD AS UNDER :- '4. ON DUE CONSIDERATION OF THE MATTER, WE ARE OF T HE VIEW THAT THE ASSESSEES DESERVES TO SUCCEED. THE TERM 'TOTAL TURN OVER' HAS BEEN DEFINED IN A NEGATIVE MANNER NOT TO INCLUDE FREIGHT , INSURANCE OR INCENTIVES EARNED BY THE ASSESSEE. WHEN THE DEFINITION SPECIFI CALLY EXCLUDES CERTAIN ITEMS FROM THE 'TOTAL TURNOVER', IT AUTOMATICALLY F OLLOWS THAT THE REMAINING ITEMS SHALL FORM PART OF THE TOTAL TURNOVER. EVEN O THERWISE, THE AMOUNT RECEIVED BY THE ASSESSEE ON ACCOUNT OF EXCHANGE DIF FERENCE IS NOTHING BUT REALISATION OF THE GOODS EXPORTED BY IT AND HEN CE, SUCH PROCEEDS HAVE TO BE CONSTRUED AS THE TURNOVER OF THE CO NO.391/DE L/2010 ASSESSEE ONLY. WE FIND SUPPORT FROM THE DECISION OF THE DELH I BENCH OF THE TRIBUNAL IN THE CASE OF SUJATA GROVER VS. DY. CIT (2002) 74 TTJ 347 (DEL) WHEREIN IT HAS BEEN SPECIFICALLY HELD THAT EXCHANGE RATE FLUCT UATION DIFFERENCE IS NOTHING BUT PART OF SALES. IT IS FURTHER OBSERVED T HAT UNDER ALL CIRCUMSTANCES THE BASIC CHARACTER OF THE RECEIPT OF FOREIGN CURRENCY REMAINS, THE SAME, I.E., IT REMAINS ATTRIBUTABLE TO THE EXPORT EFFECTED BY THE ASSESSEE. WHETHER THERE IS A PROFIT OR A LOSS, IT U LTIMATELY GOES TO INCREASE OR REDUCE THE FIGURES OF EXPORT TURNOVER RECORDED I NITIALLY BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. IN VIEW OF THIS POSITION O F LAW, WE UPHOLD THE CLAIM OF THE ASSESSEE AND DIRECT THAT THE ASSESSEE BE GRA NTED DEDUCTION UNDER S. 80HHC OF THE ACT.' IN THE CASE OF INFOSYS TECHNOLOGIES LTD. VS. JCIT - 109 TTJ 631, THE ITAT, BANGALORE HELD AS UNDER :- 12.3 IN VIEW OF THE FINDING OF THIS TRIBUNAL IN APP ELLANT'S CASE FOR ASST. YR. 1999-2000, THE EXCHANGE RATE FLUCTUATION IS TO BE C ONSIDERED AS PART OF EXCHANGE (SIC-EXPORT) TURNOVER AND TOTAL TURNOVER F OR THE PURPOSE OF DEDUCTION UNDER S. 80HHE OF THE ACT. SIMILAR VIEW HAS BEEN HELD BY THE TRIBUNAL IN THE CASE OF ENCORE SOFTWARE LTD. IN ITA NO. 794/BANG/2005, WHEREIN IT WAS HELD AS UNDER: 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE FORE IGN EXCHANGE GAIN ARISES BECAUSE OF THE FLUCTUATION IN THE FOREIGN EX CHANGE RATE. WHEN THE SALES ARE EFFECTED, THE SALES ARE ACCOUNTED IN INDI AN RUPEES ON THE BASIS 6 ITA NOS. 1257 /HYD/2015 AND 1146/H/14 BA CONTINUUM INDIA PVT. LTD. OF EXCHANGE RATE PREVAILING AT THE TIME OF SALE. SU BSEQUENTLY WHEN THE SALE PROCEEDS ARE RECEIVED IN CONVERTIBLE FOREIGN E XCHANGE, THE ASSESSEE REALIZED HIGHER SUM. INSTEAD OF ACCOUNTING THE SAME AS TURNOVER OR SALES, THE SAME IS ACCOUNTED AS FOREIGN EXCHANGE FLUCTUATI ON GAIN. THOUGH IT IS WORDED AS FOREIGN EXCHANGE CURRENCY FLUCTUATION, IT IS NOTHING BUT PART OF EXPORT TURNOVER AND A SORT OF ADDITIONAL SALE PRICE . THUS, THE SAME IS PROFIT OF THE ELIGIBLE UNDERTAKING FOR CLAIMING DEDUCTION UNDER S. 10B . SIMILARLY, IT CANNOT BE TREATED AS OTHER RECEIPTS FOR EXCLUDING 9 0 PER CENT OF THE SAME UNDER S. 80HHE . WE ACCORDINGLY HOLD THAT SUCH SUM BEING FOREIGN EXCHANGE GAIN IS NOT TO BE EXCLUDED WHILE COMPUTING PROFIT ELIGIBLE FOR DEDUCTION UNDER S.10B AS WELL AS FOR COMPUTING PROF ITS OF THE BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER S. 80HHE . THE DECISIONS OF TRIBUNAL, DELHI BENCH IN THE CASE OF SMT. SUJATA GROVER VS. DY. CIT (2002) 74 TTJ (DEL) 347 AND THE DECISION OF TRIBUNAL, BANG ALORE IN THE CASE OF INFOSYS TECHNOLOGIES LTD. VS. ASSTT. CIT (ITA NO. 4 71/BANG/2003), RELIED BY LEARNED COUNSEL FOR ASSESSEE, IS SQUARELY APPLIC ABLE'. IN THE CASE OF CHANGEPOND TECHNOLOGIES (P.) LTD. VS. ACIT - 119 TTJ 18, THE ITAT, CHENNAI HELD AS UNDER :- '6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AS WEL L AS THE MATERIAL ON RECORD. IN THE CASE OF RENAISSANCE JEWELLERY (P.) L TD. (SUPRA) THE MUMBAI BENCH OF THIS TRIBUNAL HAS HELD AS UNDER: '26. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS M ADE BEFORE US BY BOTH THE SIDES AND HAVE GONE THROUGH THE PROVISIONS OF LAW AND THE PRECEDENTS RELIED UPON BY LEARNED COUNSEL FOR THE A SSESSEE. IN OUR VIEW, THIS ISSUE IS COVERED IN THE ASSESSEE'S FAVOUR BY S EVERAL CASES RELIED UPON BY LEARNED COUNSEL FOR THE ASSESSEE AND DISCUSSED A BOVE. THERE IS NO MATERIAL DIFFERENCE BETWEEN THE REQUIREMENT OF SECTION 80HHC AND SECTION 10A . THE PROFIT ON ACCOUNT OF FOREIGN EXCHANGE GAIN IS DIRECTLY REFERABLE TO THE ARTICLES AND THINGS EXPORTED BY THE ASSESSEE. S UCH PROFITS ARE, THEREFORE, IN THE SAME NATURE AS THE SALE PROCEEDS AND THERE IS NO REASON WHY DEDUCTION UNDER SECTION 10A SHOULD NOT BE ALLOWED IN RESPECT OF SUCH EXCHANGE 1 GAIN. THEREFORE, WE VACATE THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS ISSUE. ' WE ARE ALSO OF THE VIEW THAT THE GAIN FROM THE FLUC TUATION OF FOREIGN EXCHANGE IS DIRECTLY RELATED WITH THE EXPORT ACTIVI TIES AND SHOULD BE CONSIDERED AS INCOME DERIVED FROM EXPORT ACTIVITIES . IT IS PERTINENT THAT SUCH GAIN DUE TO FLUCTUATION OF FOREIGN EXCHANGE AR ISES ONLY DUE TO THE EXPORT AND NOT DUE TO OTHER ACTIVITIES OF THE ASSES SEE. IF THE ASSESSEE HAS NOT EXPORTED ANY ARTICLE THEN THE QUESTION OF ANY G AIN OR LOSS DUE TO FOREIGN EXCHANGE DOES NOT ARISE. THEREFORE, WE DECI DE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND SET ASIDE THE ORDER OF THE C.I. T(APPEALS). ACCORDINGLY, GAIN ON FOREIGN EXCHANGE WOULD BE INCL UDED IN THE TOTAL TURNOVER WHILE COMPUTING THE DEDUCTION UNDER SECTION 10A OF THE ACT.' 7 ITA NOS. 1257 /HYD/2015 AND 1146/H/14 BA CONTINUUM INDIA PVT. LTD. IN THE CASE OF CIT VS. PENTASOFT TECHNOLOGIES LTD., HON 'BLE HIGH COURT OF MADRAS HELD AS UNDER :- '4. IN ORDER TO ALLOW A CLAIM UNDER SECTION 10A OF THE ACT, WHAT ALL IS TO BE SEEN IS WHETHER SUCH BENEFIT EARNED BY THE ASSESSEE WAS DERIVED BY VIRTUE OF EXPORT MADE BY THE ASSESSEE. THE EXCHANGE VALUE BASED ON UPWARD OR DOWNWARD OF THE RUPEE VALUE IS NOT IN THE HANDS OF THE ASSESSEE. IN OTHER WORDS, THE ASSESSEE DOES NOT DET ERMINE THE EXCHANGE VALUE OF THE INDIAN RUPEE. IT HAS TO BE REMEMBERED BUT FOR THE FACT THAT THE ASSESSEE IS AN EXPORT HOUSE, THERE WAS NO QUEST ION OF EARNING ANY FOREIGN EXCHANGE. THEREFORE, WHEN THE FLUCTUATION I N FOREIGN EXCHANGE RATE WAS SOLELY RELATABLE TO THE EXPORT BUSINESS OF THE ASSESSEE AND THE HIGHER RUPEE VALUE WAS EARNED BY VIRTUE OF SUCH EXP ORTS CARRIED OUT BY THE ASSESSEE, THERE IS NO REASON WHY THE BENEFIT OF SECTION 10(A) SHOULD NOT BE ALLOWED TO THE ASSESSEE.' IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE CONS IDERED VIEW THAT THE ORDER OF THE CIT (A) DESERVES TO BE SUSTAINED AS THE FOREIG N EXCHANGE GAIN IS NOTHING BUT VALUE OF SALE RECORDED AT THE TIME OF SALE AND VALUE REALIZED AFTER REMITTANCE BY THE CUSTOMER. THE SAME IS PART AND PARCEL OF EXP ORT TURNOVER. IN THE RESULT, THE GROUND NO. 4 OF REVENUE'S APPEAL IN AY 2008-09 STANDS DISMISSED. 13. GROUND NOS 1 & 5 IN AY 2008-09 ARE GENERAL IN N ATURE, HENCE, NEED NO ADJUDICATION. 14. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE UNDER CONSIDERATION ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2016 SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 29 TH APRIL, 2016 KV 8 ITA NOS. 1257 /HYD/2015 AND 1146/H/14 BA CONTINUUM INDIA PVT. LTD. COPY TO:- 1) DCIT,CIRCLE 1(2), 4 TH FLOOR, AAYAKAR BHAVAN, HYDERABAD. 2) M/S BA CONTINNUM INDIA P. LTD., BUILDING NO. 5, MIND SPACE, RAHEJA IT PARK, H-TECH CITY, MADHAPUR, HYDERABA D. 3 CIT(A) - I, HYDERABAD 4) CIT(A) II, HYDERABAD 4) PR. CIT , HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.