ACIT Range I, V. Nodi Exports,

ITA 1535/DEL/2007

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9828 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 30-07-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 28-03-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KIRHORE B
• Assessee Lawyers: ROHIT JAIN
• Keywords: Business income
• Section: 80HHC; 80IB

Judgement Text

ITA NO. 1535/DEL/07 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BECHES : G NEW DELHI BEFORE SHRI DEEPAK R. SHAH, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ITA NO. 1535 / DEL/ 07 ASSTT. YEAR : 2003-04 ASSTT. CIT, RANGE-I, VS. M/S NODI EXPORTS, DE LHI ROAD, MORADABAD- UP MORADABAD - UP (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KIRHORE B., SR. DR RESPONDENT BY : SHRI ROHIT JAIN, CA ORDER PER GEORGE MATHAN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), BAREILLY IN APPEAL NO. 26/ACIT-I/MBD/06-07 DATED 29 .12.2006 FOR THE ASSESSMENT YEAR 2003-04. 2. SHRI KISHORE B., SR. DR REPRESENTED ON BEHALF O F THE REVENUE AND SHRI ROHIT JAIN, CA REPRESENTED ON BEHALF OF THE ASSESSEE. 3. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL) H AS ERRED IN LAW AND ON THE FACTS FOR THE CASE IN DIRECTING TO ALLOW THE DEDUC TION UNDER SECTION 80HHC AND 80 IB ON GROSS TOTAL INCOME SEPARATELY WHICH IS NOT AS PER PROVISION OF SECTION 80IA(9) OF THE IT ACT, 1961. 2. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEAL) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING TO ALLOW THE DEDUCTI ON UNDER SECTION 80IB OF IT ACT, 1961 ON FOREIGN EXCHANGE DIFFERENCE WHILE THE HON BLE TRIBUNAL DID NOT ALLOW THE SAME IN ITA NO. 3121/D/98 DATED 03/03/2003 IN T HE CASE OF MENTHE AND ALLIED PRODUCTS (P) LTD., MORADABAD FOR AY 1993-94. ITA NO. 1535/DEL/07 2 3. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EAL) IS ERRONEOUS ON ABOVE ISSUES WHICH MAY BE CANCELLED AND ORDER OF THE ASSE SSING OFFICER MAY BE RESTORED. 4. ANY OTHER GROUNDS OF APPEAL WHICH MAY BE TAKEN AT THE TIME OF HEARING. 4. AT THE TIME OF HEARING, IT WAS AGREED BY BOTH TH E SIDES THAT THE ISSUE IN THE FIRST GROUND WHICH WAS AGAINST THE ACTION OF THE LD . CIT(A) IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE DEDUCTION UNDER SECT ION 80HHC AND 80-IB ON THE GROSS TOTAL INCOME SEPARATELY WAS COVERED BY THE DE CISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF HINDUSTAN MINT AND AGR O PRODUCTS PVT. LTD. REPORTED IN 119 ITD 107 (DELHI) (SB). 5. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT HE H AD NO OBJECTION TO THE ISSUE BEING RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE-COMMUTATION OF THE DEDUCTION UNDER SECTION 80HHC AND 80IB IN RELATION WITH THE DECISION OF THE SPECIAL BENCH IN THE CASE OF HINDUSTAN MINT AND AGR O PRODUCTS PVT. LTD. (SUPRA). IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAD ERRED IN COMMUTING THE DEDUCTION UNDER SECTION 80HHC IN SO FAR AS HE HAD R EDUCED THE DEDUCTION CLAIMED AND ALLOWED UNDER SECTION 80IB FROM THE QUALIFYING AMOUNT OF DEDUCTION UNDER SECTION 80HHC OF RS. 71,13,486/- WHEREAS IT WAS LIA BLE TO BE REDUCED FROM THE QUALIFYING AMOUNT OF RS. 1,42,26,973/-. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE R EPRESENTATIVES. 7. AS THE ISSUE IS CLEARLY COVERED BY THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF HINDUSTAN MINT AND AGRO PRO DUCTS PVT. LTD. (SUPRA), IT IS DIRECTED THAT THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE- COMPUTATION IN LINE WITH THE DECISION OF THE SPECI AL BENCH OF THIS TRIBUNAL IN THE CASE OF HINDUSTAN MINT AND AGRO PRODUCTS PVT. LTD. AND FURTHER THAT WHILE RE- ITA NO. 1535/DEL/07 3 COMPUTING THE DEDUCTION UNDER SECTION 80HHC AND 80 IB THE ASSESSING AUTHORITY SHALL REDUCE DEDUCTION COMPUTED UNDER SECTION 80 IB FROM THE QUALIFYING AMOUNT OF DEDUCTION UNDER SECTION 80 HHC AND NOT THE ACTUA L DEDUCTION UNDER SECTION 80HHC FOR THE RELEVANT YEAR. 8. IN THE CIRCUMSTANCES THE GROUND NO. 1 OF THE REV ENUES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 9. IN REGARD TO GROUND NO. 2 WHICH IS AGAINST THE A CTION OF THE LD. CIT(A) IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE DEDUCT ION UNDER SECTION 80IB ON THE FOREIGN EXCHANGE DIFFERENCE. 10. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF TH E ASSESSING AUTHORITY. 11. IN REPLY, THE LD. AR SUBMITTED THAT THE FOREIGN EXCHANGE FLUCTUATION HAS TO BE TREATED AS REVENUE RECEIPT WHICH FORMS PART OF T HE TURNOVER AND IS TAXABLE AS BUSINESS INCOME FOR THE PURPOSE OF CALCULATION OF D EDUCTION UNDER SECTION 80IB. HE PLACED RELIANCE ON THE DECISION OF THE COORDINA TE BENCH OF THIS TRIBUNAL IN THE CASE OF ITC HOTELS VS. DCIT AND ANR. REPORTED IN 10 7 TTJ 955 WHICH WAS IN THE CONTEXT OF 80IA; THE DECISION DELIVERED IN THE CAS E OF SMT. SUJATA GROVER VS. DCIT REPORTED IN 74 TTJ 347(DEL) WHICH WAS IN THE CONTEX T OF 80HHC AND THE DECISION OF THE HONBLE MUMBAI HIGH COURT IN THE CASE OF REN AISSANCE JEWELLERY P LTD. VS. ITO REPORTED IN 289 ITR 65 (MUM) WHICH WAS IN THE C ONTEXT OF SECTION 10A. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 13. ON PERUSAL OF THE DECISION OF THE COORDINATE BE NCH OF THIS TRIBUNAL AS ALSO THE DECISION OF THE HONBLE MUMBAI HIGH COURT, IT I S NOTICED THAT THE FOREIGN EXCHANGE FLUCTUATION IS A REVENUE RECEIPT AND FORM S PART OF THE TURNOVER. IT IS ITA NO. 1535/DEL/07 4 FURTHER NOTICED THAT THE FOREIGN EXCHANGE FLUCTUATI ON IS DERIVED FROM THE ACTUAL EXPORT OF THE GOODS AND THE RECEIPT OF THE FOREIGN EXCHANGE WHICH IS PART OF THE TURNOVER. 14. IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT TH E CIT(A) WAS RIGHT IN HOLDING THAT THE FOREIGN EXCHANGE DIFFERENCE ON ACCOUNT OF EXPORT IS DIRECTLY RELATED TO AND IS DERIVED FROM THE PROFIT OF THE BUSINESS AND CONSEQUENTLY ENTITLED TO BE INCLUDED FOR THE PURPOSE OF COMMUTING THE DEDUCTION UNDER SECTION 80IB OF THE ACT. 15. IN THE CIRCUMSTANCES, THE FINDING OF THE CIT(A) ON THIS ISSUE STANDS UPHELD. 16. THE GROUND NO. 3 AND 4 OF THE INSTANT APPEAL ARE GENERAL IN NATURE AND IS NOT CALLED FOR ANY ADJUDICATION. 17. IN THE CIRCUMSTANCES, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21.8.20 09. (DEEPAK R SHAH) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 21.8.2009 SRB COPY OF THE ORDER IS FORWARDED TO:- 1. APPELLANT. 2. RESPONDENT. 3. CIT(A)-I , NEW DELHI 4. CIT 5. THE DR, ITAT, NEW DELHI BY ORDER DY. REGISTRAR, ITAT // TRUE COPY // ITA NO. 1535/DEL/07 5