The DCIT, Circle-4, Ahmedabad V. Harsha Engineers Pvt. Ltd., Ahmedabad

ITA 2186/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9141 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 09-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C PANDIT SR
• Assessee Lawyers: S N SOPARKAR
• Section: 10B; 80HH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI H.L. KARWA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER Z ITA NO.2186/AHD/2009 ASSESSMENT YEAR : 2006-07 THE DCIT, CIR-4, AHMEDABAD NAVJIVAN TRUST BLDG. OFF. ASHRAM ROAD, AHMEDABAD. VS. HARSHA ENGINEERS PVT. LTD., SARKHEJ BAVLA ROAD, AT/P.O. CHANGODAR, AHMEDABAD. PAN/GIR NO. : AAACH 4828C (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI M.C.PANDIT SR. A.R. RESPONDENT BY: SHRI S.N. SOPARKAR O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF THE LD.CIT(APPEALS)-VIII, AHMEDABAD, DATED 24.03.2009 T AKING THE SOLE GROUND OF APPEAL THAT THE LEARNED COMMISSIONER OF INCOME TAX( APPEALS) ERRED IN LAW AND FACTS AND DIRECTING THE LEARNED ASSESSING OFFIC ER TO ALLOW DEDUCTION UNDER SECTION 10B ON GAINS FROM FOREIGN EXCHANGE FLUCTUAT ION. 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS.11,93,42,872/- AND CLAIMED DEDUCTION UNDER SECTI ON 10B ON EXCHANGE RATE FLUCTUATION OF RS.17,10,678/-. WHILE MAKING THE ASS ESSMENT, THE LEARNED ASSESSING OFFICER DISALLOWED DEDUCTION UNDER SECTIO N 10B ON THE SAME. ITA NO .2186/AHD/2009 M/S.HARSHA ENGINEERS PVT. LTD. ASST.YEAR -2006-07 - 2 - 3. IN APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X(APPEALS) DELETED THE DISALLOWANCE ON EXCHANGE RATE FLUCTUATION OF RS .17,10,678/- OBSERVING THAT AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. GAMI EXPORTS 94 TTJ 557 HAS HELD THAT THE GAINS FROM FOREIGN EXCHANGE F LUCTUATION ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC. THEREFORE, CONSIDERI NG THE SAME ANALOGY, THE GAINS WOULD ALSO BE ELIGIBLE FOR DEDUCTION UNDER SE CTION 10B OF THE ACT. 4. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE ARGUED THAT THE ISSUE AT HAND IS NOW COVERED BY THE DECISION OF THI RD MEMBER OF THE TRIBUNAL IN THE CASE OF INCOME TAX OFFICER VS. BANYAN CHEMICALS LTD. (2009) 117 ITD 376. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO AGR EED WITH THE SUBMISSIONS OF THE LEARNED AUTHORISED REPRESENTATIV E OF THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE ASSESSEE EARNED EXCHANGE RATE FLUCTUATION OF RS.17, 10,678/- ON SALE PROCEEDS OF GOODS, WHICH WAS DISALLOWED DEDUCTION UNDER SECT ION 10B OF THE ACT BY THE LEARNED ASSESSING OFFICER. IN APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALLOWED DEDUCTION ON THE SAME. WE FIND THAT THE THIRD MEMBER OF THE TRIBUNAL IN THE CASE OF INCOME TAX OFFICER V S. BANYAN CHEMICALS LTD. (2009) 117 ITD 376, HAS HELD THAT THE GAIN ON ACCOU NT OF EXCHANGE FLUCTUATION RESULTS IN THE RECEIPT OF FOREIGN CURRENCY DUE TO E XPORT SALES MADE BY BY AN ASSESSEE. IT IS A PART OF THE RECEIPT OF SALE PROCE EDS CONVERTED IN INDIAN RUPEE AS HELD BY THE HONBLE GUJARAT HIGH COURT IN CIT VS . AMBA IMPAX (2006) 282 ITR 144 (GUJ.). THOUGH IT WAS A CASE UNDER SECTION 80HH C BUT THE PROVISIONS OF SECTION 10B ARE IN PARA MATERIA AND THEREFORE, THE DECISION WOULD APPLY ITA NO .2186/AHD/2009 M/S.HARSHA ENGINEERS PVT. LTD. ASST.YEAR -2006-07 - 3 - MUTATIS MUTANDIS TO SECTION 10B. RESPECTFULLY FOLLO WING THE SAME, WE FIND THAT IN THE INSTANT CASE, IT IS NOT THE FACT THAT THE AS SESSEE HAS RECEIVED SALE PROCEEDS OF EXPORTS AND DEPOSITED THE SAME IN ANY B ANK ACCOUNT AND EARNED EXCHANGE FLUCTUATION GAIN AT THE TIME OF WITHDRAWAL FROM THE SAID BANK ACCOUNT. ON THE OTHER HAND, THE FACTS OF THE CASE I S THAT THE ASSESSEE MADE AN EXPORT SALE AND RECORDED THE SALE VALUE AT THE VALU E MENTIONED IN THE INVOICE AND LATER ON WHEN IT ACTUALLY RECEIVED THE SALE PRO CEEDS DUE TO CHANGE IN RATE OF EXCHANGE THE ASSESSEE RECEIVED MORE SALE PROCEED S OF EXPORTS AND THEREBY EARNED EXCHANGE FLUCTUATION GAIN. THEREFORE, RESPE CTFULLY FOLLOWING THE ABOVE CITED DECISION OF THE TRIBUNAL, WE CONFIRMED THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND DISMISSED T HE GROUND OF APPEAL OF REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 09.09.2009. SD/- SD/- ( H.L. KARWA ) ( N.S. SAINI ) JUDICIAL MEMBER ACCO UNTANT MEMBER AHMEDABAD; DATED 09/09/ 2009 PARAS# COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VIII, AHMEDABAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD