Smt. Bhupinder Kaur Purewal, Dharampur V. DCIT, Parwanoo

ITA 308/CHANDI/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95482 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-07-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 26-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Section: 143(3); 80IB; 147; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO.308/CHD/2015 ASSESSMENT YEAR: 2011-12 SMT. BHUPINDER KAUR PUREWAL, VS. DCIT C/O PA PINIONS CIRCLE KASAULI ROAD PARWANOO DHARAMPUR PAN NO. AASPP4053G (APPELLANT) (RESPONDENT) APPELLANT BY : SH. NEERAJ JAIN RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 12/08/2015 DATE OF PRONOUNCEMENT : 18/08/2015 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL IS FILED BY THE ASSESSE AGAINST THE OR DER OF THE LD.CIT(A) SHIMLA, H.P .DATED 08/01/2015 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE LD CIT(A) IS NOT JUSTIFIED IN CONFIRMIN G THE ASSESSMENT MADE U/S 143(3) / 147 OF THE INCOME-TAX ACT, 1961 WHICH IS BAD IN LAW AND INVALID. THE ASSESSMENT ORDER PASSED U/S 143(3) BE QUASHED. 2(A) THAT THE LD CIT(A) IS NOT JUSTIFIED IN CONFIRM ING THE DISALLOWANCE OF DEDUCTION U/S 80-IC OF THE INCOME-TAX ACT, 1961 AMOUNTING TO RS. 51,32,411/-. (B) THAT WITHOUT PREJUDICE TO ABOVE, THE APPELLANT DISPUTES THE QUANTUM OF DISALLOWANCE OF DEDUCTION U/S 80-IC. 3. THAT THE LD CIT(A) IS NOT JUSTIFIED IN CONFIRM ING THE DISALLOWANCE OF DEDUCTION U/S 80IC ON THE SHORT & EXCESS AMOUNTING TO RS. 3,724 /- AND CURRENCY FLUCTUATION AMOUNTING TO RS. 14,489/- B) THAT WITHOUT PREJUDICE TO ABOVE, THE APPELLANT DISPUTES THE QUANTUM OF DISALLOWANCE OF DEDUCTION U/S 80-IC. 2 WE HAVE HEARD LD. REPRESENTATIVES OF BOTH PARTIES A ND PERUSED THE MATERIAL ON RECORD. 3. WE FIND THAT FOR THE IMPUGNED A.Y, RETURN DECLAR ING INCOME OF RS.55,57,740/- WAS E-FILED BY THE ASSESSEE ON 20.09 .2011 CLAIMING DEDUCTION U/S 80IC OF RS.17,30,804/- AT 25% OF ITS ELIGIBLE PROF ITS . LATER THE RETURN WAS REVISED ON 24.03.2012 , CLAIMING DEDUCTION U/S 80IC OF RS.6 8,43,215/- @ 100% OF ELIGIBLE PROFIT AND THEREBY DECLARING TOTAL INCOME OF RS.4,2 5,530/- . ASSESSMENT WAS FRAMED AT AN INCOME OF RS.55,75,950/-AFTER RESTRICT ING DEDUCTION U/S 80IC TO 25% OF THE ELIGIBLE PROFITS, ADDED RS.17,10,804/-AND D ISALLOWING CLAIM OF 80 IC ON CURRENCY FLUCTUATION AND SHORT AND EXCESS ACCOUNT, AMOUNTING TO RS.18,213/- ,VIDE ORDER DT.31-01-2014. THE CIT (A), VIDE HER OR DER DT. 08/01/2015 , DISMISSED THE APPEAL OF THE ASSESSE AND UPHELD THE DISALLOWAN CES MADE BY THE AO. 4. AGGRIEVED BY THE SAME, THE ASSESSEE HAS FILED TH IS APPEAL BEFORE US. 5. BRIEFLY STATED THE FACTS RELATING TO THE CASE AR E THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF PRECISI ON EQUIPMENT AT TEHSIL KASAULI, DIST- SOLAN(HP) SINCE 01/04/1963 AS CERTIF IED IN F.NO. 10CCB PLACED AT P.B. PAGE NO. 13-17. ON 01/10/2004, THE ASSESSEE UN DERTOOK SUBSTANTIAL EXPANSION OF ITS UNDERTAKING AND CLAIMED AND WAS AL LOWED 100% DEDUCTION OF ITS PROFITS U/S 80IC ,FOR FIVE YEARS,FROM AY 2005-0 6 TO AY 2009-10. IN THE FINANCIAL YEAR 2010-11 THE ASSESSEE UNDERTOOK ANOTHER SUBSTAN TIAL EXPANSION AND CLAIMED 100% DEDUCTION OF ITS ELIGIBLE PROFITS U/S 80IC ON THE GROUND THAT THE INITIAL YEAR ,FOR THE PURPOSE OF DETERMINING RATE OF ALLOWABLE DEDUCTION U/S 80 IC,HAD NOW BECOME A.Y 11-12,I.E THE IMPUGNED A.Y A ND THEREFORE THE ASSESSE WAS ELIGIBLE FOR 100% DEDUCTION OF ITS PROFITS FOR THE IMPUGNED A.Y . ON ASSESSMENT, THE ASSESSE WAS DENIED THE 100% DEDUC TION AND THE SAME WAS RESTRICTED TO 25%.IN APPEAL THE RESTRICTION OF DED UCTION TO 25% OF ELIGIBLE PROFITS 3 WAS UPHELD ON THE GROUND THAT IT WOULD BE INAPPROP RIATE TO ALLOW REFIXING OF INITIAL YEAR AFTER SUBSTANTIAL EXPANSIONS, ONCE I NITIAL YEAR HAS BEEN FIXED U/S 80IC ON ACCOUNT OF COMMENCEMENT OF BUSINESS OR ON S UBSTANTIAL EXPANSION WITHIN A WINDOW OF 07-01-2003 TO 01-04-2012 .IT WAS FURTHER HELD THAT IT WOULD BE INAPPROPRIATE TO RETAIN A CAP OF 10 YEARS PERMITTIN G SEVERAL INITIAL ASSESSMENT YEARS FOR CLAIMING 100% DEDUCTION U/S 80 IC IN THE STATE OF HIMACHAL PRADESH. 6. FURTHER THE ASSESSE HAD CLAIMED DEDUCTION U/S 80 IC ON FOREIGN EXCHANGE FLUCTUATION AND SHORT AND EXCESS ACCOUNT WHICH WAS DENIED IN THE ABSENCE OF DULY EVIDENCED NEXUS BETWEEN PROFITS ON THE SAME AN D MANUFACTURING ACTIVITY OF INDUSTRIAL UNDERTAKING. 7. IN APPEAL BEFORE US THE COUNSEL OF THE ASSESSEE PREFERRED NOT TO PRESS GROUND NO. 1 , THEREFORE GROUND NO. 1 IS DISMISSED AS NOT PRESSED. 8. GROUND NO. 2 (A) AND (B) RELATE TO RESTRICTION O F DEDUCTION U/S 80IC TO 25% OF THE PROFITS AS AGAINST 100% CLAIMED BY THE ASSES SEE ,RESULTING IN DISALLOWANCE OF DEDUCTION U/S 80-IC AMOUNTING TO RS. 51,32,411/- . 9. THE ONLY ISSUE ARISING IN THIS GROUND IS WHETHER THE ASSESSEE IS ENTITLED TO CLAIM 100% DEDUCTION U/S 80IC FROM THE AY IN WHICH SECOND SUBSTANTIAL EXPANSION WAS UNDERTAKEN BY IT. IN OTHER WORDS CAN THERE BE MORE THAN ONE INITIAL YEAR AS PER THE PROVISIONS OF SECTION 80IC OF THE INCOME TAX ACT,1961. .DURING THE COURSE OF HEARING BEFORE US,IT WAS BROU GHT TO THE NOTICE OF THE BENCH THAT THE CASE IS COVERED BY THE DECISION OF T HE CHANDIGARH BENCH IN THE CASE OF M/S HYCRON ELECTRONICS VS. ITO IN ITA NO. 7 98/CHD/2012 DT. 27/05/2015. 10. WE HAVE HEARD THE REPRESENTATIVES OF BOTH THE P ARTIES AND PERUSED THE ORDERS OF AUTHORITIES BELOW AND ALSO THE DOCUMENTS PLACED BEFORE US. 4 11. WE FIND THAT THE CASE IS SQUARELY COVERED BY TH E DECISION IN THE CASE OF M/S HYCRON ELECTRONICS VS. ITO IN ITA NO. 798/CHD/2 012 DT. 27/05/2015 WHEREIN IT HAS BEEN CLEARLY HELD AT PARA 33,35 &39 THAT : 33. EVEN IF THE ABOVE CONTROVERSY IS IGNORED REGARD ING EXISTING UNIT, THE INTENTION OF THE LEGISLATURE BECOME ABSOL UTELY CLEAR WHEN SUB SECTION (2) IS READ ALONGWITH SUB-SECTION (3) O F SECTION 80IC. AS NOTED EARLIER, SUB SECTION (2) IS ENABLING PROVISIO N WHICH PROVIDES FOR DEDUCTION IN CERTAIN KIND OF UNDERTAKINGS, I.E. NEW UNIT SET UP OR THE EXISTING UNITS WHICH CARRIES OUT SUBSTANTIAL EX PANSION DURING THE PARTICULAR WINDOW PERIOD WHICH ARE GIVEN IN CLAUSES (I), (II) & (III) OF SUB SECTION (2). THE SUB SECTION (3) PROVIDES FOR R ATES OF DEDUCTION. IT IS USEFUL TO NOTE THAT CLAUSE (I) OF SUB SECTION (3) PROVIDES FOR 100% DEDUCTION FOR A PERIOD OF 10 ASSESSMENT YEARS IN CASES COVERED BY SUB CLAUSE (I) & (III) OF CLAUSE (A) AND SUB CLAUSE (I) & (III) OF CLAUSE (B). NOW SUB CLAUSE (I ) AND (III) OF CLAUSE (A) OF SUB SECTION (2) REFERS TO THE WINDOW PERIOD IN CASE OF STATE OF SIKKIM, NORTH-EASTERN STATES WHEREAS SUB CLAUSE (II) REFERS TO THE WINDOW PERIOD IN CASE OF STATE OF HIMACHAL PRADESH AND STA TE OF UTTARANCHAL. SIMILARLY, SUB CLAUSE (I) & (III) OF CLAUSE (B) REFERS TO WINDOW PERIOD IN CASE OF STATE OF SIKKIM AND NORTH- EASTER STATES WHEREAS SUB CLAUSE (II) REFERS TO THE WINDOW PERIOD IN CASE OF STATE OF HIMACHAL PRADESH AND UTTARANCHAL. NOW CLAUSE (I I) OF SUB SECTION (3) PROVIDES FOR 100% DEDUCTION ON SUCH PRO FITS FOR FIVE ASSESSMENT YEARS COMMENCING WITH INITIAL ASSESSMENT YEAR AND THEREAFTER 25% (OR 30% WHERE THE ASSESSEE IS A COM PANY) OF THE PROFITS AND GAINS. THEREFORE, IT IS ABSOLUTELY CLEAR THAT IN CASE OF STATE OF SIKKIM AND NORTH-EASTERN STATES, LEGISLATU RE WAS VERY CLEAR THAT IN CASE OF NEW UNDERTAKING OR IN CASE OF SUBST ANTIAL EXPANDED UNDERTAKING DEDUCTION IS TO BE ALLOWED @ 100% FOR W HOLE OF THE TEN YEARS WHEREAS IN CASE OF STATE OF HIMACHAL PRADESH AND UTTARANCHAL THE DEDUCTION WAS TO BE ALLOWED @ 100% ONLY FOR FIRST FIVE YEARS AND THEREAFTER IT WAS ONLY 25%. IF THE LEGISLATURE WANTED TO EXTEND THE BENEFIT IN THE CASE OF SUBSTANTIAL EX PANSION SEPARATELY THEN THE RATE OF DEDUCTION IN THE CLAUSE (I) & (II) OF SUB SECTION (3) WOULD NOT HAVE BEEN DIFFERENT I.E. 100% FOR WHOLE OF THE 10 YEARS IN CASE OF STATE OF SIKKIM & NORTH-EASTERN STATES UNDER SUB CLAUSE (I) AND FOR THE STATE OF HIMACHAL PRADESH & UTTARANCHAL UNDER SUB CLAUSE (II) 100% FOR FIRST FIVE YEARS AND THEREAFTER 25% FOR NEXT FIVE YEARS. THE CONCEPT OF SUBSTANTIAL EXPAN SION REMAINS SAME UNDER SUB SECTION (2) FOR BOTH TYPES OF STATES I.E STATE OF SIKKIM AND NORTH-EASTERN STATES AND STATE OF HIMACH AL PRADESH AND UTTRANCHAL. IF THE EXTENDED BENEFIT OF SUBSTANTIAL EXPANSION WAS TO BE SEPARATELY ALLOWED IN CASE OF STATE OF HIMACHAL PRADESH AND STATE OF UTTARANCHAL, THEN MEANING OF SUBSTANTIAL E XPANSION AS GIVEN UNDER SUB SECTION (2) WHICH IS SAME FOR THE S TATE OF SIKKIM AND NORTH-EASTERN STATES BECOME REDUNDANT. AS NOTE D EARLIER, THE PROVISION CANNOT BE INTERPRETED IN SUCH A WAY THAT PART OF THE SECTION BECOMES REDUNDANT OR OTIOSE. THEREFORE, WHATEVER DOUBTS MAY BE THERE IN SUB SECTION (2) WHEN IT IS READ WIT H SUB SECTION (3), THOSE DOUBTS ARE TOTALLY REMOVED AND IT BECOME ABSO LUTELY CLEAR THAT RATE OF DEDUCTION HAS TO BE 100% FOR FIRST 5 YEARS AND 25% THEREAFTER . 35. FURTHER, SUB SECTION (6) PROVIDES THAT IN NO CA SE THE TOTAL PERIOD OF DEDUCTION COULD EXCEED THE PERIOD OF 10 Y EARS INCLUDING DEDUCTION AVAILED UNDER SUB SECTION (4) OF SECTION 80IB AND SECTION 10A AND 10B. IT WAS CONTENDED BEFORE US THAT SINCE THERE IS N O RESTRICTION IN CARRYING OUT OF SUBSTANTIAL EXPANSIO N IN THE NEW UNITS AND AS SUCH SUBSTANTIAL EXPANSION CAN BE CARRIED OU T ANY NUMBER 5 OF TIMES. IF THIS INTERPRETATION IS ACCEPTED THEN SUB SECTION (6) WOULD BE RENDERED OTIOSE OR MEANINGLESS BECAUSE IF A UNIT WAS SET UP ON THE COMMENCEMENT OF THIS SECTION AND THE SAM E CLAIMS DEDUCTION @ 100% AND LATER ON EVERY FIVE YEARS A SU BSTANTIAL EXPANSION IS CARRIED OUT THEN ACCORDING TO THE INTE RPRETATION CANVASSED ON BEHALF OF THE ASSESSEE, SUCH UNIT WOUL D AGAIN BECOME ENTITLED TO 100% DEDUCTION FOR ANOTHER FIVE YEARS AND FURTHER BLOCK OF FIVE YEARS EVERY TIME SUBSTANTIAL EXPANSION IS CARRIED OUT. IF THIS INTERPRETATION IS ADOPTED THE N DEDUCTION WOULD BECOME ALMOST PERCEPTUAL AS LONG AS THE ASSESSEE HA S CARRIED OUT SUBSTANTIAL EXPANSION BUT IN THAT CASE SUB SECTION (6) WOULD LOOSE ITS MEANING. SUCH AN UNLIMITED PERIOD OF DEDUCTION WOULD NOT BE IN CONSONANCE OF LAW. AT THE COST OF REPETITION, WE WOULD LIKE TO EMPHASIZE THAT NO PRINCIPLE OF INTERPRETATION CAN B E ADOPTED WHICH LEADS TO A SITUATION WHERE A PARTICULAR PART OF THE SECTION BECOMES TOTALLY REDUNDANT. IN FACT THOUGH IT WAS C ONTENDED THAT IN THE PRESENT CASE (I.E. IN CASE OF HYCRON ELECTRO NICS) DEDUCTION HAS BEEN CLAIMED ONLY OF 10 YEARS BUT ON THE DATE O F HEARING SOME OTHER APPEALS WERE ALSO LISTED WHEREIN THE DEDUCTIO N WAS CLAIMED FOR MORE THAN 10 YEARS ADOPTING THE SAME CONTENTION WHICH HAS BEEN MADE BEFORE US. IN CASE OF M/S MAHAVIR INDUSTR IES (ITA NO. 127/CHD/2011 AND ITA NO. 791/CHD/2012) THOUGH THOSE CASES WERE ADJOURNED BECAUSE SOME OTHER ISSUES WERE ALSO THERE BUT IN THOSE TWO CASES ASSESSEE HAD COMMENCED THE OPERATION ON 8 .5.1997 AND CLAIMED DEDUCTION U/S 80IB FROM ASSESSMENT YEARS 1 998-99 TO 2005- 06. LATER ON, SUBSTANTIAL EXPANSION WAS CARRIED OUT IN ASSESSMENT YEAR 2005-06 AND ON THE BASIS OF THE CONTENTION THA T ASSESSEE IS ALLOWED TO CARRY OUT ANY NUMBER OF EXPANSIONS, DED UCTION WAS CLAIMED FOR THE 12 TH YEAR FOR ASSESSMENT YEAR 2009-10 (WE MAY CLARIFY THAT REFERENCE TO THESE CASES IS MADE BECAU SE OF PARTICULAR CONTENTION AND WE ARE NOT EXPRESSING ANY OPINION ON THE MERITS OF THESE APPEALS HERE). THEREFORE, THE CONTENTION OF THE ASSESSEE THAT ANY NUMBER OF EXPANSIONS ARE ALLOWED IS NOT POSSIBL E IN VIEW OF THE RESTRICTION GIVEN IN SECTION 80IC(6). 39. LASTLY, IT WAS CONTENDED THAT INITIAL ASSESSMEN T YEAR AS DEFINED IN CLAUSE (V) OF SUB SECTION (8) OF SECTION 80IC USES THE EXPRESSION OR THEREFORE, IT CAN BE CONSTRUED THAT IT RELATES TO BOTH SITUATIONS SEPARATELY I.E. FOR NEW UNIT AND SUBSTAN TIAL EXPANDED UNIT. WE FIND NO FORCE IN THIS CONTENTION. THE IN ITIAL ASSESSMENT YEAR HAS BEEN DEFINED AND THE EXPRESSION OR HAS B EEN USED IN RESPECT OF NEW UNITS BY STATING COMMENCES OPERATIO N OR COMPLETE SUBSTANTIAL EXPANSION. HERE THE EXPRESSI ON OR IS TO BE READ AS A MUTUALLY EXCLUSIVE EXPRESSION WHICH REFER S TO A PARTICULAR SITUATION BY EXCLUDING THE OTHER SITUATION. THEREF ORE, INITIAL ASSESSMENT YEAR WOULD CLEARLY COMMENCE EITHER ON COMMENCEMENT OF OPERATION OR AT COMPLETION OF SUBST ANTIAL EXPANSION OF EXISTING UNIT. IN ANY CASE THE WORD INITIAL CANNOT BE USED TWICE BY REFERRING TO SERIES OF EVENTS . THIS CAN BE UNDERSTOOD WITH A VERY SIMPLE EXAMPLE. LET US SAY A PERSON A PASSES OUT HIS EXAMINATION OF LLB AND GET EMPLOYED AS LEGAL OFFICE R IN AN ORGANIZATION. LATER ON, HE QUITS THE JOB AND STARTS THE PRACTICE IN LEGAL PROFESSION AND ULTIMATELY HE IS ELEVATED AS A JUDGE. THEN IN SUCH A SITUATION IT CANNOT BE SAID THAT INITIALLY A WAS WORKING IN A ORGANIZATION AND THEN INITIALLY HE WAS IN THE PROFE SSION AND THEN ELEVATED AS A JUDGE. INITIALLY CAN BE USED ONLY ONC E AS A MATTER OF USAGE OF ENGLISH LANGUAGE. THEREFORE, READING OF THE ABOVE PROVISION CLEARLY SHOWS THAT INTENTION OF THE LEGIS LATURE WAS VERY CLEAR TO ALLOW 100% FOR FIRST FIVE YEARS IN CASE OF UNITS SITUATED IN THE STATE OF HIMACHAL PRADESH (SINCE ALL THE CASES BEFO RE US ARE SITUATED IN THE STATE OF HIMACHAL PRADESH) AND THER EAFTER 25% DEDUCTION FOR ANOTHER FIVE YEARS ON THE NEW UNITS O R THE EXISTING UNITS WHERE SUBSTANTIAL EXPANSION WAS CARRIED OUT. 6 12. SINCE THE ISSUE AS WELL AS CONTENTIONS REMAIN T HE SAME AS DECIDED IN THE CASE OF M/S HYCRON ELECTRONICS (SUPRA) THE ISSUE IS DECIDED AGAINST THE ASSESSE .CONSEQUENTLY ,THE DEDUCTION U/S 80IC FOR THE IMPUG NED AY IS RESTRICTED TO 25% OF THE PROFITS AND THE DISALLOWANCE OF DEDUCTION U/ S 80 IC OF RS. 51,32,411/- IS THEREBY UPHELD. 13. THIS GROUND OF APPEAL OF THE ASSESSEE IS THEREF ORE DISMISSED. 14. IN GROUND NO. 3(A) &(B) THE ASSESSEE HAS AGITAT ED THE DISALLOWANCE OF DEDUCTION U/S 80IC ON THE SHORT AND EXCESS AMOUNTIN G TO RS. 3,724/- AND CURRENCY FLUCTUATION AMOUNTING TO RS. 14,489/-. 15. DURING THE IMPUGNED AY, THE ASSESSEE HAD CREDIT ED INCOME OF RS. 14,489/- AS CURRENCY FLUCTUATION & OF RS. 3,724/- A S SHORT AND EXCESS AMOUNT AND CLAIMED DEDUCTION U/S 80IC ON THE SAME. REGARDING CURRENCY FLUCTUATION ,THE ASSESSEE CLAIME D THAT THE SAME RELATED TO ITS PURCHASE & SALE TRANSACTION UNDERTAKEN DURING T HE COURSE OF CARRYING ON BUSINESS. HE CLAIMED THAT THE SAME DIRECTLY RELATED TO THE BUSINESS OF THE ASSESSEE AND WAS DIRECTLY DERIVED.FROM THE MANUFACT URING ACTIVITIES OF THE INDUSTRIAL UNDERTAKING. PLACING RELIANCE ON A NUMBE R OF DECISIONS THE ASSESSEE CLAIMED THAT DEDUCTION U/S 80IC ON EXCHANGE FLUCTUA TION WAS ALLOWABLE. 16. AS REGARDS SHORT AND EXCESS ACCOUNT ,THE ASSESS EE CONTENDED THAT THEY WERE SMALL AMOUNTS WRITTEN OFF ON ACCOUNT OF PAYMEN T RECEIVED SHORT FROM THE DEBTORS OR SHORTAGE IN RECEIPT OF MATERIAL FROM CRE DITORS. HE CLAIMED THAT THE AMOUNT RELATED TO BUSINESS TRANSACTIONS AND HENCE D EDUCTION U/S 80IC WAS ALLOWABLE. 7 17. THE AO DENIED THE CLAIM, HOLDING THAT BOTH THE INCOME ON ACCOUNT OF CURRENCY FLUCTUATION AND SHORT AND EXCESS ACCOU NT CANNOT BE SAID TO BE DIRECTLY DERIVED FROM MANUFACTURING ACTIVITY OF TH E INDUSTRIAL UNDERTAKING. IN APPEAL THE CIT(A) DISALLOWED THE CLAIM BY HOLDIN G AT PARA 7 PAGE 14 AND 15 OF HER ORDER. IT IS UNDISPUTED THAT ONLY PROFITS AND GAINS PERT AINING TO MANUFACTURING ACTIVITY HAS TO BE CONSIDERED FOR DEDUCTION U/S 80IC. THE AS SESSEE IN PRESENT CASE HAS FAILED TO ESTABLISH THAT THE PROFIT ON ACCOUNT OF F LUCTUATION ON FOREIGN EXCHANGE IS DIRECTLY DERIVED FROM MANUFACTURING ACTIVITY OF IND USTRIAL UNDERTAKING. THUS IN ABSENCE OF DULY EVIDENCED NEXUS BETWEEN PR OFITS ON FOREIGN EXCHANGE FLUCTUATION AND MANUFACTURING ACTIVITY OF INDUSTRIA L UNDERTAKING, THE ACTION OF A.O. IS UPHELD AND APPEAL IS DISMISSED. SIMILARLY T HE SHORT AND EXCESSES ARE HAVING ANY NEXUS WITH THE PROFITS OF MANUFACTURING HAS TO BE DULY EVIDENCED BY ASSESSEE WHICH IN THE PRESENT CASE ASSESSEE HAS FAILED TO DO . THUS THERE IS NO INFIRMITY IN THE ACTION OF THE A.O. AND THIS GROUND OF ASSESSEE IS D ISMISSED. 18. WE HAVE HEARD THE REPRESENTATIVES OF BOTH THE P ARTIES AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND THE DOCUMENTS P LACED BEFORE US. 19. WE FIND THAT A SIMILAR ISSUE AROSE IN THE CASE OF M/S HYCRON ELECTRONICS VS. ITO IN ITA NO. 798/CHD/2012 DT. 27/05/2015, WH EREIN IT WAS HELD AT PARA 61 OF THE ORDER: 61. AS FAR AS THE AMOUNT RECEIVED ON FOREIGN EXCHA NGE FLUCTUATION IS CONCERNED, THOUGH IN CASE OF M/S ANS YSCO VS. ACIT(SUPRA) IT WAS HELD THAT GAIN FROM FOREIGN EXCH ANGE FLUCTUATIONS WAS DIRECTLY RELATED TO THE BUSINESS A CTIVITY THEREFORE ASSESSEE WAS ENTITLED TO DEDUCTION. HOWEVER THE DET AILS ARE NOT INCORPORATED IN THE ASSESSMENT ORDER OR IN THE IMPU GNED ORDER, THEREFORE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF ASSESSING OFFICER WITH A DIRECT ION THAT IF THE SAME RELATES TO THE BUSINESS TRANSACTION ON REVENUE ACCO UNT, THEN DEDUCTION MAY BE ALLOWED ON THIS AMOUNT, OTHERWISE THE ISSUE MAY BE DECIDED IN ACCORDANCE WITH LAW. AS FAR AS THE IS SUE REGARDING MISC. INCOME AND SUNDRY CREDIT BALANCE WRITTEN BAC K IS CONCERNED, THIS ISSUE WAS NOT SERIOUSLY PRESSED BEF ORE US, THEREFORE, ACTION OF THE LD. CIT(A) IN RESPECT OF THESE TWO IT EMS ARE ALSO CONFIRMED. THEREFORE FOLLOWING THE SAME WE SET ASIDE THE ORDER OF LD. CIT (A) AND REMIT BOTH THE MATTER BACK TO THE FILE OF AO WITH SIMILAR DIRE CTION AS CONTAINED IN PARA 61 OF 8 THE ORDER IN THE CASE OF M/S HYCRON ELECTRONICS VS. ITO IN ITA NO. 798/CHD/2012 DT. 27/05/2015 REPRODUCED ABOVE. 20. IN THE RESULT APPEAL IS PARTLY ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18/08/2015 SD/- SD/- (T.R. SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18/08/2015 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR