The DCIT, Circle-2(1)(2), Ahmedabad V. Mastek Ltd., Ahmedabad

ITA 3398/AHD/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5881 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 18-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: S N SOPARKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) ITA. NO: 3398/AHD/2014 (ASSESSMENT YEAR: 2006-07) DY. COMMISSIONER OF INCOME TAX, CIRCLE-2(1)(2), AHMEDABAD V/S MASTEK LTD. 804/805 PRESIDENT HOUSE, OPP. C.N. VIDYALAYA, AMBAWADI, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACM9908Q APPELLANT BY : SHRI LALIT P JAIN, SR. D. R. RESPONDENT BY : SHRI S. N. SOPARKAR, A.R. ( )/ ORDER DATE OF HEARING : 28 -11-201 8 DATE OF PRONOUNCEMENT : 11 -01-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)- VIII, AHMEDABAD DATED 19.09.2014 PERTAINING TO A.Y. 2006-07 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 3398 /AHD/2014 . A.Y. 2006-0 7 2 1.THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF DEDUCTION U/S 10A OF THE ACT AMOUNTING TO RS.1,03,8 2,636/- MADE BY AO ON ACCOUNT OF THE INCOME EARNED AS FOREIGN EXCHANGE FL UCTUATION GAIN WHICH IS NOT PROFIT DERIVED FROM EXPORT BUSINESS. 2. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO COMPUTE THE INCOME/LOSS OF EACH ELIGIBLE UNIT AFTER ALLOWING TH E DEDUCTION U/S 10A, WHICH IS AGAINST THE CLARIFICATION ISSUED BY CBDT CIRCULAR N O. 7/2013 DATED 16-07-2013. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT (A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO TH E ABOVE EXTENT. 2. IN THIS CASE, ASSESSEE COMPANY IS ENGAGED IN THE EX PORT OF THE SOFTWARE DEVELOPMENT, UPGRADATION AND MIGRATION. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE IN THE P&L ACCOUNT HAS CREDITED 'OTHER INCOME' APAR T FROM 'SALES INCOME' HAS CREDITED OTHER INCOME OF RS. 1,03,82,636/- AND THE SAID OTHER INCOME INCLUDED INCOME ON ACCOUNT OF FOREIGN EXCHANGE GAIN APART FR OM SOME OTHER INCOME. IT WAS FURTHER OBSERVED THAT WHILE COMPUTING THE DEDUC TION U/S. 10A OF THE ACT, THE ASSESSEE HAD REDUCED FROM ELIGIBLE PROFIT, 'OTH ER INCOME' EXCEPT INCOME CREDITED ON ACCOUNT OF GAIN ON FOREIGN EXCHANGE GAI N IN RESPECT OF MAHAPE UNIT OF RS. 1,03,82,636/-. THEREFORE, LD. A.O. HELD THE DEDUCTION U/S. 10A OF THE ACT ON OTHER INCOME INCLUDING INCOME ON ACCOUNT OF GAIN ON FOREIGN EXCHANGE IS NOT ALLOWABLE AND ACCORDINGLY COMPUTED THE ELIGIBLE DEDUCTION U/S. 10A. ITA NO. 3398 /AHD/2014 . A.Y. 2006-0 7 3 4. AGAINST THE SAID ADDITION, ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO GRANTED RELIEF TO THE ASSESSEE. 5. NOW, REVENUE HAS COME BEFORE US. 6. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED. AFTER HEARING BOTH THE SIDES, WE HAVE COME TO THE CONCLUSION THAT ISSU E STOOD DECIDED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF CO-ORDINATE BENCH IN I TA NO. 2762/AHD/2003 AND ITA NO. 09/AHD/2004. IN THAT MATTER, IT WAS HEL D THAT AS REGARD ON INCOME OF EXCHANGE RATE FLUCTUATION, THE HONBLE GU JARAT HIGH COURT IN THE CASE OF CIT VS. AMBA IMPEX (SUPRA), IT IS HELD THA T MERELY BECAUSE AN AMOUNT WAS RECEIVED IN THE YEAR SUBSEQUENT TO THE YEAR OF EXPORT BY WAY OF EXCHANGE RATE DIFFERENCE, IT DOES NOT NECESSARILY ALWAYS FOL LOW THAT THE SAME WAS NOT RELATABLE TO THE EXPORTS MADE. 7. IN THE CASE OF PR. CIT VS. ASAHI SONGWON COLOURS LT D., HONBLE GUJARAT HIGH COURT HAS DECIDED MATTER IN FAVOUR OF ASSESSEE THAT THE EXACT REMITTANCE IN CONNECTION WITH SUCH EXPORT WOULD DEPEND ON THE PRE CISE EXCHANGE RATE AT THE TIME WHEN AMOUNT IS REMITTED. THE RECEIPT WOULD BE ON ACCOUNT OF EXPORT MADE AND THEREFORE, THE FLUCTUATION THEREOF MUST AL SO BE SAID TO ARISE OUT OF EXPORT BUSINESS. THE ASSESSEE HAS GIVEN SUFFICIENT DETAILS TO PROVE THAT FOREIGN EXCHANGE FLUCTUATIONS SHOWN BY IT IN BOOKS OF ACCOU NTS ARE ARISING DUE TO EXPORT MADE BY IT. IT HAS ALSO SUBMITTED PAPER-WIS E WORKING OF THE FLUCTUATION AND SAME ARE CLEARLY RELATABLE TO THE EXPORT MADE B Y IT. BECAUSE ISSUE IS COMMON, WHATEVER HAVE BEEN DECIDED BY THE HONBLE G UJARAT HIGH COURT. ITA NO. 3398 /AHD/2014 . A.Y. 2006-0 7 4 8. THUS, RESPECTFULLY FOLLOWING THE AFORESAID JURISDIC TIONAL HIGH COURT ORDER, WE ARE OF THE CONSIDERED OPINION THAT THIS CASE DOES N OT REQUIRE ANY KIND OF INTERFERENCE AT OUR END AS LD. CIT(A) HAS PASSED RE ASONED ORDER. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON 11 - 01- 2019 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 11 /01/2019 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