DCIT CIR 3(3), MUMBAI V. SARLA POLYESTER LTD, MUMBAI

ITA 4371/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2053 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 20-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAVEEN GUPTA
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, E, MUMBAI BEFORE SHRI R V EASWAR, SENIOR VICE PRESIDENT AND SHRI R K PANDA, ACCOUNTANT MEMBER I T A NO: 4371/MUM/2009 (ASSESSMENT YEAR: 2005-06) DEPUTY COMMISSIONER OF INCOME TAX APPELLANT CIRCLE 3(3), MUMBAI VS M/S SARLA POLYESTER LTD., MUMBAI RESPONDENT (PAN: AABCS1322B) APPELLANT BY: SHRI NAVEEN GUPTA RESPONDENT BY: SHRI VIJAY MEHTA O R D E R R V EASWAR, SENIOR VICE PRESIDENT: THE FOLLOWING GROUNDS HAVE BEEN TAKEN IN THIS APPE AL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2005-06: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A), ERRED IN HOLDING THAT FOREIGN EXCHANGE FLUCTUATION GAIN OF RS.24,64,362/- IS IN THE NATURE OF EXPORT TURNOVER AND, THEREFORE, DESERVES TO BE INCLUDED IN THE ELIGIBLE PROFITS U/S.10B. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. AT THE TIME OF THE HEARING, IT WAS BROUGHT TO OU R NOTICE THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY T HE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. RACHNA UDHYOG (2010) 230 CTR (BOM) 72, IN WHICH IT WAS HELD THAT IF THE EXCH ANGE RATE DIFFERENCE 2 ARISES OUT OF AND IS DIRECTLY RELATED TO THE SALE T RANSACTION INVOLVING EXPORT OF GOODS OF THE INDUSTRIAL UNDERTAKING, THE SAME SHOULD BE CONSIDERED AS PROFITS DERIVED FROM THE INDUSTRIAL U NDERTAKING AND ALLOWED DEDUCTION UNDER SECTION 80-IB. A STATEMENT WAS MADE FROM THE BAR THAT IN THE PRESENT CASE THE EXCHANGE RATE FLUCTUATION GAIN ARISES OUT OF EXPORT SALES. IT WAS THUS CONTENDED THAT THE DECISION OF THE CIT(A) SHOULD BE CONFIRMED AND THE APPEAL OF TH E REVENUE SHOULD BE DISMISSED. ACCEPTING THE STATEMENT MADE FROM TH E BAR THAT THE EXCHANGE RATE DIFFERENCE ARISES OUT OF THE EXPORT S ALES AND NOTICING THAT THE CIT(A) HAS ALSO CONSIDERED THE SAME AS PAR T OF THE EXPORT TURNOVER, RESPECTFULLY FOLLOWING THE JUDGMENT OF TH E HONBLE BOMBAY HIGH COURT, WE CONFIRM THE DECISION OF THE CIT(A) A ND DISMISS THE APPEAL FILED BY THE REVENUE WITH NO ORDER AS TO COS TS. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST MAY 2010. SD/- SD/- (R K PANDA) (R V EASWAR) ACCOUNTANT MEMBER SENIOR VICE PRESI DENT MUMBAI, DATED 21 ST MAY 2010 SALDANHA COPY TO: 1. M/S SARLA POLYESTER LTD. 304, ARCADIA, 195, NARIMAN POINT MUMBAI 400 021 2. DCIT, CIRCLE 3(3) 3. CIT-3 4. CIT(A)-XXXII 5. DR E BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI