DCIT, Chandigarh V. M/s Ansysco, Chandigarh

ITA 486/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8914 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 04-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: HARDAYAL SINGH
• Section: 80IB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.486/CHD/2016 (ASSESSMENT YEAR : 2012-13) THE D.C.I.T., VS. M/S ANSYSCO, SUNRISE COMPLEX, CIRCLE I(1), SCO 74-75, SECTOR 8-C CHANDIGARH. CHANDIGARH. PAN: AACFA7228C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. MITTAL, DR RESPONDENT BY : S/SHRI HARDAYAL SINGH & ROHIT GUPTA DATE OF HEARING : 16.11.2016 DATE OF PRONOUNCEMENT : 16.12.2016 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAIN ST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, CHANDIGARH DATED 29.2.2016 FOR ASSESSM ENT YEAR 2012-13. 2. GROUND NO.1 RAISED ,BEING GENERAL IN NATURE NEE DS NO ADJUDICATION. 3. GROUND NO. 2 RAISED BY THE REVENUE READS AS UNDE R: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND 2 IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING DEDUCTI ON U/S 80IC WITHOUT APPRECIATING THE FACT THAT- A) THE ASSESSEE HAS SIMPLY UNDERTAKEN PACKAGING OF DGX COMPOUND, STANDARDIZATION, OF COOLANT AND FORMULATI NG OF PVC. B) IN THE PROCESS UNDERTAKEN BY THE ASSESSEE, THERE IS NO CHANGE IN THE PRODUCT AND THE ACTIVITY OF THE ASSES SEE DOES NOT FALL WITHIN THE PARAMETERS OF THE DEFINITION OF WORD 'MANUFACTURE'. 5. IN THIS GROUND THE REVENUE HAS CHALLENGED THE ALLOWANCE OF DEDUCTION UNDER SECTION 80IC OF THE AC T BY THE CIT(A),TO THE ASSESSEE ON THE MANUFACTURING AC TIVITY UNDERTAKEN BY IT. 6. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURIN G AND SELLING OF COOLANT, PVC COMPOUND, AND EXPANSION BOT TLE KITS. THE MANUFACTURING FACILITY OF THE ASSESSEE IS LOCATED AT PARWANOO AND THE ASSESSEE WAS ENTITLED TO BENEFI TS UNDER SECTION 80IA OF THE INCOME TAX ACT, 1961, FR OM ASSESSMENT YEAR 1996-97 ONWARDS IN RESPECT OF PROF ITS FROM THE BUSINESS OF MANUFACTURING COOLANT, PVC COMPOUND AND SEALANTS. IN THE YEAR 2003 THE ASSESSE E UNDERTOOK SUBSTANTIAL EXPANSION OF ITS MANUFACTURIN G FACILITIES MAKING IT ELIGIBLE TO CLAIM DEDUCTION UN DER SECTION 80IC OF THE ACT. THIS IS THE 9 TH YEAR OF CLAIM OF THE ASSESSEE. DURING ASSESSMENT PROCEEDINGS THE AO DISCUSSED THE MANUFACTURING ACTIVITIES IN RESPECT O F THE 3 VARIOUS PRODUCTS MADE BY THE ASSESSEE AND DISALLOWE D THE ENTIRE DEDUCTION UNDER SECTION 80IC CLAIMED BY THE ASSESSEE BY HOLDING THAT THE ASSESSEE WAS NOT ENGAG ED IN ANY MANUFACTURING ACTIVITY. THE RELEVANT FINDINGS O F THE AO ARE AT PARA 5-5.4 FOR OF HIS ORDER. LD.CIT (APPE ALS) ALLOWED THE ASSESSEES APPEAL BY FOLLOWING THE DEC ISION OF THE ITAT IN THE ASSESSEES OWN CASE IN THE PRECEDIN G YEAR, I.E. ASSESSMENT YEAR 2011-12. 7. AGGRIEVED BY THE SAME THE REVENUE FILED THE PRESENT APPEAL BEFORE US. 8. BEFORE US LD.AR ARGUED THAT IN ALL EARLIER YEAR S THE CLAIM OF THE ASSESSEE HAD BEEN ALLOWED EITHER B Y THE AO OR THE CIT(A) AND FURTHER UPHELD BY THE ITAT. L D. AR STATED THAT IN THE FIRST YEAR OF CLAIM I.E. A.Y. 20 04-2005, THE CLAIM WAS DULY ACCEPTED BY THE ASSESSING OFFICE R. LD.AR THEREAFTER STATED THAT FROM ASSESSMENT YEAR 2 008- 09 TO ASSESSMENT YEAR 2011-12 THE CLAIM UNDER SECTI ON 80IC HAD BEEN DENIED TO THE ASSESSEE BUT IN ALL THE YEARS THE ISSUE HAD BEEN DECIDED IN ASSESSEES FAVOUR BOT H BY THE CIT (APPEALS) AND THE HONBLE ITAT. LD.AR THER EFORE STATED THAT THERE WAS NO BASIS FOR MAKING THE DISALLOWANCE IN THE IMPUGNED YEAR. 9. LD.DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 4 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS ALSO THE DOCUMENTS PLACED BEFORE US. 11. WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (APPEALS) UPHOLDING THE ASSESSEES CLAIM TO DEDUCTIO N UNDER SECTION 80IC OF THE ACT, SINCE THE ASSESSEES CLAIM HAS BEEN ALLOWED FROM YEAR TO YEAR. THE ITAT WHILE DECIDING THE ISSUE IN THE PRECEDING ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2011-12 HAD HELD THAT THE CLAIM OF THE ASSESSEE HAVING BEEN ALLOWED FROM YEAR TO YEAR AND NO CHANGE IN THE FACT SITUATION HAVING BEEN BROUGHT TO LIGHT BY THE REVENUE THERE WAS NO REASON TO DISALLOW THE CLAIM IN THE PRESENT YEAR ALSO. THE RELEVANT FINDINGS OF THE ITAT AT PARAGRAPH 13 OF ITS ORDER IS AS UNDER: 13. WE FIND THAT THIS ISSUE HAS ALREADY BEEN DECIDED BY THE HON'BLE I.T.A.T. IN FAVOUR OF THE ASSESSEE IN AY 2 008-09, 2009-10 AND 2010-11. THE HON'BLE ITAT IN ITS ORDER FOR AY 2009-10 IN THE ASSESSEES CASE IN ITAT NO.910/CHD/20 12, HELD AS FOLLOWS IN PARA 9-10 OF ITS ORDER: 9. WE HOVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE MANUFACTURE AND SALE OF COOLENT AND PVC COMPOUND AND CAR CARE PRODUCTS. THE MANUFACTURING UNIT OF THE ASSESSEE IS LOCATED AT PARWANOO, HIMACHAL PRADESH. THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IC OF THE ACT ON ACCOUNT OF INCOME EARNED FROM CARRYING ON ITS MANUFACTURING ACTIVITIES 5 AND ALSO FROM JOB WORK. THIS THE FIFTH YEAR OF CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT. THE FIRST YEAR OF CLAIM OF THE ASSESSEE VIS-A VIS DEDUCTION UNDER SECTION 80IC OF THE ACT WAS ASSESSMENT YEAR, 2005-06, THE ASSESSING OFFICER HAD ALLOWED THE CLAIM OF THE ASSESSEE BY HOLDING THE ASSESSEE TO BE ELIGIBLE FOR EXEMPTION UNDER SECTION 80IC OF THE ACT IN RELATION TO THE INCOME EARNED FROM CARRYING ON ITS MANUFACTURING ACTIVITIES. HOWEVER, THE CLAIM OF THE ASSESSEE VIS-A-VIS ON ACCOUNT OF UNDER SECTION 80IC OF THE ACT ON JOB WORK WAS DISALLOWED BY THE ASSESSING OFFICER, AGAINST WHICH THE ASSESSEE WENT IN APPEAL BEFORE THE TRIBUNAL. THE APPEAL OF THE ASSESSEE IN ITA NO.883/CHD/2006 RELATING TO ASSESSMENT YEAR 2005-06 WAS ALLOWED BY THE TRIBUNAL VIDE ORDER DATED 17.9.2009 UNDER WHICH THE MANUFACTURING PROCESS UNDERTAKEN BY THE ASSESSEE WAS CONSIDERED IN PARAS 11 AND 12 AND VIDE PARA 13 IT WAS HELD THAT THE ACTIVITY IN RELATION TO DGX AMOUNTS TO MANUFACTURING AND THEREFORE, THE RESULTANT INCOME EARNED BY THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE ACT. THE TRIBUNAL ALSO VIDE PARA 6 OBSERVED THAT THE ASSESSEE HAD CLARIFIED THAT THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT IN RESPECT OF MANUFACTURING ACTIVITIES CARRIED ON BY THE ASSESSEE. THE CLAIM OF THE ASSESSEE OF DEDUCTION UNDER SECTION 80IC OF THE ACT IN RELATION TO INCOME EARNED FROM UNDERTAKING JOB WORK FOR SUPPLYING DGX CARTRIDGE WAS HELD TO BE ALLOWABLE. FURTHER THE 6 TRIBUNAL IN ITA NO NO.120/CHD/2011 AND ITA NO. 255/CHD/201I RELATING TO ASSESSMENT YEAR 2007-08 IN CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE, VIDE ORDER DATED 21.6.2011 HAD ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT BOTH ON JOB WORK CHARGES AND PART OF OTHER INCOME. THE TRIBUNAL IN ITA NO. 532/CHD/2012 RELATING TO ASSESSMENT YEAR 2008-09 VIDE ORDER DATED 30.07.2012 IN THE APPEAL FILED BY THE REVENUE HAD FURTHER ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT BOTH ON MANUFACTURING, JOB WORK CHARGES AND PART OF OTHER INCOME. 10. WE FIND THAT IN THE PRESENT APPEAL BEFORE US THE FIRST ISSUE RAISED BY THE ASSESSING OFFICER WAS IN RESPECT OF DEDUCTION UNDER SECTION 80IC OF THE ACT ON THE PROFITS EARNED BY THE ASSESSEE FROM CARRYING ON ITS MANUFACTURING ACTIVITIES. IN VIEW OF THE CLAIM OF THE ASSESSEE BEING ALLOWED FROM YEAR TO YEAR WE FIND NO MERIT IN THE STAND OF THE ASSESSING OFFICER IN THE PRESENT YEAR IN THE ABSENCE OF ANY CHANGE IN THE FACT SITUATION. WE ARE IN AGREEMENT WITH THE ORDER OF THE CIT (APPEALS) IN THIS REGARD. IN VIEW OF THE CLAIM OF THE ASSESSEE HAVING BEEN AL LOWED FROM YEAR TO YEAR WE FIND NO MERIT IN THE APPEAL FILED B Y THE REVENUE IN THE ABSENCE OF ANY CHANGE IN THE FACT SITUATION. 12. IN VIEW OF THE ABOVE AND IN VIEW OF THE FACT T HAT NO CHANGE IN THE FACT SITUATION HAS BEEN BROUGHT TO OUR NOTICE BY THE REVENUE WE ARE AN AGREEMENT WITH THE ORDER 7 OF THE CIT( APPEAL) IN THIS REGARD, AND UPHOLD THE ASSESSEES CLAIM TO DEDUCTION UNDER SECTION 80 IC O N THE MANUFACTURING ACTIVITY CARRIED OUT BY IT IN THIS YE AR ALSO. THIS GROUND OF APPEAL RAISED BY THE REVENUE IS THER EFORE DISMISSED. 13. GROUND NO. 3 RAISED BY THE REVENUE READS AS UNDER: 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) HAS ERRED IN ALLOWING DEDUCTION UNDER SECTION 80IC ON INCOME FROM JOB WORK MORE SO WHEN THE ACTIVITY BEEN CARRIED OUT BY THE ASSESSEE WAS NOTHING BUT PACKAGING. 14. IN THIS GROUND THE REVENUE HAS CHALLENGED THE ALLOWANCE OF DEDUCTION UNDER SECTION 80IC ON INCOME FROM JOB WORK EARNED BY THE ASSESSEE. 15. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE AO DENIED THE ASSESSEE DEDUCTION UNDER SECTION 80 IC O N THE JOB WORK INCOME EARNED, BY HOLDING THAT IT DID NOT INVOLVE ANY MANUFACTURING ACTIVITY AS NO NEW ARTICLE OR TH ING WAS PRODUCED AND AS WAS HELD IN THE PREVIOUS YEARS ALSO . THE AO ALSO OBSERVED THAT SINCE REVENUE HAD PREFERRED A PPEAL BEFORE THE HONBLE PUNJAB AND HARYANA HIGH COURT ON THIS ISSUE FOR THE ASSESSMENT YEAR 2007-08 AND ASSESSMEN T YEAR 2008-09, TO KEEP CONSISTENCY ON THIS ISSUE, AD DITION WAS MADE IN THE IMPUGNED YEAR ALSO. THE RELEVANT FI NDINGS OF THE AO ARE THERE AT PARA 3.2 TO 3.11 OF THE ASSE SSMENT 8 ORDER. LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWING THE DECISION OF THE ITAT FOR ASSESSMENT YEAR 2011-12 WHICH IN TURN HAD BASED ITS DECISION ON ITS EARLIER DECISIONS FOR ASSESSMENT YEAR 2007-2008 AND ASSESSMENT YEAR 2008 2009. 16. AGGRIEVED BY THE SAME THE REVENUE FILED THE PRESENT APPEAL BEFORE US. 17. BEFORE US LD. AR CONTENDED THAT THIS ISSUE HAD BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN EARLIER Y EARS BY THE HONBLE ITAT IN ASSESSEES OWN CASE. 18. LD.DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE AO. 19. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIAL AVAILABLE ON RECORD. 20. WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY TH E ITAT IN FAVOUR OF THE ASSESSEE IN ASSESSMENT YEAR 2 005- 2006, 2007-2008 , 2008-2009 AND 2011-2012. THE HON BLE ITAT IN ITS ORDER FOR ASSESSMENT YEAR 2011-2012 IN THE ASSESSEES CASE IN ITA NO. 1106/CHD/2014 HELD AT PA RA 21 & 22 OF ITS ORDER AS FOLLOWS: 21. WE FIND THAT DISALLOWANCE OF DEDUCTION U/S 80IC O N JOB WORK INCOME WAS FOR THE FIRST TIME MADE IN ASSESS MENT YEAR 2005-06 WHICH WAS ALLOWED IN APPEAL BEFORE THE TRIBUNAL IN ITA NO. 883/CHD/2006 VIDE ORDER DT. 17/09/2009. IN THE IMPUGNED ORDER THE MANUFACTURING PROCESS UNDERTAKEN BY THE ASSESSEE WAS CONSIDERED I N 9 PARA 11&12 AND VIDE PARA 13 IT WAS HELD THAT THE AC TIVITY IN RELATION TO DGX AMOUNTS TO MANUFACTURING AND THER EFORE THE RESULTANT INCOME EARNED BY THE ASSESSEE WAS ELI GIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE ACT. FURTHER TH E TRIBUNAL IN ITA NO.L20/CHD/2011 AND ITA NO.255/CHD/2011 RELATIN G TO ASSESSMENT YEAR 2007-08 IN CROSS APPEALS FILED B Y THE ASSESSEE AND REVENUE, VIDE ORDER DATED 21.6.2011 HA D ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT ON JOB WORK CHARGES. FURTHER DEDUCT ION U/S 80IC WAS ALSO ALLOWED ON INSURANCE CLAIM RECEIV ED AND SCRAP SALE, HOLDING THE SAME TO BE DIRECTLY ATTR IBUTABLE TO THE ACTIVITIES OF THE BUSINESS UNIT. FURTHER THE T RIBUNAL IN ITA NO. 532/CHD/2012 RELATING TO ASSESSMENT YEAR 200 8-09 VIDE ORDER DATED 30.07.2012 IN THE APPEAL FILED BY TH E REVENUE ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT BOTH ON MANUFACTURING, JOB WORK CHARGES, INSURANCE CLAIM AND SCRAP SALE. 22. IN VIEW OF THE CLAIM OF THE ASSESSEE HAVING BEE N ALLOWED FROM YEAR TO YEAR WE FIND NO MERIT IN THE AP PEAL FILED BY THE REVENUE. 21. IN VIEW OF THE CLAIM OF THE ASSESSEE HAVING BE EN ALLOWED FROM YEAR TO YEAR AND IN VIEW OF THE FACT T HAT NO CHANGE IN THE FACT SITUATION HAS BEEN BROUGHT TO OU R NOTICE BY THE REVENUE WE FIND NO MERIT IN THE PRESE NT GROUND RAISED BY THE REVENUE. 22. THIS GROUND OF APPEAL RAISED BY THE REVENUE IS THEREFORE DISMISSED. 23. GROUND NO. 4 RAISED BY THE REVENUE READS AS UNDER: 10 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD.CIT(A) HAS ERRED IN ALLOWING DEDUCTION UNDER SECTION 80 IC ON OTHER INCOME SUCH AS SCRAP SALE, INSURANCE CLAIM, FOREIGN EXCHANGE FLUCTUATION AND CREDIT BALANCE WHEN THESE INCOMES WERE NOT DERIVED IN TRUE SENSE FROM THE BUSINESS OF THE ELIGIBLE UNDERTAKING. 24. IN THIS GROUND THE REVENUE HAS CHALLENGED THE ALLOWANCE OF DEDUCTION UNDER SECTION 80IC ON SCRAP SALE, INSURANCE CLAIM, FOREIGN EXCHANGE FLUCTUATIONS AND CREDIT BALANCE WRITTEN BACK. BRIEF FACTS RELATING TO THE I SSUE ARE THAT THE ASSESSEE CLAIMED DEDUCTION U/S 80IC ON OTH ER INCOME WHICH INCLUDED SCRAP SALE, INSURANCE CLAIM, FOREIGN EXCHANGE FLUCTUATIONS AND CREDIT BALANCE WR ITTEN BACK. THE ASSESSING OFFICER DENIED THE SAME HOLDING THAT THEY COULD NOT SAID TO BE DERIVED FROM INDUSTRIAL UNDERTAKING OF THE ASSESSEE. THE AO HELD THAT SIMIL AR ADDITIONS HAD BEEN MADE IN THE PREVIOUS YEAR ALSO A ND SINCE REVENUE HAD PREFERRED APPEAL BEFORE THE HONB LE PUNJAB AND HARYANA HIGH COURT ON THIS ISSUE FOR THE ASSESSMENT YEAR 2007-2008 AND ASSESSMENT YEAR 2008- 2009, TO KEEP CONSISTENCY, THE ADDITION WAS MADE IN THIS YEAR ALSO. LD. CIT(A) ALLOWED THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IC ON SCRAP SALES AND INSURANCE CLAIM, FOLLOWING THE DECISION OF THE ITAT IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-2012. AS FOR THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTIO N 80IC ON FOREIGN EXCHANGE FLUCTUATION THE LD. CIT(A) ALLO WED THE SAME FOLLOWING THE DECISION OF THE ITAT CHANDIGARH BENCH 11 IN THE CASE OF JCBL INDIA PVT. LTD IN ITA NO. 368/CHD/2012 DATED 15.06.2015. THE CREDIT BALANCE O F PARTIES WRITTEN BACK WAS ALLOWED BY THE LD.CIT(A) FOLLOWING THE ORDER OF THE ITAT IN THE ASSESSEES O WN CASE FOR ASSESSMENT YEAR 2007-2008 IN ITA NO. 120 AND 255/CHD/2011. 25. AGGRIEVED BY THE SAME THE REVENUE FILE THE PRESENT APPEAL BEFORE US. 26. BEFORE US LD.AR RELIED ON THE ORDER OF THE CIT (A) WHILE THE LD.DR RELIED ON THE ORDER OF THE ASSESSIN G OFFICER. 27. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW AS ALSO THE DOC UMENTS PLACED BEFORE US. WE FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(A). THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80 IC WITH REGARDS TO SCRAP SALES, INSURANC E CLAIM AND CREDIT BALANCE WRITTEN BACK HAS BEEN ALLOWED FR OM YEAR TO YEAR AND SINCE NO CHANGE IN THE FACT SITUAT ION HAS BEEN BROUGHT TO OUR NOTICE BY THE LD.DR THERE IS NO REASON TO DISTURB THE FINDINGS OF THE LD.CIT(A) IN THIS REGARD. THE ASSESSEES CLAIM FOR DEDUCTION UNDER SE CTION 80IC ON INSURANCE CLAIM AND SCRAP SALES HAS BEEN AL LOWED BY THE ITAT IN ASSESSMENT YEAR 2007-2008, ASSESSMEN T 2008-2009 AND IN A.Y. 2011-2012. THE RELEVANT FIND INGS OF THE ITAT IN ASSESSMENT YEAR 2011-12 AT PARA 21 O F ITS ORDER ARE AS UNDER: 12 21. WE FIND THAT DISALLOWANCE OF DEDUCTION U/S 80IC O N JOB WORK INCOME WAS FOR THE FIRST TIME MADE IN ASSESS MENT YEAR 2005-06 WHICH WAS ALLOWED IN APPEAL BEFORE THE TRIBUNAL IN ITA NO. 883/CHD/2006 VIDE ORDER DT. 17/09/2009. IN THE IMPUGNED ORDER THE MANUFACTURING PROCESS UNDERTAKEN BY THE ASSESSEE WAS CONSIDERED I N PARA 11&12 AND VIDE PARA 13 IT WAS HELD THAT THE AC TIVITY IN RELATION TO DGX AMOUNTS TO MANUFACTURING AND THER EFORE THE RESULTANT INCOME EARNED BY THE ASSESSEE WAS ELI GIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE ACT. FURTHER TH E TRIBUNAL IN ITA NO.L20/CHD/2011 AND ITA NO.255/CHD/2011 RELATIN G TO ASSESSMENT YEAR 2007-08 IN CROSS APPEALS FILED B Y THE ASSESSEE AND REVENUE, VIDE ORDER DATED 21.6.2011 HA D ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT ON JOB WORK CHARGES. FURTHER DEDUCT ION U/S 80IC WAS ALSO ALLOWED ON INSURANCE CLAIM RECEIV ED AND SCRAP SALE, HOLDING THE SAME TO BE DIRECTLY ATTR IBUTABLE TO THE ACTIVITIES OF THE BUSINESS UNIT. FURTHER THE T RIBUNAL IN ITA NO. 532/CHD/2012 RELATING TO ASSESSMENT YEAR 200 8-09 VIDE ORDER DATED 30.07.2012 IN THE APPEAL FILED BY TH E REVENUE ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT BOTH ON MANUFACTURING, JOB WORK CHARGES, INSURANCE CLAIM AND SCRAP SALE. 28. FOLLOWING THE SAME WE HOLD THAT THE ASSESSEES CLAIM HAVING BEEN ALLOWED FROM YEAR TO YEAR THERE I S NO MERIT IN THE PRESENT GROUND RAISED BY THE REVENUE V IS A VIS CLAIM OF DEDUCTION UNDER SECTION 80IC ON SCRAP SAL ES AND INSURANCE CLAIM RECEIVED BY THE ASSESSEE. 29. WITH REGARDS TO CLAIM OF DEDUCTION UNDER SECTI ON 80IC ON CREDIT BALANCE WRITTEN OFF WE FIND THAT IDE NTICAL CLAIM WAS ALLOWED BY THE ITAT IN THE ASSESSEES OWN CASE IN ASSESSMENT YEAR 2007-2008 WHEREIN AT PARA 13 OF THE ORDER THE ITAT HELD AS FOLLOWS: 13 13. COMING TO THE FACTS BEFORE US AND FOLLOWING TH E RATIO LAID DOWN BY THE AHMEDABAD BENCH OF THE TRIBU NAL IN ARVIND FASHIONS LTD. VS. ACIT (SUPRA) WE HOLD TH AT THE INTEREST INCOME RECEIVED BY THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE A CT. HOWEVER, THE AMOUNT RECEIVED ON SCRAP SALE, THE CRE DIT BALANCE WRITTEN OFF OF PARTIES, INSURANCE CLAIM REC EIVED TOWARDS MATERIAL DAMAGE DURING TRANSIT IS DIRECTLY ATTRIBUTABLE TO THE ACTIVITIES OF THE INDUSTRIAL UN IT AND HENCE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE ACT. HOWEVER, THE ASSESSEE IS NOT ENTITLED TO THE DEDUCTION CLAIMED UNDER SECTION 80IC OF THE ACT ON THE MISC. INCOME RECEIVED BEING REFUND OF SECURITY DEPO SIT AND THE INSURANCE CLAIM ON MACHINERY REPAIRS. IN V IEW THEREOF WE DIRECT THE ASSESSING OFFICER TO RECOMPUT E THE DEDUCTION ALLOWABLE UNDER SECTION 80IC OF THE ACT. THE GROUND NO.1 RAISED BY THE ASSESSEE IS PARTLY ALLOWE D. 30. FOLLOWING THE SAME WE ALLOW THE CLAIM OF THE ASSESSEE FOR THE CURRENT YEAR ALSO SINCE NO CHANGE IN THE FACT SITUATION HAS BEEN BROUGHT TO OUR NOTICE BY TH E LD.DR. 31. AS FOR THE ASSESSEES CLAIM FOR DEDUCTION UNDE R SECTION 80 IC ON FOREIGN EXCHANGE FLUCTUATION RECEI VED WE FIND THAT THE CIT(A) ALLOWED THE ASSESSEES CLAIM FOLLOWING THE DECISION OF THE ITAT IN THE CASE OF JCBL LTD IN ITA NO. 368/CHD/2012 DATED 15.06.2015 WHEREIN FOLLOWING THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CI T VS RACHNA UDYOG ( 2010) 230 CTR 72 THE ISSUE WAS DECI DED IN FAVOUR OF THE ASSESSEE. THE RELEVANT FINDINGS OF THE ITAT IN THE CASE OF JCBL INDIA LTD AT PARA 8 TO 12 OF THE ORDER ARE AS UNDER: 14 8. GROUND NO.3 READS AS UNDER : 3. THAT THE LEARNED C.I.T.(A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF REBATE U/S 80IC RS.8,22,196/- ON ACCOUNT OF EXCHANGE RATE FLUCTUATIONS. 9. THE ASSESSEE HAS CLAIMED INCOME OF RS.8,00,196/- ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION. THE ASSESSING OFFICER DID NOT ALLOW DEDUCTION UNDER SECTION 80IC OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON THE INCOME ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION AND THE SAME WAS ADDED TO THE TAXABLE INCOME OF THE ASSESSEE. 10. ON APPEAL, THE LEARNED CIT (APPEALS) UPHELD THE ORDER OF THE ASSESSING OFFICER AND HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 11. I HAVE HEARD THE RIVAL SUBMISSIONS. THE ISSUE IN HAND IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RACHNA UDYOG (2010) 230 CTR (BOM) 72 WHEREIN THE HON'BLE HIGH COURT HELD AS UNDER : 5. HAVING HEARD THE LEARNED COUNSEL APPEARING ON BEHALF OF THE APPELLANT AND LEARNED COUNSEL APPEARING FOR THE ASSESSEE, WE ARE OF THE VIEW THAT THE DIFFERENCE ON ACCOUNT OF EXCHANGE RATE FLUCTUATION IS LIABLE TO BE ALLOWED UNDER S. 80-IB. THE EXCHANGE RATE FLUCTUATION ARISES OUT OF AND IS DIRECTLY RELATED TO THE SALE TRANSACTION INVOLVING THE EXPORT OF GOODS OF THE INDUSTRIAL 15 UNDERTAKING. THE EXCHANGE RATE FLUCTUATION BETWEEN THE RUPEE EQUIVALENT OF THE VALUE OF THE GOODS EXPORTED AND THE ACTUAL RECEIPTS WHICH ARE REALIZED ARISES ON ACCOUNT OF THE SALE TRANSACTION. THE DIFFERENCE ARISES PURELY AS A RESULT OF A FLUCTUATION IN THE RATE OF EXCHANGE BETWEEN THE DATE OF EXPORT AND THE DATE OF RECEIPT OF PROCEEDS, SINCE THERE IS NO VARIATION IN THE SALE PRICE UNDER THE CONTRACT. THE VIEW WHICH WE HAVE TAKEN IS ALSO CONSISTENT WITH THE VIEW TAKEN BY A DIVISION BENCH OF THIS COURT ON 15 TH DEC., 2009 IN THE CASE OF SYNTEL LTD. (IT APPEAL NOS.1974, 1976 AND 1978 OF 2009). IN THE CIRCUMSTANCES, WE WOULD AFFIRM THE JUDGMENT OF THE TRIBUNAL INSOFAR AS THE QUESTION OF EXCHANGE RATE FLUCTUATION IS CONCERNED. 12. FROM THE ABOVE, IT IS CLEAR THAT THE HON'BLE HIGH COURT HAS CATEGORICALLY HELD THAT THE EXCHANGE RATE FLUCTUATION ARISES OUT OF AND IS DIRECTLY RELATED TO THE SALE TRANSACTION INVOLVING THE EXPORT OF GOODS OF THE INDUSTRIAL UNDERTAKING AND, THEREFORE, DIFFERENCE ON ACCOUNT OF EXCHANGE RATE FLUCTUATION IS ENTITLED TO DEDUCTION UNDER SECTION 80IB OF THE ACT. NO CONTRARY DECISION WAS BROUGHT TO MY NOTICE. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RACHNA UDYOG (SUPRA), I HOLD THAT THE DIFFERENCE ON ACCOUNT OF EXCHANGE RATE FLUCTUATION IS ENTITLED TO DEDUCTION UNDER SECTION 80IC OF THE ACT. THIS GROUND OF APPEAL IS ALLOWED. 32. SINCE IN THE PRESENT CASE ALSO IT IS NOT DISPU TED THAT THE FOREIGN EXCHANGE FLUCTUATIONS RELATE TO TH E EXPORT 16 ACTIVITY CARRIED OUT BY THE ASSESSEE, THE FOREIGN EXCHANGE FLUCTUATION EARNED BY THE ASSESSEE IS TO BE TREATED AS ITS TRADING RECEIPTS/RECEIPTS FROM THE MANUFACTURING AC TIVITY CARRIED OUT BY IT AND THEREBY ENTITLING THE ASSESSE E TO CLAIM DEDUCTION UNDER SECTION 80IC ON THE SAME. IN VIEW OF THE ABOVE WE FIND NO INFIRMITY IN THE ORDER OF T HE CIT(A)ALLOWING THE ASSESSEES CLAIM OF DEDUCTION UN DER SECTION 80IC ON THE FOREIGN EXCHANGE FLUCTUATION RE CEIVED. 33. IN VIEW OF THE ABOVE WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80IC ON S CRAP SALES, INSURANCE CLAIM, CREDIT BALANCES WRITTEN BAC K AND FOREIGN EXCHANGE FLUCTUATIONS EARNED. THE GROUND OF APPEAL RAISED BY THE REVENUE IS THEREFORE DISMISSED . 34. IN EFFECT THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16 TH DECEMBER, 2016 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH