DCIT, CHENNAI V. Shasun Pharmaceuticals Ltd., CHENNAI

ITA 733/CHNY/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8660 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 1999-2000
• Appeal Filed On: 25-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: E SULOCHANA
• Assessee Lawyers: A S SRIRAMAN
• Section: 80HHC

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.733/MDS/2014 ( )( / ASSESSMENT YEAR : 1999-2000 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(2), CHENNAI - 600 034. V. M/S SHASUN PHARMACEUTICALS LTD., (FORMERLY M/S SHASUN CHEMICALS & DRUGS LTD.), NO.28, SARDAR PATEL ROAD, GUINDY, CHENNAI - 600 032. PAN : AAACS 5031 L (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SMT. E. SULOCHANA, JCIT -.+, / 0 / RESPONDENT BY : SH. A.S. SRIRAMAN, ADVOCATE 1 / 2% / DATE OF HEARING : 09.06.2016 3') / 2% / DATE OF PRONOUNCEMENT : 24.08.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE WAS DISPOSED OF BY THI S TRIBUNAL EARLIER BY AN ORDER DATED 06.08.2015. HOWEVER, THE ASSESSEE FILED A MISCELLANEOUS PETITION IN M.P. NO.209/MDS/2015 ON THE GROUND THAT THE ISSUE RAISED BY THE REVENUE AS GROUND NO.3 WAS NOT DISPOSED OF. 2 I.T.A. NO.733/MDS/2014 2. SMT. E. SULOCHANA, THE LD. DEPARTMENTAL REPRESEN TATIVE, SUBMITTED THAT GROUND NO.3 RELATES TO COMPUTATION O F DEDUCTION UNDER SECTION 80HHC OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AFTER REDUCING THE FOREIGN EXCHANGE GAIN OF ` 89,46,150/-. ACCORDINGLY, THE APPEAL WAS REOPENED AND POSTED FOR HEARING. THE APPEAL WAS HEARD ONLY FOR THE PURPOSE OF ADJUDICATI NG THE GROUND RAISED BY THE REVENUE WITH REGARD TO FOREIGN EXCHAN GE GAIN FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT. 3. THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED T HAT THE ASSESSING OFFICER REDUCED THE FOREIGN EXCHANGE GAIN OF ` 89,46,150/- WHILE COMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT. ACCORDING TO THE LD. D.R., IN THIS CASE, THE FOREIGN EXCHANGE GAIN DOES NOT RELATE TO EXPORT OF GOODS. ACCORDING TO THE LD. D.R., FOR THE PURPOSE OF DEDUCTION UNDER SECTIO N 80HHC OF THE ACT, ONLY INCOME DERIVED FROM EXPORT OF GOODS OR ME RCHANDISE HAS TO BE TAKEN INTO CONSIDERATION. THE FOREIGN EXCHAN GE GAIN DOES NOT ARISE OUT OF EXPORT OF GOODS, THEREFORE, ACCORDING TO THE LD. D.R., THE SAME CANNOT BE CONSIDERED FOR THE PURPOSE OF DE DUCTION UNDER SECTION 80HHC OF THE ACT. 3 I.T.A. NO.733/MDS/2014 4. ON THE CONTRARY, SH. A.S. SRIRAMAN, THE LD. COUN SEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER DISA LLOWED THE CLAIM OF THE ASSESSEE ONLY ON THE GROUND THAT FOREIGN EXC HANGE GAIN WAS NOT DERIVED FROM EXPORT OF GOODS. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXPORT ACTIV ITY. THEREFORE, FOREIGN EXCHANGE FLUCTUATION WAS DIRECTLY RELATED T O THE EXPORT OF THE ASSESSEE. THE CIT(APPEALS) BY PLACING RELIANCE ON THE JUDGEMENT OF MADRAS HIGH COURT IN CIT V. PENTASOFT TECHNOLOGY LTD. [TAX CASE (APPEAL) NO.599 OF 2010 DATED 13.07.2010], ALL OWED THE CLAIM OF THE ASSESSEE. SINCE THE CIT(APPEALS) HAS FOLLOW ED THE DECISION OF THE MADRAS HIGH COURT, ACCORDING TO THE LD. COUN SEL, THERE CANNOT BE ANY GRIEVANCE FOR THE REVENUE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WHETHER FOREIGN EXCHANG E FLUCTUATION, WHICH RESULTED IN PROFIT TO THE ASSESSEE, HAS TO BE REDUCED FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80HHC OF THE ACT OR NOT? THE FOREIGN EXCHANGE FLUCTUATION WAS DUE TO EXPORT SALE S MADE BY THE ASSESSEE. THE ASSESSEE EARNED MORE PROFIT DUE TO F OREIGN EXCHANGE FLUCTUATION. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED 4 I.T.A. NO.733/MDS/2014 OPINION THAT THE FOREIGN EXCHANGE FLUCTUATION WAS D IRECTLY RELATED TO EXPORT SALES MADE BY THE ASSESSEE. HENCE, THE SAME IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC OF THE ACT. THEREFOR E, THE CIT(APPEALS) HAS RIGHTLY DIRECTED THE ASSESSING OFF ICER TO COMPUTE DEDUCTION WITHOUT REDUCING THE FOREIGN EXCHANGE GAI N FROM THE EXPORT BUSINESS. THEREFORE, THIS TRIBUNAL DO NOT F IND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 6. IT IS MADE CLEAR THAT THE ORDER OF THIS TRIBUNAL DATED 06.08.2015 IN RESPECT OF OTHER ISSUES REMAIN AS SUC H. 7. IN THE RESULT, THE GROUND RAISED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 24 TH AUGUST, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 24 TH AUGUST, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-VI, CHENNAI-34 4. 1 92 /CIT-VI, CHENNAI-34 5. 7: -2 /DR 6. ( ; /GF.