DCIT, Central Circle - VII, Kolkata, Kolkata V. M/s. Linc Pen & Plastics Pvt. Ltd., Kolkata

ITA 816/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54495 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 27-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PRAMANICK
• Assessee Lawyers: S L KOCHAR
• Keywords: Business income
• Section: 80IB

Judgement Text

, , , , , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [ . . . . . .. . , , !' !' !' !' , ] [BEFORE HONBLE SHRI S.V. MEHROTRA, AM & HONBLE SHRI MAHAVIR SINGH, JM '# '# '# '# / I.T.A NO. 816/KOL/2011 !$% &' !$% &' !$% &' !$% &'/ // / ASSESSMENT YEAR : 2007-08 DY. COMMISSIONER OF INCOME TAX -VS.- M/S. LINC PEN & PLASTICS PVT. LIMITED CENTRAL CIRCLE-VII, KOLKATA. KOLKATA. [PAN : AAACL 6426 C] [ )* )* )* )* /APPELLANT ] ]] ] [ ,-)* ,-)* ,-)* ,-)*/ // / RESPONDENT ] ]] ] ] )* )* )* )* / FOR THE APPELLANT : SHRI A. K. PRAMANICK ,-)* ,-)* ,-)* ,-)* / FOR THE RESPONDENT : SHRI S. L. KOCHAR . /ORDER . . . . . .. . , PER S. V. MEHROTRA, A. M. THE DEPARTMENT HAS PREFERRED THIS APPEAL FOR ASSESS MENT YEAR 2007-08 AGAINST ORDER OF LD. CIT(A), CENTRAL-II, KOLKATA DATED 25.02.2011. T HE ONLY GROUND RAISED BY REVENUE READS AS UNDER :- THAT THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTIO N UNDER SECTION 80IB ON THE GAIN ON FOREIGN EXCHANGE RATE FLUCTUATIONS WITH THE OBSERVATION THAT IT IS A TRADING RECEIPT AND HAS A DIRECT NEXUS WITH THE INDUSTRIAL ACTIVITIES OF THE ASSESSEE. 2. THE ASSESSEE-COMPANY, IN THE RELEVANT ASSESSMENT YEAR, FILED ITS RETURN OF INCOME SHOWING TOTAL INCOME OF RS.1,07,85,178/-. ASSESSING OFFICER NOTICED THAT ASSESSEE, INTER ALIA, HAD INCLUDED FOREIGN EXCHANGE FLUCTUATION GAIN IN THE PROFIT & L OSS ACCOUNT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB. ASSESSING OFFICER AFTER CONSIDERING THE FOLLO WING DECISIONS HELD THAT FOREIGN EXCHANGE FLUCTUATION GAIN OF RS.12,77,050/- WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB :- (I) CAMBAY ELECTRIC INDUSTRIAL COMPANY VS. CIT 113 ITR 84 (SC) [I TA NO. 816/KOL/2011] 2 (II) PANDIAN CHEMICALS VS. CIT 262 ITR 278 (SC) (III) M/S. LIBERTY INDIA VS. CIT [2009] 317 ITR 21 8 (SC) LD. CIT(A) HELD THAT INCOME FROM FLUCTUATION OF FOR EIGN EXCHANGE OF RS.12,77,050/- IN GOA UNIT- II, WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB. HE OBSERVED THAT THIS INCOME WAS PART OF EXPORT SALE CONSIDERATION AND HAS FIRST DEGREE NEXUS WITH THE OPERATION OF INDUSTRIAL UNIT. HE RELIED ON THE DECISION OF I.T.A.T., MADRAS BENCH IN THE CASE OF A CIT VS. P.S. APPARELS [101 TTJ 29]. 3. LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF KOLKATA BENCH FOR ASSESSMENT YEAR 2002-03 IN ASSESSEES OWN CASE IN ITA NO.1316/KOL/2006 VIDE ORDER DATED 2 0.10.2006. 4. LD. DEPARTMENTAL REPRESENTATIVE DID NOT RAISE AN Y OBJECTION AS THE ISSUE IS COVERED BY DECISION IN ASSESSEES OWN CASE. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. THE ISSUE IS COVERED BY THE DECISION OF KOLKATA BENCH FOR ASSESSMENT YEAR 2002-03 IN ASSESSEES OWN CASE IN ITA NO.1316/KOL/2006 VIDE OR DER DATED 20.10.2006 WHEREIN TRIBUNAL HAS GIVEN HIS FINDINGS IN PARAS 6 TO 9, THE SAME IS REP RODUCED HEREUNDER :- 6. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS MADE BEFORE US AND HAVE PERUSED THE ORDERS OF THE TAX AU THORITIES. SO FAR AS RECEIPT ON ACCOUNT OF EXCHANGE FLUCTUATION IS CONCERNED, SUCH RECEIPT HAS ARISEN TO ASSESSEE DUE TO DIFFERENCE IN THE RATE OF FOREIGN EXCHANGE A T THE TIME OF SALE AND AT THE TIME OF RECEIPT OF SUCH SALE PROCEEDINGS AND, THERE FORE, SUCH RECEIPT IS DIRECTLY RELATED TO THE BUSINESS ACTIVITY OF THE ASSESSEE AN D, THEREFORE, IN OUR CONSIDERED OPINION THE LD. CIT(A) WAS JUSTIFIED IN TREATING SU CH RECEIPT AS BUSINESS INCOME. WE, THEREFORE, UPHOLD SUCH ORDER OF LD. CIT(A) AND REJECT THE GROUND OF REVENUE. 9. WE, THEREFORE, KEEPING IN VIEW THE FACTS AND CI RCUMSTANCES OF THE CASE AND IN THE LIGHT OF ABOVE DISCUSSION SET ASIDE THE ORDER OF THE LD. CIT(A) IN REGARD TO RECEIPT ON ACCOUNT OF JOB CHARGES AND RES TORE THAT OF ASSESSING OFFICER WHEREAS WE UPHOLD THE ORDER OF. LD. CIT(A) ON ACCOU NT OF RECEIPT FROM EXCHANGE FLUCTUATION, DISCOUNT ON PURCHASES AND INTEREST FRO M SUPER STOCKIST AND ACCORDINGLY ACCEPT THE GROUND RAISED BY THE REVENUE IN PART. 6. RESPECTFULLY, FOLLOWING THE DECISION OF THIS TRI BUNAL IN ASSESSEES OWN CASE, THE ONLY GROUND RAISED BY THE REVENUE IS DISMISSED. [I TA NO. 816/KOL/2011] 3 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. . . . . / / / / 0 /$ 1 2 0 /$ 1 2 0 /$ 1 2 0 /$ 1 2 3 3 3 3 ORDER PRON OUNCED IN THE OPEN COURT ON 12. 08. 2011. SD/- SD/- [ !' !' !' !' , ] [ . .. . . .. . , ] [ MAHAVIR SINGH ] [ S.V. MEHROTRA ] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (3 3 3 3) )) ) DATED : 12TH AUGUST, 2011. . 6 ,!!7 87&/ COPY OF THE ORDER FORWARDED TO: 1. )* /APPELLANT : DY. COMMISSIONER OF INCOME TAX, CENTR AL CIRCLE-VII, KOLKATA. 2 ,-)* / RESPONDENT : M/S. LINC PEN & PLASTICS PVT. LTD., 3, ALIPORE ROAD, KOLKATA-700 027 . 3. !.$ / CIT, 4. !.$ ()/ CIT(A), KOLKATA. 5. !1 ,!$/ DR, KOLKATA BENCHES, KOLKATA [-7 ,!/ TRUE COPY] .$// BY ORDER, '? /ASSTT REGISTRAR [KKC @A !$B? !C /SR.PS]