Tribunal allows appeal on foreign currency loss, rejects deduction denial under section 80IB

The Tribunal partly allowed the appeal, condoning the delay in filing and ruling in favor of the assessee on the disallowance of foreign currency derivative loss. However, the Tribunal rejected the grounds related to denying deduction under section 80IB of the Act on duty drawback, in line with a Supreme Court ruling.

---

---

Issues involved:
1. Condonation of delay in filing appeal.
2. Disallowance of foreign currency derivative loss.
3. Denying deduction under section 80IB of the Act on duty drawback.

Condonation of delay in filing appeal:
The appeal filed by the assessee was delayed by 60 days due to the assessee's accident and hospitalization. The Tribunal, after perusing the reasons, allowed the condonation of delay in the interest of justice. The delay was condoned, and the appeal was admitted.

Disallowance of foreign currency derivative loss:
The Tribunal considered the appeal filed by the assessee against the disallowance of foreign currency derivative loss by treating it as speculation loss. The Tribunal referred to a previous decision where it was held that such losses are deductible as business losses. The Tribunal noted that the assessee was not a dealer in foreign exchange and the forex transactions were part of the regular business. Citing relevant case laws, the Tribunal allowed the ground of appeal in favor of the assessee.

Denying deduction under section 80IB on duty drawback:
The issue revolved around the exclusion of duty drawback from eligible profits while computing deduction under section 80IB of the Act. The Assessing Officer had excluded duty drawback from the profits derived from the industrial undertaking. The Commissioner of Income Tax (Appeals) upheld this decision based on a Supreme Court ruling stating that duty drawback cannot be included in eligible profit for claiming deduction under section 80IB. The Tribunal, following the decision, dismissed the grounds raised by the assessee on this issue, upholding the exclusion of duty drawback from eligible profits for the deduction under section 80IB.

In conclusion, the Tribunal partly allowed the appeal of the assessee, condoning the delay in filing the appeal and ruling in favor of the assessee regarding the disallowance of foreign currency derivative loss. However, the Tribunal rejected the grounds raised by the assessee concerning the denial of deduction under section 80IB of the Act on duty drawback, in line with the decision based on the Supreme Court ruling.

---