Tribunal upholds CIT(A) decisions on tax issues, dismisses appeals.

The Tribunal dismissed all appeals, upholding the CIT(A)'s decisions on various issues raised by the Assessing Officer, including the inclusion of excise duty and sales tax in total turnover for deduction under section 80HHC, allocation of indirect expenses for export of trading goods, and disallowance of excess depreciation claim due to foreign exchange fluctuation gain. The Tribunal affirmed that relevant statutory provisions did not justify adjustments, leading to the dismissal of all grounds of appeal. The judgments were delivered on September 30, 2015.

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Issues Involved:

1. Inclusion of excise duty and sales tax in total turnover for computing deduction under section 80HHC.
2. Allocation of indirect expenses for the export of trading goods.
3. Disallowance of excess claim of depreciation due to foreign exchange fluctuation gain.
4. Depreciation on computer software arising from disallowance in a previous assessment year.
5. Depreciation disallowance by reducing foreign exchange fluctuation gain from the written down value (WDV) of plant and machinery.

Issue-wise Detailed Analysis:

1. Inclusion of Excise Duty and Sales Tax in Total Turnover for Computing Deduction under Section 80HHC:
The first ground of appeal concerns the inclusion of excise duty and sales tax in the total turnover while computing the deduction under section 80HHC. The Assessing Officer's grievance was dismissed as the issue is covered in favor of the assessee by the Hon'ble Supreme Court's judgment in the case of CIT vs. Laxmi Machine Works (290 ITR 667). Therefore, the grievance of the Assessing Officer lacks legally sustainable merits, and ground no.1 was dismissed.

2. Allocation of Indirect Expenses for the Export of Trading Goods:
The second ground of appeal deals with the allocation of indirect expenses for the export of trading goods. The issue is covered in favor of the assessee by the order dated 13th November 2014, in the assessee's own case for the assessment year 2001-02. The co-ordinate bench had upheld the CIT(A)'s direction to allocate only auditor's expenses proportionately in addition to the already considered indirect expenses. The Tribunal saw no reason to deviate from this view and upheld the relief granted by the CIT(A), dismissing ground no.2.

3. Disallowance of Excess Claim of Depreciation Due to Foreign Exchange Fluctuation Gain:
The third ground of appeal involves the disallowance of excess claim of depreciation due to foreign exchange fluctuation gain on a foreign exchange loan borrowed to acquire indigenous plant and machinery. The CIT(A) deleted the disallowance, observing that section 43A applies only when the asset is acquired from outside India. Since the plant and machinery were indigenous, section 43A was not applicable. The Tribunal agreed with the CIT(A), noting that no other statutory provision justified the adjustment. Thus, ground no.3 was dismissed.

4. Depreciation on Computer Software Arising from Disallowance in a Previous Assessment Year:
In the appeal for the assessment year 2005-06, the second ground of appeal pertained to the depreciation on computer software arising from disallowance in the assessment year 2002-03. The issue was rendered infructuous as the matter had been decided in favor of the assessee by a coordinate bench of the Tribunal in the case of DCIT vs. Icon Data Management Limited. Consequently, ground no.2 was dismissed.

5. Depreciation Disallowance by Reducing Foreign Exchange Fluctuation Gain from WDV of Plant and Machinery:
In the appeals for the assessment years 2005-06 and 2008-09, the issue of depreciation disallowance by reducing foreign exchange fluctuation gain from the WDV of plant and machinery was raised. The Tribunal followed its adjudication for the assessment year 2004-05, where it upheld the CIT(A)'s relief, noting that section 43A did not apply as the assets were indigenous. Therefore, the Tribunal upheld the relief granted by the CIT(A) and dismissed the respective grounds of appeal.

Conclusion:
All three appeals were dismissed, with the Tribunal consistently upholding the CIT(A)'s decisions across the various issues raised by the Assessing Officer. The judgments were pronounced in the open Court on the 30th day of September 2015.

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