Appeal Allowed: Exchange Difference to be Included in Turnover for Section 80HHC Deduction

The Tribunal allowed the appeal filed by the assessee regarding the disallowance of deduction claimed under section 80HHC of the IT Act, 1961 for the assessment year 1997-98. The Tribunal held that the amount received on account of exchange difference should be considered part of the total turnover, constituting the turnover of the assessee. It emphasized that exchange rate fluctuation difference is part of sales and remains attributable to the export, leading to an increase or decrease in export turnover figures. Consequently, the Tribunal directed the grant of deduction under section 80HHC of the Act.

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Issues:
The judgment deals with the disallowance of deduction claimed under section 80HHC of the IT Act, 1961 for the assessment year 1997-98.

Summary:
The assessee, a 100% exporter, claimed a deduction of Rs. 3,24,727 under section 80HHC of the Act, based on export realisation of sales from earlier years. The Assessing Officer (AO) denied the deduction, alleging that the receipts were shown to claim the benefit of the deduction. The CIT(A) upheld the disallowance, stating that the export realisation on account of exchange difference did not form part of the total turnover as defined in the Act.

The assessee contended that the amount received on account of exchange difference should be considered part of the total turnover, as it did not fall under the categories excluded from the definition. The Tribunal agreed with the assessee, noting that the exclusion of certain items from the total turnover definition implied that the remaining items were included. The Tribunal also held that the amount received on account of exchange difference was a realization of exported goods, constituting the turnover of the assessee. Citing a previous decision, the Tribunal emphasized that exchange rate fluctuation difference is part of sales and remains attributable to the export by the assessee, leading to an increase or decrease in export turnover figures. Consequently, the Tribunal allowed the appeal and directed the grant of deduction under section 80HHC of the Act.

Therefore, the appeal filed by the assessee was allowed.

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