2011 (2) TMI 178

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.... foreign exchange. In the assessment year 1998-99, the assessee had filed return declaring the income of Rs. 20.44 crores under section 115JA of the Act. This assessment was originally framed under section 143(3) of the Act at an income of Rs. 21.78 crores, however, this assessment was reopened by issuing notice under section 148 of the Act as, according to the Assessing Officer, benefit under section 80HHD was not correctly computed and in the process income had escaped assessment. It was included on the following grounds:   (i)  The Assessing Officer noticed that the assessee had not included a sum of Rs. 1168.23 lakhs received in money-changing business in the total turnover.  (ii)  Likewise, the assessee had no....

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....s for this reason, the assessee was not even allowed deduction under section 80HHD on the foreign exchange receipts from its money-changing activity. We may also notice that the contention of the assessee in this behalf was that the money-changing exercise undertaken by the assessee for its guests/customers is only a facility for its guest/customers granted to them and it is for this reason that the assessee simply converts the money taken in foreign exchange from its customers by paying them equivalent money in Indian currency. For this reason, asserted the assessee, there was no element of profit in these receipts. It was argued that the assessee collects this amount in fiduciary capacity and in the interest of its main business by provid....

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....gure to the total receipts of business, the deduction claimed by the assessee would automatically stand reduced. Even otherwise, it is a common logic that the nominator and the denominator of a equation should have the same set of negotiation. If the assessee is including foreign exchange receipts in the nominator, it should also include this figure in the denominator for the correct answer." 5. As mentioned above, even in the succeeding assessment year, i.e., 1999-2000, the Assessing Officer has not included the receipts in foreign exchange in money-changing activity. 6. Going by the aforesaid peculiar facts, it appears in this case that when there is a reasonable dispute as to whether this facility of money changer, which is provide....