2015 (1) TMI 394

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..../2004 for the assessment years 1996-97 and 2000-01 respectively. 1.1 This Court while admitting these appeals formulated the following questions for consideration:         "Whether, the Appellate Tribunal is right in law on facts in holding that while computing deduction u/s. 80IA exchange rate difference and duty draw back should be treated to be 'derived' from the industrial undertaking?" 2. The assessee firm is engaged in the business of manufacturing and sale of dyes. During the years under consideration, the assessee claimed deduction u/s 80HHC qua sales tax amount. The Assessing Officer worked out the deduction u/s 80HHC after considering the sales tax and excise duty. On appeal the CIT (A....

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....estion regarding foreign exchange difference is concerned, the same is squarely governed by the decision of this Court in the case of Commissioner of Income-Tax vs. Priyanka Gems reported in [2014] 367 ITR 575 (Guj) wherein this Court has answered the question in favour of the assessee and held that that the foreign exchange gain arising out of the fluctuation in the rate of foreign exchange cannot be divested from the export business of the assessee and once export is made, due to variety of reasons, the remission of the export sale consideration may not be made immediately and that all foreign currencies received by the assessee need not be converted into Indian Rupees on the last date of the accounting period. This Court in the said deci....

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....unt of the factum of export. Current price of the goods so exported would also be pre-decided in the foreign exchange currency. The exact remittance in Indian rupees would depend on the precise exchange rate at the time when the amount is remitted. This fluctuation and possibility of increase or decrease, in our opinion, can have no bearing on the source of such receipt. Primarily and essentially, the receipt would be on account of the export made. If this is so, any fluctuation thereof also must be said to have arisen out of the export business. Mere period of time and the vagaries of rate fluctuation in international currencies cannot divest the income from the character of the income from assessees export business. In that view of the ma....

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....ntioned in the said clause. The Revenue, however, contended that the same must be included by necessary implication as part of other receipts. Legislature, however, has used the term any other receipt of similar nature. This expression similar nature would have considerable bearing on the ultimate conclusion that we arrive in this respect. What is to be excluded under the said sub-clause(1) of clause (baa) is any other receipt of a nature similar to the brokerage, commission, interest, rent or charges. The receipt by way of foreign exchange fluctuation not being similar to any of these receipts mentioned above, application of clause (baa) must be excluded. Sub-rule (1) of rule 115 only provides for adopting the rate of exchange for calculat....