TaxTMI 
TaxTMI 
2015 (5) TMI 811
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....f the Act on 28.11.2008 determining the income at Rs. 2,30,83,131/-. While completing the assessment Assessing Officer noticed that assessee received Rs. 54,99,546/- on account of difference in exchange rate in foreign currency on the packing credit foreign currency loan taken by the assessee. According to the Assessing Officer, the assessee has not derived this income from export of computer software, therefore such gain is not eligible for deduction under section 10A of the Act. Thus he withdrew deduction under section 10A on such gain. On appeal, the Commissioner of Income Tax (Appeals) sustained the action of the Assessing Officer in treating the said exchange rate fluctuation on packing credit foreign currency loan as not derived from business for the purpose of computing relief under section 10A of the Act. The assessee is in appeal before us. 4. Counsel for the assessee submits that during the assessment year assessee had borrowed packing credit foreign currency loan from HDFC and Citi Bank for working capital purposes as authorized by Reserve Bank of India and repaid the entire loan taken from HDFC. Counsel for the assessee submits that at the time of repayment of loan rup....
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.... vehemently supports the orders of lower authorities in considering the exchange gain on packing credit foreign currency loan as not derived from for the purpose of computing relief under section 10A of the Act. 6. Heard both sides. Perused orders of lower authorities. The Assessing Officer while completing the assessment did not consider exchange gain on packing credit foreign currency loan for the purpose of computing relief under section 10A of the Act holding that such gain is not derived from export of software business and is eligible to be assessed as income from other sources. The Commissioner of Income Tax (Appeals) affirmed the said contention of the Assessing Officer observing as under:- " 6.3 I have perused the Assessing Officer's observations and the appellant's contentions in this regard. It is seen from the facts of the case that the appellant company had made gains on exchange fluctuation on the following foreign currency loans:- HDFC Bank : Rs. 9,16,20,000.00 Citi Bank : Rs. 4,33,05,889.61 Total Rs. 13,49,25,889.61 The company had borrowed money from banks in the form of Packing Credit Foreign Currency Loan. Part of the loan was repaid during the year. There ....
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....e nexus, with the industrial undertaking ... Where 'the Words are unequivocal, there is no scope for importing any rule of Interpretation. (iii) CIT v NSC Shoes (Mad) 258 ITR 749 Interest on ;amount deposited with Bank as guarantee fund for opening the letters of' credit for the purpose of Import of material cannot be said to be income derived from' Industrial undertaking- The direct 'and. proximate link is with ~the deposit In the bank and not with the industrial undertaking. Respectfully following the ratio laid down in the decisions mentioned supra, I hereby uphold the action of the AO and reject the contentions made by the AR. As a result, the grounds raised in this regard are dismissed." 7. On going through the order of the Commissioner of Income Tax (Appeals), we do not find any valid reason to reverse the findings of the Commissioner of Income Tax (Appeals) in holding that the foreign exchange gain on packing credit foreign currency loan is not eligible for deduction under section 10A of the Act. The case laws relied on by the counsel for the assessee are distinguishable on facts and are not applicable to the facts of the assessee's case. The grounds raise....
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....d that on the basis of parity principles whatever has been excluded from export turnover shall also be excluded from the total turnover. 7.3 Since the issue involved is covered by the decision mentioned supra, respectfully following the same, I hereby direct the Assessing Officer to exclude travelling expenditure from the total turnover also while computing deduction u/s.10A of the Act. In the result, the ground raised by the appellant is allowed." The Commissioner of Income Tax (Appeals) following the Special Bench decision in the case of ITO Vs. Saksoft Ltd.(supra), rightly directed the Assessing Officer to exclude the travelling expenditure from total turnover also. Thus, we uphold the order of the Commissioner of Income Tax (Appeals) on this issue. 12. The next issue in the appeal of the Revenue is that Commissioner of Income Tax (Appeals) erred in holding that action of the Assessing Officer in excluding 50% of telecommunication expenditure incurred in Indian rupee from the export turnover. 13. Counsel for the assessee submits that the issue in appeal is squarely covered by the decision of the co-ordinate bench in the case of California Software Company Ltd. (2008) TIOL-610....