2006 (11) TMI 631

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....AT was right in law in holding that the receipt on account of fluctuation in foreign exchange rate was includible in the gross total Income for computing deduction under section 80-HHC? 2. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in upholding the decision of the CIT(A) allowing deduction under section 32-AB on the machine assembled by the assessee when section 32-AB intends the use of investment only for purchase of new plant and machinery?" The assessee showed receipts in the export turnover on account of fluctuations in the foreign exchange rate. The Assessing Officer took the view that the said receipts could not be treated as arising from business activity and the same could not be taken....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ave considered the facts and we are of the view that the receipt formed part of the turnover and shown as such, were part of trading receipt. There is nothing on record to show that the receipt was on account of capital account. Looking to the nature of the receipt, we agree with the learned counsel that it arose from an activity which was incidental to business. Ground No.6 stands allowed and receipts on account of fluctuation in foreign exchange rate and held to be includible in gross total income." Learned counsel for the assessee in support of finding recorded by the Tribunal, relied upon judgment of the Hon'ble Supreme Court in Sutlej Cotton Mills Limited v. CIT, West Bengal, (1979) 116 ITR 1, wherein it was, inter-alia, observed....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....it is clear that deduction is relatable to net foreign exchange realisation. The definition of "export turnover", as contained in explanation (b) to Section 80-HHC(4) of the Act clearly defines the same to be sale proceeds convertible in foreign exchange of any goods or merchandise exported out of India, which is extracted below: "(b) "export turnover" means the sale proceeds receivable by the assessee in convertible foreign exchange of any goods or merchandise to which this section applies and which are exported out of India, but does not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Customs Act, 1962 (62 of 1962)". It is not disputed before us that ....