TaxTMI 
TaxTMI 
2016 (7) TMI 693
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....n allowing the exchange rate difference amounting to Rs. 31,68,717/- to be included in profits eligible for deduction u/s. 80IB of the Act. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in allowing the depreciation on plant amounting to Rs. 20,32,557/-. 3. Briefly stated the facts of the case are that the assessee firm is engaged in the business of manufacturing of printed flexible packaging. In the return of income for the year under consideration, the assessee has claimed deduction u/s. 80IB of the Act. 4. While scrutinizing the return of income, the A.O. found that the assessee has claimed deduction u/s. 80IB of the Act in respect of exchange rate difference amounting to Rs. 31,68,717/....
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....g substantial question of law. "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the exchange rate difference pertaining to exports made in earlier years would be 'profits of business' within the meaning of section 80HHC of the Income-tax Act, 1961?" 9. In our understanding of the facts of the case before the Hon'ble High Court were in respect of export sales made by the assessee and on sales realization there was a gain because of exchange rate fluctuation which was claimed as eligible for deduction u/s. 80HHC of the Act. As is evident from the aforementioned substantive question of law, the issue was to decide whether exchange rate difference pertaining to....
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....re it is necessary, or, where the sale proceeds have been received within a period of six months from the end of the previous year, such sale proceeds are directly relatable to the exports made and no further inquiry is necessary. Therefore, the entire controversy as to whether such receipt amounts to "any other receipt" stipulated in Explanation (baa)(1) need not be taken up for consideration. Once the Legislature has provided for treating a receipt within a period of six months after the end of the previous year, or within further extended period, as sale proceeds relatable exports, it would not be open to the Revenue to raise such a controversy. The Legislature in its wisdom has taken into consideration the fact that in the case of expor....
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....h the sides, decide the appeal on this count, after permitting additional evidence on record, if necessary. It would also be open to the Tribunal to restore the issue to the file of the assessing authority to ascertain proper facts in the circumstances." 10. Coming back to the facts of the case in hand in the light of the aforementioned decision of the Hon'ble High Court, we find that there is clear dissimilarity of the facts in as much as in the case of the assessee, the gain has arisen out of the hedging made by the assessee. The assessee has entered into a forward contract and has been benefitted by the fluctuations in foreign exchange irrespective of the fact whether trade agreement exists or not. In other words, the exchange rate fl....