2015 (6) TMI 1176

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....e Learned C.I.T.(A) has erred in sustaining the disallowance of rebate u/s 80IC Rs. 5,50,866/- as per Rule 8D read with section 14A." 4. Briefly stated, the facts of the case are that the assessee had earned dividend income, which is exempt and had not shown any expenditure against the dividend income. The Assessing Officer disallowed total amount of Rs. 8,21,516/- under Rule 8D of the Income Tax Rules, 1962. Out of Rs. 8,21,516/-, the CIT (Appeals) deleted an amount of Rs. 2,70,650/-, against which no appeal has been filed by the Revenue. The balance amount of Rs. 5,50,866/- (Rs.8,21,516 - Rs. 5,50,866 = Rs. 2,70,650/-) was added by the Assessing Officer as under : "The assessee has claimed total interest of Rs. 13,74,875/-. Th....

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....ideration and, therefore, I set aside the orders of the lower authorities on this issue and remand the matter to the file of the Assessing Officer to decide the issue afresh in accordance with law after affording due and reasonable opportunity of being heard to the assessee. 7. For statistical purposes, this ground of appeal is allowed. 8. Ground No.3 reads as under : "3. That the Learned C.I.T.(A) has erred in sustaining the disallowance of rebate u/s 80IC Rs. 8,22,196/- on account of Exchange Rate Fluctuations." 9. The assessee has claimed income of Rs. 8,00,196/- on account of foreign exchange fluctuation. The Assessing Officer did not allow deduction under section 80IC of the Income Tax Act, 1961 (in short 'the Act') o....

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....(IT Appeal Nos.1974, 1976 and 1978 of 2009). In the circumstances, we would affirm the judgment of the Tribunal insofar as the question of exchange rate fluctuation is concerned." 12. From the above, it is clear that the Hon'ble High Court has categorically held that the exchange rate fluctuation arises out of and is directly related to the sale transaction involving the export of goods of the industrial undertaking and, therefore, difference on account of exchange rate fluctuation is entitled to deduction under section 80IB of the Act. No contrary decision was brought to my notice. Respectfully following the judgment of the Hon'ble Bombay High Court in the case of CIT Vs. Rachna Udyog (supra), I hold that the difference on accou....