2021 (3) TMI 18

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....hnology enabled services. The return for the year under consideration was filed declaring income at Rs. 1,88,91,468/-. The return was subsequently revised declaring loss of Rs. 2,39,69,400/-. The assessment was completed at a loss Rs. 1,06,39,645/-. In computing the income, the Assessing Officer (AO) restricted the assessee's claim of deduction u/s 10A of the Income Tax Act, 1961 (herein after called 'the Act'). The deduction u/s 10A was allowed at income of Rs. 25,81,03,269/-, as against the claim at income of Rs. 26,02,89,625/-. While allowing the deduction u/s 10A, net foreign exchange gain of Rs. 4,80,613/- was reduced from the net profit of the undertaking for the reason that the same was capital in nature. Apart from this, adjustment ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... gain of Rs. 4,80,613/- was a capital receipt and as such was not liable to tax as business income." 3.1 The Ld. Authorized Representative (AR) submitted that this ground was also raised before the Ld. CIT (A) as ground No.3 and that this additional ground deserves to be admitted. It was submitted that this ground relates to the issue of taxability of Rs. 4,80,613/- and was duly examined by the Assessing Officer and was, thus, not an altogether fresh issue. Reliance was placed on the judgment of Hon'ble Apex Court in the case of NTPC Ltd. vs. CIT [1998] 299 ITR 383, for the proposition that the purpose of assessment proceedings before the Taxing Authorities is to assess correctly the tax liability of an assessee in accordance with law and....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....was not real income and that these were notional entries on capital account. It was further submitted that actual loss of Rs. 12,15,955/- on account of payment to shareholders of Web- Converse was also on capital account. It was further submitted that, thus, the net foreign exchange fluctuation gain of Rs. 4,80,613/- was on account of capital account and not on revenue account. The Ld. Authorized Representative drew our attention to the finding of the Ld. CIT (A) on the issue as contained in pages 8 and 9 of the impugned order wherein the Ld. CIT (A) has given a categorical finding that this foreign exchange fluctuation adjustments were not related to the acquisition of assets and, therefore, section 43A (1) of the Act was not applicable. T....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e Assessing Officer and the Ld. CIT (A) and submitted that the issue had already been duly considered by the two Lower Authorities and that they had arrived at the right conclusion in this regard. 7.0 We have heard the rival contentions and have also perused the material on record. The only grievance of the assessee before us is that the Assessing Officer, while allowing assessee's claim of deduction u/s 10A of the Act, has reduced an amount of Rs. 4,80,613/- from the net profit of the undertaking, it being the net foreign exchange gain, for the reason that the same was capital in nature. There is no dispute that the said income is capital in nature as the Ld. CIT (A) has given a categorical finding on the same. The Department has not disp....