TMI Blog2009 (7) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of assessee as unascertained liabilities/notional losses. He accordingly disallowed the claim of assessee at Rs. 4,68,896. 3. On appeal ld. CIT(A) following the decision of ITAT in the case of Oil Natural Gas Corpn. Ltd. v. Dy. CIT [2002] 83 ITD 151 (Delhi)(SB) allowed the claim of the assessee. 4. We have heard both the parties and gone through the material available on record. There is no dispute that the assessee has suffered foreign currency loss due to restatement of liability on account of purchase of raw material/debtors. Therefore, the loss due to difference in foreign ex-change has occurred in the revenue field. We find this issue is covered by the decision of Hon ble Supreme Court in the case of CIT v. Woodward Governor India (P.) Ltd. [2009] 312 ITR 254 wherein it has been held that the loss suffered by the assessee on account of fluctuation in the rate of foreign exchange as on the date of the balance sheet is an item of expenditure under section 37(1) of the Act. Hon ble Supreme Court has upheld the decision of Hon ble Delhi High Court in the case of CIT v. Woodward Governor India (P.) Ltd. [2007] 294 ITR 451 . Respectfully following t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome which is exempt from tax. Rule 8D of the Income-tax Rules, 1962 prescribes the method by which the Assessing Officer has to determine the disallowable expenditure as relatable to the exempted income in terms of sub-sections (2) and (3). Thus, sub-sections (2) and (3) are procedural in nature and hence applicable retrospectively. In the case before us the Assessing Officer as well as the ld. CIT (Appeals) have not examined as to how much of the interest payment is relatable to exempted income though the assessee s contention is that investment was made out of own sources. The disallowance under section 14A of the Act has to be computed as per the provisions of section 14A (2) and (3) read with rule 8D as held in the decision of ITAT, Special Bench in the case of Daga Capital Management (P.) Ltd. ( supra ). We, therefore, set aside the matter to the file of the Assessing Officer with the directions to examine the claim of the assessee in the light of the decision of the ITAT, Special Bench and work out the disallowance as per Rule 8D of Income-tax Rules, 1962. The Assessing Officer will decide the matter after affording the assessee a reasonable opportunity of being heard. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it had been excluded for computing the export turnover and total turnover. Since the income from EHTP unit was exempt under section 10A it would not be correct to include the turnover of the exempted unit in the export turnover and total turnover. Section 10A being an exemption provision all the financial figures of such undertaking are to be ignored. It was also submitted that where profit is excluded the relevant turnover should be excluded from numerator and denominator. Ld. CIT(A) after considering the rival submission agreed with the contention of AR of the assessee that the decisions relied upon by the Assessing Officer were not applicable to the facts of this case. They related to cases where assessee had exports as well as local sales. He further noted that when profit of a particular unit was excluded the relevant turnover should also be excluded from both the numerator and denominator. He accordingly directed the Assessing Officer to exclude the turnover of exempted unit from total turnover. 13. We have heard both the parties and gone through the material available on record. There is no dispute that the industrial undertaking to which provisions of section 10A apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill not be applicable to the year under consideration in view of decision of Hon ble Delhi High Court in the case of CIT v. Shri Ram Honda Power Equip [2007] 289 ITR 475 . From the assessment order as well as order of CIT(A) we find that none of the authority had examined the nature of interest income whether the same should be assessable as business income or under the head other sources. Therefore, we are of the considered view that the nature of interest income it to be examined in the light of the decision of Hon ble Delhi High Court in the case of Shri Ram Honda Power Equip. ( supra ). We, therefore, set aside this issue to the file of Assessing Officer with the direction to examine the case of the assessee in the light of decision of Hon ble Jurisdictional High Court. As regards the issue relating to commission, and rental income is concerned the Assessing Officer will verify whether they are assessable as business income or under the head other sources. If these are assessable as business income, 90 per cent of the same shall be excluded under clause ( baa ) of the Explanation . On the other hand if these are assessable under the head other sources , 100 per cent of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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