TMI Blog2011 (8) TMI 1367X X X X Extracts X X X X X X X X Extracts X X X X ..... 58/- arising on account of revaluation of Bank Balance as Income from Other Sources and not allowing deduction u/s.10A of the Act on the same. 2. In view of the above, the ld ACIT be directed to treat the gain on foreign exchange fluctuation on account of revaluation of Bank Balance as Business Income and to allow the deduction u/s.10A of the Act on the same. 3. The assessee is a private limited company and engaged in the business of export of software related services. The assessee had claimed deduction u/s.10A on foreign exchange gain of Rs.69.21 lacs, however the AO disallowed the claim of the assessee with respect to foreign exchange gain and treated the same as income from other sources. On appeal, the ld CIT(A) allowed the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re squarely covered by the Hon ble ITAT Special Bench, Mumbai in the case of ACIT vs. Prakash I. Shah (supra) wherein it was clearly held that foreign exchange gain is part of export turnover and also by the decision of Hon ble ITAT Bangalore in the case of Information Technologies Ltd. Vs. JCIT 109 TTJ 631 wherein it was clearly held that exchange rate difference is part and parcel of export proceeds and cannot be treated as income from other sources. In view of the judicial precedents, the Assessing Officer is directed to allow 10A deduction on foreign exchange fluctuation of Rs.58,60,227/-. It is also pertinent to mention that the appellant himself had conceded that the foreign exchange gain of Rs.10,61,258/- on account of revaluation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action is complete and payment has been received by the exporter. Upon the completion of the export transaction, what the seller does with the proceeds, upon repatriation, is a matter of his option. The exchange fluctuation in the EEFC account arises after the completion of the export activity and does not bear a proximate an direct nexus with the export transaction so as to fall within the expression derived by the assessee in sub-section(1) of section 80HHC. Both the Assessing Officer and the CIT(A) have made a distinction, which merits emphasis. The exchange fluctuation, as both those authorities noted, arose subsequent to the transaction of export. In other words, the exchange fluctuation was not on account of a delayed realization of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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