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2015 (12) TMI 285 - AT - Income TaxIncome recognition - CIT(A) considering foreign income at average exchange rate of conversion during the year when credit for tax deducted at source is given based on the actual exchange rate prevailing on the date of transaction - Held that:- CIT(A) had given directions to adopt the exchange rate prevailing on the date of payment of taxes for the purpose of granting foreign tax credit and whereas for the purpose of assessing the foreign income, he had adopted a different view of adopting the average exchange rate of conversion during the year. We hold that the provisions of Rule 26 and Rule 115 of Income Tax Rules provide computation mechanism for conversion of foreign currency into Indian currency in respect of each source of income. Hence we deem it fit and appropriate in the interest of justice and fair play to set aside this issue to the file of the Learned AO to determine the foreign income in accordance with Rule 26 and Rule 115 of Income Tax Rules depending upon the nature of income. We also direct that in case the assessee is able to produce any other fresh evidence to determine the foreign income based on exchange rate prevailing on the date of income, the same need to be considered by the Learned AO while framing the set aside assessment. - Decided in favour of revenue for statistical purposes. Determination of presumptive profit u/s 44AD - Held that:- The action of the lower authorities in adopting the presumptive rate of taxation u/s 44AD in the facts and circumstances of the case is not appreciated and accordingly the cross objection of the assessee is allowed. Non consideration of effect of Double Taxation Avoidance Agreement (DTAA) between India and Oman for the purpose of assessment of foreign income of the assessee - Held that:- We find lot of force in the cross objection raised by the assessee in this regard. Accordingly, we direct the Learned AO to consider the relevant article of DTAA with regard to the foreign income depending upon the nature of income and assess the foreign income in accordance with the provisions of section 90 of the Act. Cross objection of the assessee is allowed for statistical purposes.
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