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2015 (6) TMI 1176 - AT - Income TaxDisallowance of rebate u/s 80IC as per Rule 8D read with section 14A - Held that:- It is relevant to observe that in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] has held that Rule 8D is applicable from assessment year 2008-09. It has no application prior to assessment year 2008-09. In the instant case, the assessment year is 2007 08. It is pertinent to state here that following the decision of the Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. (supra) different Benches have set aside the matters back to the Assessing Officer where the additions were made on the basis of Rule 8D. In view it Rule 8D is not applicable to the assessment year under consideration and, therefore, 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 Disallowance of rebate u/s 80IC on account of Exchange Rate Fluctuations - Held that:- The issue in hand is squarely covered in favour of the assessee and against the Revenue by the decision of the Hon'ble Bombay High Court in the case of CIT Vs. Rachna Udyog [2010 (1) TMI 38 - BOMBAY 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 above thus hold that the difference on account of exchange rate fluctuation is entitled to deduction under section 80IC of the Act. This ground of appeal is allowed. Disallowance on account of interest expense under section 36(1)(iii) - Held that:- As assessee submitted that the provisions of section 36(1)(iii) of the Act are applicable in this case. However, she stated that the disallowance of interest @ 12% is not correct and the same should be worked out on pro-rata basis. Fully agree with the above submissions of the learned A.R. for the assessee and direct the Assessing Officer to re-work the disallowance on pro-rata basis. This ground of appeal is disposed off accordingly. Disallowing deductions u/s 80IC for the additions made due to certain disallowances - Held that:- Direct the AO to re-compute the deduction allowable under section 80IC of the Act keeping in view the above observations and in accordance with law after affording reasonable opportunity of being heard to the assessee.
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