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2016 (9) TMI 398 - AT - Income TaxClaim u/s. 10B - Held that:- Reversion of excess provisions and Exchange gain - Admittedly the foreign exchange gain arisen out of the import of rawmaterials or export of finished goods and not interest from external commercial borrowings. The issue regarding taxability of gain or deduction of loss arising on account of fluctuation in rate of foreign exchange has been subject matter of the decision in the case of CIT v. Woodward Governor India P Ltd. [2007 (4) TMI 118 - DELHI HIGH COURT ] and also the Hon'ble Supreme Court [2009 (4) TMI 4 - SUPREME COURT ]. In terms of the above said judgments the effect of exchange difference in the case of revenue item has to be taken into account in the P&L a/c. As the foreign exchange fluctuation in the case of the assessee relates to import of raw material and export of finished goods the same cannot be excluded and have to be taken in to account while computing deduction under section 10B of the Act. Accordingly, the ld. CIT(A) directed the Assessing Officer to amend the order. With regard to scrap sale, export entitlements, discount received, fixed charges recovery, the ld. CIT(A) has directed the Assessing Officer to amend the order by including all the above receipts while computing deduction under section 10B of the Act. Reversion of excess provisions if it is allowed as deduction in earlier assessment year while computing the business income of the assessee and consequently reversing the same in the assessment year under consideration, it has to be considered as part of the business profit and thereby the assessee is entitled for deduction under section 10B of the Act. Hence, the Assessing officer is directed to verify whether the original provision was allowed as deduction in earlier assessment years and decide the issue afresh accordingly after hearing to the assessee. Thus, the ground raised by the Revenue is allowed for statistical purposes.
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