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2006 (8) TMI 246 - AT - Income TaxDeduction u/s 80HHD - bills for services rendered to foreign tourists - income generated in exchange fluctuation - HELD THAT:- The actual income was exact value realized by the assessee when its bills were honoured by foreign tourists. In order to arrive at the net foreign exchange receipts, the amounts certified under Item 2A, in Form 10CCA are to be considered. However, while considering the total receipts and net receipts of foreign exchange, the AO in the instant case has wrongly reduced the exchange fluctuation income instead of adding the same to the foreign tour receipts. The issue regarding treatment of income/loss arising out of exchange fluctuation is no more res integra and by plethora of decisions, it has been held that, such amount is part and parcel of sale proceeds in convertible foreign exchange. Tribunal, Delhi Bench in the case of Sharp Credit Ltd. vs. Dy. CIT [2004 (4) TMI 272 - ITAT DELHI] has held that total turnover of export receipts includes profit/loss in exchange fluctuation. Similarly, Tribunal, Ahmedabad Bench in the case of Priyanka Gems vs. Asstt. CIT [2004 (12) TMI 288 - ITAT AHMEDABAD-B], order authored by one of the Members constituting this Bench have dealt with the issue in great length and held that in case of export business, income earned or loss incurred on account of fluctuation in exchanged rates, forms part of the sale proceeds earned in convertible foreign currency and, therefore, eligible for deduction u/s 80HHC/80HHD of the Act. Thus, we direct the AO to verify the records and relevant certificate in Form 10CCA, and consider the foreign exchange earning actually realized by the assessee, after considering the excess amount realized due to exchange rate fluctuation as forming part of income eligible for deduction u/s 80HHD. Accordingly, the AO is directed to recompute the deduction u/s 80HHD of the Act. Tax credit available u/s 115JB - HELD THAT:- In the instant case, the assessee is engaged in business of handling inbound foreign tourists and entire income was received in convertible foreign exchange. A tax credit u/s115JB of the Act was claimed while computing advance tax and net tax. The AO computed interest without giving this credit. In view of the decisions referred to above, we do not find any merit in the action of the AO in computing interest payable under ss. 234B and 234C of the Act without giving credit for tax under s. 115JB of the Act. We, therefore, reverse the action of the lower authorities and direct the AO to recompute interest under ss. 234B and 234C of the Act after giving due deduction for tax credit of Rs. 7,20,934 u/s 115JB of the Act. In the result, the appeal of the assessee is allowed in terms indicated hereinabove.
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