TMI Blog2001 (11) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... t income from the profits of the business; and second he included a sum of Rs. 48,38,274 being the amount received on account of exchange fluctuation in relation to sales effected in earlier years in total turnover and not forming part of export turnover. The assessee challenged the second item before the CIT(A) contending that such foreign exchanges fluctuation ought to have been included in the export turnover as well. The CIT(A) concurred with the assessee s contention in this regard. However, it was noticed by the CIT that the AO while calculating deduction under s. 80HHC had not excluded 90 per cent of the foreign exchange gain of Rs. 48,38,274 and interest income of Rs. 1,52,807 from the profits of the business as defined in Expln. (baa) below s. 80HHC(4B). It was noted that this amount received as foreign exchange difference during the present assessment year related to export sales made in the earlier years and, therefore, could not be treated like foreign exchange difference relating to exports made during the current year. It was further noted by him that since the issue of including the same amount in export turnover and total turnover was considered and decided by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as any part of the deduction under s. 80HHC was concerned. For this proposition reliance was placed on various decisions including Oil India Ltd. vs. CIT (1982) 27 CTR (Cal) 259 : (1982) 138 ITR 836 (Cal), Remex Constructions/Remex Electricials vs. First ITO Ors. (1986) 55 CTR (Bom) 423 : (1987) 166 ITR 18 (Bom), CIT vs. Goodricke Group Ltd. (1994) 116 CTR (Cal) 625 and unreported decisions of the Allahabad Bench of Tribunal in ITA No. 509 (All) of 1999 [since reported as Sahara India Mutual Benefits Co. Ltd. vs. Asstt. CIT (2002) 74 TTJ (All) 67 Ed.] the copy of which was also placed on record for our consideration. 5. On merits the learned counsel submitted that the CIT misdirected himself in considering the foreign exchange fluctuation income of sales effected in earlier years as falling in "any other receipts of a similar nature" as per Expln. (baa) below s. 80HHC(4B). It was submitted that this Explanation referred to receipts by way of brokerage, commission, interest and rent, etc. and the expression "any other receipts of similar nature" referred to such type of receipts only and the foreign exchange rate fluctuation income could not be considered as falling in that cat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clude the same amount in the figure of export turnover as well. On the other hand, the learned CIT invoked his revisionary power under s. 263 on the ground that the AO should have deducted 90 per cent of income on account of the difference in foreign exchange of Rs. 48,38,274 and interest income of Rs. 1,52,807 while calculating "profits of the business". In so far as the interest income of Rs. 1,52,807 is concerned, it is seen from the assessment order that the AO had considered this figure while deducting 90 per cent from the net profit for arriving at the figure of the "profits of the business". Therefore, to this extent there was unanimity between AO and CIT and hence could not have been the subject-matter of revision under s. 263. Insofar as the other item of income from difference of foreign exchange rate is concerned, the CIT was of the opinion that 90 per cent of the same ought to have been reduced from the net profits to arrive at the "profits of business" on the ground that this amount received on account of foreign exchange fluctuation did not relate to the sales effected during the year under consideration but to the sales effected in earlier years. 8. First of all we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed legal position reveals that the CIT(A) is competent to consider all the aspects of the matter which is agitated before him. It is not only the right but the duty of the CIT(A) to examine various aspects of the issue which is the subject-matter of controversy before him. When a particular matter is disputed by the assessee before the first appellate authority and he gives his findings on some aspects of the matter, it is implied that he has examined all aspects of that matter before adjudicating upon the matter and is satisfied as regards the correctness of the findings of the AO on all other aspects of that matter. This is obvious from his power of enhancement, which has the effect of increasing the income by setting right the lacunas left over by the AO while framing the assessment. 11. The view canvassed by the learned Departmental Representative on the overlapping of the powers of the CIT(A) under s. 251 and that of CIT under s. 263, in our considered opinion is not based upon the correct interpretation of the scope of the powers of the two authorities. Whereas s. 251 stipulates that the CIT(A) has all the powers of the AO and is competent to do all what AO could have done, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shows that the order of the AO on the issue of deduction under s. 80-I gets merged with that of the CIT(A) leaving the CIT powerless to revise that part of the order. At the same time, albeit the order of the AO is appealed against before the CIT(A), but since the issue of deduction under s. 80L is not considered and decided by the latter, the CIT is under his jurisdiction to exercise his revisionary power under s. 263 pro tanto. 12. Our view is fortified by the decision of the Calcutta High Court in the case of Oil India Ltd. vs. CIT. In this case the appeal before the first appellate authority related to the rate of depreciation of a building to be taken into account for purposes of disallowance under s. 40(a)(v) and the question whether depreciation should be calculated on the basis of user of the building for 12 months or of 11 months was not a specific aspect which was agitated before the AAC nor was it one on which he gave any direction. In this case it was held that as the quantum of depreciation was the subject-matter of appeal, the CIT had no jurisdiction under s. 263 to revise the order with reference to this aspect. 13. Reverting to the facts of the instant case it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Chapter IV-D, the 90 per cent of the sums referred to s. 28(iiia), (iiib) and (iiic) or receipts by way of brokerage, commission, interest, rent, charges or any other receipts of a similar nature. Clause (2) of the Expln. (baa) is not relevant for our purpose. Now the short question that falls for our consideration is whether the foreign exchange rate fluctuation gain pertaining to exports effected in earlier years can be said to form "any other receipts of a similar nature". If it is held to be falling in this category, then the viewpoint canvassed by the CIT on this issue, apart from legal ground, would be correct and vice versa. 16. It is not uncommon to find words like "and also", "et. cetera", "and like" and "of such nature" in every statute. The ejusdem generis is the rule of generis words following more specific ones. It means general words following specific words would derive colour from the specific words preceding them. Per contra, the meaning of the general words would have to be seen in the light of the words in whose company such general words fall. The reason being that such general words are used to provide completeness to the specific words in the statute and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to exports effected during the current year is concerned because that cannot be considered for exclusion to the extent of 90 per cent for computing Profits of the business and the CIT has himself left out the same. We fail to understand as to how the exchange rate fluctuation income relating to exports effected in the earlier years can be differentiated from the exchange rate difference in relation to exports effected in the current year. Basically exchange rate fluctuation difference is nothing but part of sales. When the goods are exported to a country outsideIndia, the invoice has to be raised in terms of the foreign currency prevalent in that country and at the time of making exports. The exporter converts that currency into Indian rupees at the exchange rate prevalent at that time and accordingly takes cognizance of that amount as its export figure in its books of accounts. However, when the invoice is actually realised from foreign country and the amount is remitted toIndia, the exchange rate prevalent on that date may be equal to or more or less than the one recorded in the books of accounts at the time of making the sales. If the exchange rate is more it result ..... X X X X Extracts X X X X X X X X Extracts X X X X
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