TMI Blog2006 (8) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,179 (B) as against Rs. 5,30,18,504 by ignoring Rs. 22,67,477 being profits in exchange fluctuation account, which is an inherent part of gross receipts of foreign exchange earnings. (d) In taking the gross total receipts in foreign exchange at Rs. 5,30,11,431 (C) as against Rs. 5,52,78,908 by ignoring Rs. 22,67,477 being profits in exchange fluctuation account, which is an inherent part of gross receipts of foreign exchange earnings. (e) In not specifically directing adjustment of special reserve under s. 80HHD from Rs. 38,38,516 to Rs. 29,51,914 having a direct bearing on future taxable income of the assessee, as unutilized reserve entails tax. (f) In charging interest under ss. 234B and 234C on alleged short payment of advance tax based on misconception of law and facts. The assessee denies his liability to advance tax to the extent of tax credits available under s. 115JB, brought forward Rs. 7,20,934 as also on the disputed income. (g) That even if it is held that any part of interest is to be charged under ss. 234B and 234C, even then interest under ss. 234B and 234C, which is not penal in nature but only compensatory for withholding payment of taxes, are valid and legal expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 30,92,563 received on FDR with bank as well as ignored Rs. 22,57,477 accrued on account of foreign exchange fluctuation, which were not derived from business of the assessee-company out of services rendered to the foreign tourists, as the same is several degree removed from the income earned by rendering services to the foreign tourists. 5. Aggrieved by the above order of the CIT(A), the assessee is in further appeal before us. 6. The learned Authorised Representative has drawn our attention to the provisions of s. 80HHD of the Act, more particularly to sub-s. (3) indicating the computation provision in respect of profits derived from services provided to foreign tourists. He submitted that as per computation provision, the profit of foreign tourists shall be the amount which bears to the profits of the business, as computed under the head Profits and gains of business or profession , the same proportion as receipts specified in sub-s. (2). He has drawn our attention to the order of the AO wherein at p. 7 of his order he observed that income from interest can be said to be attributable to the business activities of the assessee, but cannot be classified as being derived fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... At p. 7 he has given a clear-cut finding that interest income from EEFC account was attributable to the business activity of the assessee. The AO has nowhere treated such interest income as income from other sources . Such finding of the AO was confirmed by the CIT(A). The Revenue is not in appeal before us against the order of the CIT(A) and the findings confirmed by him. Therefore, the limited controversy before us is as to whether the income which is attributed to the business income of the assessee, will form part of its income from business or profession . Undisputedly, it was an income attributable to business activities of the assessee, and very much part of its business income. Therefore, while computing deduction under s. 80HHD, as per sub-s. (3), we have to take the business profit which is inclusive of the figure of the interest determined by the AO himself at p. 8 of his order. Once the interest income is found to be business income, it will qualify for consideration as per the method provided for calculation of deduction under sub-s. (3) of s. 80HHD of the Act. 10. The case laws discussed by the AO and relied on by learned Departmental Representative pertain to the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e requirement, and directions of the RBI, interest was allowed thereon by the bank, in convertible foreign exchange. Thus, not only the deposit was made in foreign exchange but interest accrued thereon was also in foreign exchange. The AO have included it in business income while computing profits and gains of business and profession, and has not treated it as income from other sources. We are well aware of the fact that an order passed by the co-ordinate Bench should not be lightly disregarded. In taking this view, we are supported by the decision of Hon'ble Supreme Court in the case of Union of India Anr. vs. Paras Laminates (P) Ltd. (1990) 87 CTR (SC) 180 : (1990) 186 ITR 722 (SC) wherein Hon'ble Supreme Court has observed that it is true that a Bench of two Members must not lightly disregard the decision of another Bench of the same Tribunal on an identical question. The rational of this rule is the need of continuity, certainty and predictability in the administration of justice. Persons effected by the decision of Tribunal have a right to expect that those exercising judicial functions will follow the reasons or grounds of the judicial decision in the earlier cases on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts 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) 83 TTJ (Del) 1056 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 (2005) 94 TTJ (Ahd) 557, 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 under s. 80HHC/80HHD of the Act. 14. In view of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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