TMI Blog2003 (7) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... could not be considered as income of the year under consideration. 1.3 The ld. CIT(A) failed to appreciate that the right to receive proceeds of the exports made by the appellant company in foreign currency accrued when the goods were exported and it had not come about as a result of devaluation. 1.4 The ld. CIT(A) ought to have appreciated that the appellant had realised the sale proceeds of the exports before the accounts were finalized and hence the turnover was rightly accounted on the basis of actual receipts. 1.5 Your appellant prays that Rs. 84,06,069 being part of the sale proceeds of the year and accounted as such, be accepted as the income of the year. 2. Deduction under section 80HHC 21.1 The ld. CIT(A) erred in confirming the computation of deduction under section 80HHC made by the Assessing Officer on the facts and circumstances of the case and in law. 2.2 Your appellant prays that deduction under section 80HHC be allowed as claimed by the appellant. For assessment year 1992-93. - 1. Gains on exchange rate fluctuation of Rs. 84,06,069 1.1 The ld. CIT(A) erred in confirming the addition of a sum of Rs. 84,06,069 in the income of the year under conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guments taken before the Assessing Officer and further made submissions which have been summed up by the ld. CIT(A) in his order at para 5 of his order. The same is reproduced below for the sake of convenience : "( i )The appellant company up to assessment year 1990-91 was following cash system of accounting in regard to foreign exchange rate fluctuation in respect of exports made by it and in view of mandatory provisions of Accounting Standard-1 w.e.f. 1-4-1991. The appellant company had started w.e.f. assessment year 1991-92 to account foreign exchange fluctuation gain/loss on accrual basis. According to AR, recording all foreign exchange gain/loss not in order in which the fluctuation take place, but in the order the original basic transaction of purchase or sale take place (by relating it back amounts to mercantile system of accounting and accounting of such gain in the year in which the fluctuation takes place and the gain is actually received amounts to cash system of accounting. ( ii )The AR pleaded that the appellant had made exports and the proceeds were received in foreign currency. In such a situation if the amount receivable which is only an estimated figure on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivalent on the foreign currency receivable on exports as on the date of settlement should not be segregated in two parts. One as per the exchange rate as on the date of sale and the other as per the rate on the date of realization, but the whole amount should be treated to have been accrued as income on the date of sale only. ( vii )The AR sought to rely on the decision of Kerala High Court in the case of CIT v. Raja Rajeshwari Narikelly Estate [1993] 199 ITR 383. In the said case the proceeds of the Coffee Estate had been sold to the Coffee Board as was the practice. The price of such coffee was to be determined by the Board in terms of Coffee Point. The assessee, while filing the return of income had estimated the sale proceeds of Coffee at a particular value. Subsequently, long after the accounting period, when the assessment was being made it became known that the Coffee Board had determined the proceeds of the Coffee sold by the assessee company at a much higher figure. The Court directed that the figure determined subsequently by the Board should be taken as the sale proceeds of the year and the fact the award made by the Coffee Board was now known by the close of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 84.06 lakh relates to the export transaction during the previous year relevant to the assessment year 1991-92. It is submitted that the Assessing Officer had wrongly placed reliance on the decision of the Hon ble Supreme Court in the case of CIT v. A. Gajapathy Naidu [1964] 53 ITR 114 . It is submitted that the assessee company had received all the sale proceeds for the assessment year 1991-92 on 14-8-1991 and the accounts were finalized on 14-10-1991. Therefore, the assessee company knew the exact export sale proceeds (inclusive of exchange fluctuation gain) which related to the sales of the year under consideration before the finalisation of the accounts. As such, the deduction should be allowed under section 80HHC of the profit earned on the export of goods which would include the gain due to exchange fluctuation. The ld. counsel also referred to Circular No. 572, dated 3-8-1990 and submitted that the term export turnover means the sale proceeds actually received by the assessee in convertible foreign exchange within six months of the end of the previous year or within such further time as may be allowed by the competent authority in this behalf. The ld. counsel also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volved in these appeals, but, misdirected himself by referring to certain decisions and has come to a wrong conclusion. He has made elaborate discussions in his order from pages 9 to 19. The ld. CIT(A) has referred to the following decisions : ( i ) CIT v. Govind Prasad Prabhu Nath [1988] 171 ITR 417 (All.) ( ii ) CIT v. Ashokbhai Chimanbhai [1965] 56 ITR 42 (SC) ( iii ) CIT v. Hindustan Housing Land Development Trust Ltd. [1986] 161 ITR 524 (SC) ( iv ) CIT v. T.N.K. Govindarajulu Chetty [1987] 165 ITR 231 (SC) and ( v ) Mahalakshmi Sugar Mills Co. v. CIT [1980] 123 ITR 429 (SC) but, ultimately he placed heavy reliance on the Hon ble Supreme Court in the case of A. Gajapathy Naidu ( supra ). 9. We have carefully perused the decisions which have been relied upon by the ld. CIT(A) in his order. The ratio of the decisions are not applicable in the present case. The issue involved and the facts of the case are clearly distinguishable. Before the Assessing Officer and before the ld. CIT(A), the assessee had correctly distinguished the decision of the Hon ble Supreme Court in the case of A. Gajapathy Naidu ( supra ). In the case of A. Gajapathy ..... X X X X Extracts X X X X X X X X Extracts X X X X
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