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Asstt. Commissioner of Income Tax, Vapi Circle, Vapi Versus M/s. K.M. Enterprises

2016 (7) TMI 693 - ITAT AHMEDABAD

Eligibility for deduction u/s. 80IB - exchange rate difference - CIT(A) has allowed the claim of deduction u/s. 80IB heavily relying upon the decision of Amba Impex [2005 (12) TMI 58 - GUJARAT High Court ] - Held that:- In the light of the aforementioned decision of the Hon’ble High Court, we find that there is clear dissimilarity of the facts in as much as in the case of the assessee, the gain has arisen out of the hedging made by the assessee. The assessee has entered into a forward contract a .....

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heavily relying upon the decision of Amba Impex (supra) and since we have substantively distinguished the facts of the case in hand with the facts of the case before the Hon’ble High Court (supra). We set aside the findings of the ld. CIT(A) and restore that of the A.O. - Decided in favour of revenue - Allowability of depreciation on plant - Held that:- CIT(A) was of the opinion that there is a merit in the case of the assessee. The plant and machineries were used during the year and, theref .....

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EMBER For The Appellant : Shri Kamlesh Makwana, Sr. D.R. For The Respondent : None PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. This appeal by the Revenue is directed against the order of Ld. CIT(A), Valsad dated 27.02.2013 pertaining to A.Y. 2009-10. 2. The substantive grievance of the revenue reads as under:- 1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in allowing the exchange rate difference amounting to ₹ 31,68,717/- to be included in profits e .....

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ncome, the A.O. found that the assessee has claimed deduction u/s. 80IB of the Act in respect of exchange rate difference amounting to ₹ 31,68,717/-. When sought explanation, the assessee heavily relied upon the decision of the Hon ble High Court of Gujarat in the case of Amba Impex 282 ITR 144. However, the claim of the assessee did not find any favour with the A.O. who was of the opinion that the principles laid down by the Hon ble Supreme Court in the case of Sterling Food 237 ITR 579 s .....

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nue is before us. 6. The ld. D.R. strongly relied upon the findings of the A.O. None appeared on behalf of the assessee; therefore, we decided to proceed ex parte. 7. We have heard the ld. Departmental Representative at length and have carefully perused the orders of the authorities below. We find that the ld. CIT(A) has allowed the claim of deduction u/s. 80IB of the Act, heavily relying upon the decision of the Hon ble Gujarat High Court in the case of Amba Impex (supra). 8. We have given a th .....

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ts of the case before the Hon ble High Court were in respect of export sales made by the assessee and on sales realization there was a gain because of exchange rate fluctuation which was claimed as eligible for deduction u/s. 80HHC of the Act. As is evident from the aforementioned substantive question of law, the issue was to decide whether exchange rate difference pertaining to exports made in earlier years would be profits of business within the meaning of Section 80HHC of the Act. The relevan .....

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financial year preceding March 31, 2000. This would have a material bearing, taking into consideration the provisions of sub-section (2) of section 80HHC of the Act as was applicable during the year under consideration. Under sub-section (2) of section 80HHC of the Act, sale proceeds of goods or merchandise exported out of India and received in convertible foreign exchange become entitled to the deduction subject to fulfillment of other requisite conditions. Clause (a) of sub-section (2) of sect .....

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ous year, such sale proceeds are directly relatable to the exports made and no further inquiry is necessary. Therefore, the entire controversy as to whether such receipt amounts to "any other receipt" stipulated in Explanation (baa)(1) need not be taken up for consideration. Once the Legislature has provided for treating a receipt within a period of six months after the end of the previous year, or within further extended period, as sale proceeds relatable exports, it would not be open .....

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ill. Hence, merely because an amount is received in a year subsequent to the year of export by way of exchange rate difference, it does not necessarily always follow that the same is not relatable to the exports made. 9. As can be seen from the impugned order of the Tribunal as well as the orders of the Commissioner (Appeals) and the Assessing Officer, none of the authorities have approached the issue in the light of the provisions of sub-section (2) of section 80HHC of the Act. No evidence is a .....

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der section 80HHC of the Act without expressing any final opinion on the merits of the matter. The Tribunal shall, after hearing both the sides, decide the appeal on this count, after permitting additional evidence on record, if necessary. It would also be open to the Tribunal to restore the issue to the file of the assessing authority to ascertain proper facts in the circumstances. 10. Coming back to the facts of the case in hand in the light of the aforementioned decision of the Hon ble High C .....

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ree nexus the ratio laid down by the Hon ble Supreme Court in the case of Liberty India 317 ITR 218 squarely apply. 11. Since the ld. CIT(A) has decided the issue in favour of the assessee, heavily relying upon the decision of the Hon ble High Court of Gujarat in the case of Amba Impex (supra) and since we have substantively distinguished the facts of the case in hand with the facts of the case before the Hon ble High Court (supra). We set aside the findings of the ld. CIT(A) and restore that of .....

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