TMI Blog2016 (7) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... g, the revenue has not placed any material on record to demonstrate that these receipts do not pertain to the manufacturing of the undertaking. In the absence of such specific material, we are of the considered view that the AO was not justified in declining the deduction as available u/s 80IE of the Act. - Decided in favour of assessee Deduction u/s 80IE in respect of foreign currency fluctuation - Held that:- Assessee is a JV concern, which sources its raw materials locally and also imports a substantial part from international market. For imported raw materials, payments are being made in foreign currencies, which are quite volatile, there is no dispute in this regard. The foreign currency gain is the part of raw material there is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue is directed against the order of ld.CIT(Appeals)-I, Jaipur dated 29.12.2014 pertaining to A.Y. 2011-12. The revenue has raised the following grounds of appeal :- (i) Whether on the facts and in the circumstances of the case and in law the ld.CIT (Appeals) has erred in allowing deduction u/s 80IE of the I.T. Act, in respect of technical services receipts of ₹ 42,20,330/- which was treated by assessee itself as income from other sources. (ii) Whether on the facts and in the circumstances of the case and in law the ld.CIT (Appeals) has erred in allowing deduction u/s 80IE of the I.T. Act, in respect of foreign currency fluctuation again of ₹ 22,41,619/- (iii) Whether on the facts and in the circumstances of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (A) was not justified in deleting the addition. 3.2. On the contrary, the ld. Counsel for the assessee supported the order of ld. CIT (A) and reiterated the submissions as are made in the written submissions. The ld. Counsel submitted that for the purpose of grouping of the income, the income was treated as Income from other sources. However, the same was derived from the manufacturing unit. Therefore, the same are eligible for deduction. The ld. Counsel drew our attention to the Bill raised by the assessee company which is enclosed at page 5 of the paper book. 3.3. We have heard rival contentions, perused the material on record and gone through the orders of the authorities below. The ld. CIT (A) has given finding of fact in para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Eastern state which has been manufacturing there articles from on or after April, 2007 onwards (till April, 2017) and AO has not made any adverse comments on that. AO s observation regarding treating of sale liner at Parvati (OMIL) as technical service is not correct. In view of facts and circumstances discussed above, assessee is entitled for the deductions u/s 80IE of ₹ 42,20,300/- with regard sale of liner to different units of Om Projects as they are very much part of manufacturing process done at the Kemang unit. Addition made of ₹ 42,20,300/- gets deleted. There is no dispute with regard to the fact that the bill was raised in respect of fabrication, manufacturing and fixing the steel liners apart from supervisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance. 4.2. On the contrary, the ld. Counsel for the assessee supported the order of ld. CIT (A) and reiterated the submissions as are made in the written submissions. 4.3. We have heard rival contentions and perused the material on record. The ld. CIT (A) in para 3.3.2. has given the finding of fact as under :- I have duly considered AO s contention and appellant s submission, perused the materials on record, duly considered factual matrix of the case as also applicable legal position. Assessee is a JV concern, which sources its raw materials locally and also imports a substantial part from international market. For imported raw materials, payments are being made in foreign currencies, which are quite volatile, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission, perused the materials on record, duly considered factual matrix of the case and also applicable legal position. The amount written off pertains to sundry creditors. It s an excess provision made for some expenses, not made in the current year but booked excess in earlier years and once it is reversed i.e. written back, assessee has to offer for taxation. This is perfectly correct as per accountancy principle. As such, this is the expenditure, which has been booked in excess in earlier year and by this amount the deduction u/s 80IE has been reduced in the said year since the deduction is available for the unit for consecutive 10 years. In view of facts and circumstances discussed above, AO s action in treating the excess provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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