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TMI Blog2019 (12) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in allowing foreign exchange gain in the claim of deduction u/s.10AoftheAct. 3). On the facts and in the circumstances of the case, the Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad ought to have upheld the order of the Assessing Officer. 4). It is therefore, prayed that the order of the Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad may be set-a-side and that of the order of the Assessing Officer be restored. 2. Facts of the case are that assessee is a Limited company engaged in the business of trading of Computers, Computer Peripherals, software development, IT enabled services and export of Software from 100% EOU situated in Software Technology Park. 3. During the year the assesee has shown amount receivable of Rs. 4,51,607/- on account of unutilized/closing balance of VAT and Rs. 11,04,607/- on account of service tax under Loans and advances. The assessing officer has wrongly considered closing balance of VAT and service tax of Rs. 31,11,757/- instead of Rs. 15,55,879/-. The appellant has wrongly added the closing balance of service tax of Rs. 11,04,272/- in the value of clo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D/2005, 17C/AHD/2005; dated 11/09/2009. It has further relied on the judgment of Delhi High Court in the case of CIT Vs. Mahavir Aluminum Limited [297 ITR 77]. After considering the submission of the appellant, I am of the considered view that no addition on account of provisions of section 145A can be made as the appellant has already considered the application of section -45A in the audit report. The practice of showing the working of inclusion of cess and excise duty on the purchases, sales and the stock is being followed by the appellant company since last so many year by including an annexure in the audit report to show that the effect would be revenue neutral. If would also be relevant to quote from the judgment of ITAT, Ahmedabad in case of Alpanil Industries (Supra) - "17.We have heard the rival submissions and perused the orders of the lower authorities and the materials available on record. In the instant case, the dispute is regarding valuation of closing stock in view of the insertion of provisions of section 145A of the Act, The Learned Assessing Officer observed that the assessee has not included (he element of excise, duty which was paid by the assessee on his pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was liable to pay a further excise duty of Rs. 80 to the government. When the expenditure of Rs. 80 is takeninto account in the illustration given for inclusive method them the profit as per inclusive method also works out to Rs. 300/- which is exactly the same as per exclusive method. Further the Ld CIT(A) in the illustration cited in his order has not accounted for the amount of Modvat utilized by the assessee inpayment of excise duty in respect of raw material not utilized for manufacturing in the illustration the ld. CIT(A) has shown that assesseehas utilized amount of Rs. 180 out of amount of Rs. 200/- of excise duty paid on purchase against the excise duty liability of Rs. 180 on sales. However, this utilization of Rs. 180 was allowed to the assessee in respect of stock which was not used for manufacturing also to the extent of Rs. 80. The CIT(A) ignored the fact that if in future the closing stock is not utilized for manufacturing then the Modvat Credit utilized would be reversed and the assessee would be further liable to pay Rs. 80 to the Government. In a nutshell the ld. CIT(AA) arrived at a wrong conclusion because of not considering the assessee's liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e heard both the parties and gone through the relevant record. So far ground relating to addition of Rs. 31,11,757/- made u/s. 145A is concerned, ld.A.O. has made disallowance by applying the provision of section 145A. As we can see, after going through the Audit Report that assessee has already considered the application of section 145A in the audit report and the practice of showing the working of inclusion of cess and excise duty on the purchases, sales and the stock is being followed by the assessee company since last several years. 10. Section 145A requires the valuation of purchase and sale of goods or services and of the inventory shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever have been called) actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on date of valuation. In our considered opinion, assessee is following the same method for several years and therefore this ground of Revenue is dismissed. 11. Now we come to next ground relating to deduction of Rs. 4,11,14,242/- . The assessee claimed deduction u/s. 10A if the claim of deduction u/s. 10B is disallowed as assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation Technology and assessee has also filed the copy of extract of the said website and which has not been disputed by the ld. A.O. and in the past, assessee has been claiming deduction u/s. 10A. Moreover, assessee company set up in the 100% EOU under STP Scheme as per letter of permission No. STPIG/EXIM/S/503/STTL-SWED/13 dated 2-1-2007 by the Designated officer Software and IT enabled services and same details were submitted before the lower authorities. 13. The assessee is in this business since 2007 and company has been set up in the 100% EOU under STP Scheme and all details have been submitted before the lower authorities. Since assessee has complied with all the condition for availing of benefit of section 10A. Therefore, we dismiss this ground of the revenue. 14. Now we come to next ground relating to allowing of foreign exchange gain in the claim of deduction u/s 10A. 15. The ld. A.O. noted that the export turnover shown in Form 56G was more than the FOB. Value realized. The assessee explained that the difference in due to the appreciation of foreign currency at the time of realization of the proceeds of goods exported on an earlier date. The A.O. held that income d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on gain is entitled for deduction u/s. 10B. For the sake of clarity, the relevant portion of the judgment is reproduced hereunder: " We have heard the rival submissions and perused the orders of the lower authorities and thematerials available on record. In the instant case, the assessee earned exchange rate fluctuation of Rs. 17,10,678/- on sale proceeds of goods. Which was disallowed deduction under section 10B of the Act by the ld. A.O. In appeal, the Ld CIT(A) allowed deduction on the same. We find that the third member of the tribunal in the case of ITO vs. Banyan Chemicals Lt. (2009) 117 ITD 376, has held that the gain on account of exchange fluctuation results in the receipt of foreign currency due to export sales made by an assessee. It is a part of the receipt of sale proceeds converted in India rupee as held by the Hon'ble Gujart High Court in CIT vs. Amba Impax (2006) 282 ITR 144 (Guj.) Though it was a case under section 80HHC but he provisions of section 10B are in para material and therefore, the decision would apply mutatis matandis to section 10B. Respectfully following the same, we find that in the instant case, it is not the fact that the assessee has receive ..... X X X X Extracts X X X X X X X X Extracts X X X X
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