TMI Blog2022 (6) TMI 1399X X X X Extracts X X X X X X X X Extracts X X X X ..... ) are set-aside and the matter is decided in favour of the assessee and against the Revenue and the grounds of appeal of the assessee are thus allowed. Disallowance of claim of deduction u/s 80-IC on account of exchange rate fluctuation - as submitted by A/R that the difference in the foreign exchange rate is a part and parcel of income derived from eligible business and the same should be allowed - HELD THAT:- There is always a difference between the exchange rate at the time of booking of the invoices and the subsequent realization thereof at the time of receipt of payment and thus the exchange rate fluctuation is clearly flowing from the eligible business and, therefore eligible for deduction u/s 80-IC - As decided in case of DCIT vs. Ansysco [ 2016 (12) TMI 1764 - ITAT CHANDIGARH] wherein it was held that where the foreign exchange fluctuations relate to the export activity carried out by the assessee, the foreign exchange fluctuations is to be treated as trading receipts/receipts from manufacturing activity and which is eligible for claiming deduction u/s 80-IC - Assessee is eligible for claim of deduction u/s 80-IC in respect of foreign exchange fluctuations. Basis the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s uncalled for and deserves to be deleted. 4. That the learned Commissioner of Income Tax (Appeals), Shimla is unjustified in upholding the order of the ld. Assessing Officer concluding that the benefit of substantial expansion is available only to the preexisting units i.e. the units that existed and were operational as on 07-01-2003 and not to the appellant which came in existence after 07-01-2003 which is discriminatory and unjustified as the section does not specify that the benefit of substantial expansion is available only to pre-existing units operational as on 07-01,03. This observation is unjustified and against the spirit of the law. 5. That the learned Commissioner of Income Tax (Appeals), Shimla is unjustified in upholding the order of the ld. Assessing Officer concluding that once an initial assessment year is determined in case of an industrial undertaking claiming benefit u/s 80IC it cannot be changed even if the same undertaking completes substantial expansion which is unjustified as it is clearly mentioned u/s 80IC(8)(v) of the I.T. Act, 1961 that initial assessment year means the assessment year in which the undertaking completes the substantial expans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r first five years and is not at all meant for units that came into being on or after the introduction of the Scheme i.e. 07.01.2003. Accordingly, the assessee s claim of substantial expansion was denied and the assessee was allowed to claim deduction under section 80IC to the tune of 25% of eligible profits for the impugned assessment year. 3. Being aggrieved, the assessee carried the mater in appeal before the ld. CIT (A). The ld. CIT (A) following the decision of Hon ble Supreme Court in assessee s own case in Civil Appeal No. 7208 of 2018 dated 20.8.2018 decided the issue against the assessee. Against the said findings of the ld. CIT (A), the assessee is in appeal before us. 4. During the course of hearing, the ld. A/R submitted that it is not in dispute that the Hon ble Supreme Court in assessee s own case for earlier year has decided the matter against the assessee. At the same time, it was submitted that in a subsequent decision in case of PCIT vs. Aarham Softronics reported in 412 ITR 623 (SC), the Hon ble Supreme Court has considered its earlier decision in case of Classic Binding Industries case and has held that an error has occurred in the said decision wherein th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, the admissible deduction would be 25% (or 30% where the assessee is a company) of the profits and gains. (c) However, in case substantial expansion is carried out as defined in clause (ix) of sub-section (8) of Section 80-IC by such an undertaking or enterprise, within the aforesaid period of 10 years, the said previous year in which the substantial expansion is undertaken would become initial assessment year , and from that assessment year the assessee shall be entitled to 100% deductions of the profits and gains. (d)Such deduction, however, would be for a total period of 10 years, as provided in sub-section (6). For example, if the expansion is carried out immediately, on the completion of first five years, the assessee would be entitled to 100% deduction again for the next five years. On the other hand if substantial expansion is undertaken, say, in 8th year by an assessee such an assessee would be entitled to 100% deduction for the first five years, deduction @ 25% of the profits and gains for the next two years and @ 100% again from 8th year as this year becomes initial assessment year once again. However, this 100% deduction would be for remaining thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chandigarh Benches in case of JCBL India Pvt. Ltd. in ITA No. 368/Chd/2012 darted 15.06.2015 wherein similar proposition has been laid down. It was accordingly submitted that the assessee is eligible for claim of deduction under section 80-IC in respect of foreign exchange fluctuations. 10. Per Contra, the ld. D/R submitted that the ld. CIT (A) has already allowed the relief to the assessee and the AO has been directed to delete the addition made after due verification. 11. We have heard the rival contentions and pursued the material available on record. Basis the invoices placed on record and following the Coordinate Bench decisions referred supra, the claim of the assessee is allowed. 12. In ground no. 6, the assessee has challenged the disallowance of expenditure amounting to Rs. 6,53,907/-. In this regard it is noted that these expenses relate to gifts, charity and donations and during the course of assessment proceedings, the assessee was asked to provide necessary explanation. However, in absence of any reply filed by the assessee these expenses were disallowed. However, given the fact that the assessee was eligible for claim of deduction under section 80-IC to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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