2011 (6) TMI 893 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition on account of exchange rate fluctuation.
2. Reduction of addition on account of estimated sale of scrap.

Summary:

1. Deletion of Addition on Account of Exchange Rate Fluctuation:
The Revenue contended that the CIT(A) erred in deleting the addition of Rs. 11,83,478/- made on account of exchange rate fluctuation. The assessee, a 100% export-oriented undertaking, claimed deduction u/s 10B of the Income-tax Act, 1961. The AO disallowed this claim, considering the exchange rate fluctuation as a windfall. However, the CIT(A) deleted the addition, relying on various judicial rulings that held such gains as integral to export turnover and eligible for deduction u/s 10B. The Tribunal upheld the CIT(A)'s decision, finding no infirmity in the well-reasoned order based on cogent material and facts.

2. Reduction of Addition on Account of Estimated Sale of Scrap:
The Revenue also contended that the CIT(A) erred in reducing the addition to Rs. 4,60,174/- from Rs. 11,53,180/- made by the AO on account of estimated sale of scrap. The AO made the addition due to the assessee's failure to provide detailed records of scrap generation. The CIT(A) partially upheld the addition, considering the sale of scrap as part of total turnover and profit of the industrial undertaking. The Tribunal found no infirmity in the CIT(A)'s findings but, in the interest of natural justice, further reduced the addition to Rs. 3,00,000/- due to the assessee's inability to provide closing stock details.

Conclusion:
The appeal filed by the Revenue was dismissed, and the appeal filed by the assessee was partly allowed. The decision was pronounced in the open court on 10th June, 2011.