2015 (10) TMI 1629 - AT - Income Tax

Eligibility for section 80IB - Income from exchange rate difference - Held that - We find that hon ble jurisdictional high court in the case of CIT vs. Alps Chemicals Ltd.(2014 (10) TMI 251 - GUJARAT HIGH COURT) holds that similar foreign exchange fluctuation gain are entitled for section 80 IB deduction. The Revenue fails to point any distinction on facts Sundry balances written back - income in question has been derived from its industrial undertaking in question. The Revenue fails to file any evidence rebutting the same. We approve CIT(A) s order in these facts and reject the Revenue s ground. Scrap sales - There is no issue on facts. The hon ble jurisdictional high court in the case of Harjivandas Juthabhai Zaveri s (1999 (12) TMI 5 - GUJARAT High Court) has treated identical income as eligible for section 80-IB deduction. The Revenue is not able to point out any distinction on facts - Decided in favour of assessee.

Summary

Issues:
1. Eligibility of exchange rate difference for section 80IB deduction.
2. Eligibility of sundry balances written back for section 80IB deduction.
3. Eligibility of income from scrap sales for section 80IB deduction.

Issue 1:
The first issue revolves around the eligibility of an amount arising from exchange rate difference for section 80IB deduction. The Assessing Officer considered this sum as speculation profits unrelated to the assessee's export business. However, the CIT (A) overturned this decision by citing a relevant court case. The ITAT upheld the CIT (A)'s decision based on the precedent set by the jurisdictional high court in a similar case, emphasizing that foreign exchange fluctuation gains are entitled to section 80IB deduction. The Revenue's appeal on this ground was rejected.

Issue 2:
The second issue concerns the eligibility of sundry balances written back for section 80IB deduction. The Assessing Officer initially disallowed this amount, arguing that it did not qualify for the deduction under section 80IB. The CIT (A) disagreed with the AO's reasoning, highlighting that the written back amount was related to liabilities arising from certain expenses incurred by the assessee's industrial undertaking. The ITAT concurred with the CIT (A)'s findings, emphasizing that the written back amount was directly linked to the business undertaking and thus eligible for section 80IB deduction. The Revenue's challenge on this ground was dismissed.

Issue 3:
The final issue pertains to the eligibility of income derived from scrap sales for section 80IB deduction. The Revenue contested the lower appellate order that deemed the income from scrap sales as eligible for section 80IB deduction. However, the ITAT upheld the CIT (A)'s decision based on a precedent set by the jurisdictional high court in a similar case, where identical income was considered eligible for the deduction. As there were no factual discrepancies pointed out by the Revenue, the ITAT affirmed the CIT (A)'s findings, leading to the dismissal of the Revenue's appeal.

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