9911796707
TMI Blog2006 (4) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year under appeal, the assessee has received exchange rate gain difference of Rs. 1,61,86,487, out of which Rs. 51,15,047 pertained to exchange difference on export of earlier year realized during the year. During the course of assessment proceedings, the Assessing Officer requested the assessee to explain as to why the said exchange difference of earlier year amounting to Rs. 51,15,047 was treated as export turnover of the year for the purpose of claiming deduction under section 80HHC and that why the same be not excluded from the 'Export Turnover' of this year. 3. Before the Assessing Officer, the authorized representative of the assessee had given the submissions and had referred to the 'Accounting Standard-11 (AS-11)' of the Institute of Chartered Accountants of India as well as rule 115 of the Income-tax Rules, 1962 and stated, inter alia, that as the exchange rate difference pertains to export transaction, it is considered as part and parcel of export sales. This principle is followed irrespective of the year of transaction and year of its settlement. Just by terming the difference as exchange difference, it cannot be deprived of its character of 'export sales'. In this r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee that foreign exchange fluctuation receipt pertain to earlier year but received in the year under consideration are part of the "Export Turnover" only and the assessee is eligible for deduction under section 80HHC accordingly. Aggrieved by this order of the CIT(A), revenue is in appeal before us. 6. At the time of hearing, on behalf of the revenue, Shri K.L. Maheswari, ld. D.R. appeared and drew our attention to clause (b) of Explanation to section 80HHC which defined the export turnover as under:- "(b) "export turnover" means the sale proceeds [received in, or brought into, India] by the assessee in convertible foreign exchange [in accordance with clause (a) of sub-section (2)] of any goods or merchandise to which this section applies and which are exported out of India, but does not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Customs Act, 1962." 7. The ld. D.R. drew our attention to clause ( a) of sub-section (2) of section 80HHC, which clearly provides that the sales proceeds of goods exported must be received in or brought into India by the assessee within a period of six months f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities below pertain to reopening of assessment under section 263. Therefore, in view of the clear provisions contained in section 80HHC, the Assessing Officer is legally and factually correct in holding that the assessee is entitled to deduction under section 80HHC on exchange difference pertaining to earlier assessment year only in the relevant year and same cannot form part of "Export Turnover" of the year under consideration and the same is therefore rightly excluded by the Assessing Officer from "Export Turnover" of the assessment year under review. In support of this contention the ld. D.R. relied on the decision of the Jurisdictional High Court in the case of Shah Bros. v. CIT [2003] 259 ITR 741 (Bom.), wherein, it was held that deduction under section 80HHC cannot be claimed in subsequent year on export incentives pertaining to earlier year. The ld. D.R. further pointed out that the CIT(A) decided the issue in favour of the assessee without considering the provisions of section 80HHC(2) of the Income-tax Act, 1961 which clearly provide that doctrine of relate back is applicable to the sales proceeds realized within six months or the period extended by the competent authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (b) of Explanation to section 80HHC and clause (a) of sub-section (2) of section 80HHC of the Income-tax Act being specifically worded called for adherence of literal interpretations as held by the Supreme Court in the case of Vikrant Tyres Ltd. v. First ITO [2001] 247 ITR 8211. Further equity cannot be taken into account while interpreting legal provisions as held by the Jurisdictional High Court in the case of CIT v. Gopal Krishna Suri [2001] 248 ITR 8192 (Bom). A combine reading of definition of "Export Turnover" contained in clause(b) of Explanation to section 80HHC and provisions contained in clause (a)of sub-section (2) of section 80HHC clearly indicate that the export sales proceeds received before the end of previous year or within six months or extended period as the competent authority may allow will relate back and required to be included in the "Export Turnover" in the year in which goods were exported. Any other view in this regard will frustrate the object of Legislature. There is no dispute that as per rule 115 of Income-tax Rules, 1962, which prescribed 'Rate of exchange for conversion into rupees of income express in foreign currency' the principle that emer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80HHC is required to be included in the "Export Turnover" in the year in which the goods were exported. We accordingly direct the assessee to furnish details/bifurcation of exchange rate difference and also direct the Assessing Officer to include the same in "Export Turnover" in the relevant assessment years if the same is qualified for inclusion in the "Export Turnover" as per clause (a) of sub-section (2) of section 80HHC of the Income-tax Act, 1961. 15. The decision of the ITAT in the case of Smt. Sujata Grover (supra) relied by the ld. Counsel for the assessee relates to quashing of order under section 263, particularly on the ground that order of the Assessing Officer is merged with that of CIT(A) regarding allowance of deduction under section 80HHC. Apart from this in the case of Smt. Sujata Grover (supra), the Co-ordinate Bench was concerned with the issue whether foreign exchange fluctuation gain pertaining to exports effected in earlier years can be said to be 'any other receipts of a similar nature' in terms of Explanation (baa) to section 80HHC for calculating 'profits of the business'. In the case before us, we are concerned with what is "export turnover" whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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