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TMI Blog2018 (7) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee by long line of judicial precedents where a consistent view has been taken that foreign exchange gains arising out of the fluctuation in the rate of foreign exchange cannot be divested from the export business of the assessee. Once export is made, the foreign exchange gains/loss may occur due to variety of reasons at the time of remission of export sale proceeds. Foreign exchange fluctuation gains required to be taken as integral part of the business profits derived from exports. What is required to be determined is ‘profits of the business of the undertaking’ which is ostensibly wider than ‘profits & gains derived by the undertaking’. In short, the profits derived from export have been equated when business profits of the undertaking in view of the formula provided in Section 10AA(7) of the Act - Decided against revenue - I.T.A. No. 2788/Ahd/2014 - - - Dated:- 2-7-2018 - SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SMT. MADHUMITA ROY, JUDICIAL MEMBER For The Appellant : Shri Saurabh Singh, Sr.D.R. For The Respondent : Shri Mukesh M. Patel, A.R. ORDER PER PRADIP KUMAR KEDIA - AM: The captioned appeal has been filed at the instance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled cannot be used at desired level having regard to the industry in which the assessee by placed in. The learned AR, thereafter, pointed out that the issue is no longer res integra and is covered in favour of the assessee by the decision of the co-ordinate bench of the Tribunal ACIT vs. Zydus Infrastructure (P.) Ltd. [2016] 72 taxmann.com 199 (Ahmedabad-Trib.). Learned AR submitted that in one of group cases as pointed out, the identical issue came up wherein in similar facts, it was held that assessee is eligible for accelerated depreciation year after-year and therefore, higher depreciation in initial years would ultimately lead to lower depreciation in the subsequent years and accordingly, over a period of time, the entire exercise would be revenue neutral. The learned AR accordingly asserted that no interference with the order of CIT(A) is called for. 5. We have carefully considered the rival submissions and perused the orders of the authorities below. We find substantial weight in the counter plea raised on behalf of the assessee for eligibility of accelerated depreciation is noted above. In view of the fact that higher or lower depreciation will not lead to any change i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not made any adverse remarks. The appellant submitted that it fulfilled all the eligible condition to claim deduction u/s.10AA of the Act for its eligible unit in Special Economic Zone(SEZ). The appellant though reduced such gain from the export turn over but the same was included as business income / profit of eligible undertaking thereby correctly followed the provisions. As per provisions it is profit gains of eligible unit at SEZ from the export of goods/article/services and the same be realized in foreign exchange. It is undisputed that on account of day to day fluctuation of foreign exchange, such variation in reporting of sale as per invoice and realization of such export being in two different time frames will result into such gain or loss. I am inclined with appellant that as per the ratio of Hon'ble Gujarat High Court decision in the case of Priyanka Gems upholding the Hon'ble ITAT, Ahmedabad order in the same case, such gain and loss are part and parcel of the sale of export. I am also inclined with appellant that Hon'ble Bombay High Court for same issue and in similar facts (deduction u/s.10A of the Act) following its judgement in the case of CIT vs. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or things or securities is to be computed for the purpose of 10AAdeduction reflect that- The profits of the business of the undertaking are to be computed as per the provisions of Chapter IV D of the Act and the only adjustment which is permitted by the legislature to be made to such profits of the business is to apportion the same in the proportion of export turnover of the eligible services to the total turnover of the business carried on by the assessee. It is significant to note here that the specific provisions like explanation (baa) of Section 80HHC of the Act which provide for exclusion of 90% of interest income from the profits of business to arrive at the profits of the business has not been provided by the legislature in section 10AA of the Act. In the present case of appellant, such gains were reduced from the export turnover but not from the profit / business income of the eligible unit as per the provisions of section 10AA(7) of the Act but A.O. reduced such gain from the business profit also. It is therefore such interpretation of A.O. and giving effect to these gain by completely excluding from deduction U/S.10AA of the Act is neither justified being ..... X X X X Extracts X X X X X X X X Extracts X X X X
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