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TMI Blog2019 (1) TMI 1275X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the assessee’s export business - Held that:- CIT Appeals while granting the relief to the assessee had recorded that the additional income earned by the assessee on account of the fluctuation of foreign exchange rate was out of its receipts for exported goods. This is not a case where the assessee after completing the exports and receipt of the sale consideration, realized the same in rupee turns after a gap of time and in the meantime, the foreign exchange rate having fluctuated favourably, the assessee earned additional income. We are therefore, of the opinion that the Tribunal correctly confirmed the view of the CIT appeals and granted the benefit to the assessee. Claim of deduction of income arising out of sale of scrap - revenue argues that such income cannot be stated to have been derived from the assessee’s export business - Held that:- we notice that the Commissioner appeals while granting the relief to the assessee had come to factual finding that the assessee was engaged in manufacturing activity. During the course of such manufacturing activity scrap was generated out of use of various raw materials till the finished goods are produced. Such scrap was sold whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justified in directing not to exclude the interest income of ₹ 69,936/ from the profits eligible for deducting u/s 80IB, without considering the fact that the said income is not directly derived from the manufacturing activity of the assessee? ii. Whether on the facts and circumstances of the case and in Law, the Tribunal was justified in directing not to exclude the exchange rate difference of ₹ 21,81,641/ from the profits eligible for deducting u/s 80IB? iii. Whether on the facts and circumstances of the case and in Law, the Tribunal was justified in directing not to exclude the scrap income of ₹ 13,25,620/ from the profits eligible for deduction u/s 80IB, even though the said income is not directly derived from the manufacturing activity of the assessee? iv. Whether on the facts and circumstances of the case and in Law, the Tribunal was justified in setting aside the settled issue to the file of the A.O. in respect of exclusion of export benefits such as DEPB duty drawback etc from the profits eligible for deduction u/s 80IB in contravention of the ratio laid down by the Hon ble Apex Court Liberty India Vs. CIT (2009) 317 ITR 6218 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court in Income Tax Appeal No. 2131 of 2008 dated 22nd April, 2010 . In such case, however, the Court while holding that the additional income earned by the assessee on account of fluctuation of the foreign exchange rate would not qualify for deduction under Section 80HHC of the Act, noted that such exchange fluctuation was not on account of delayed realization of export proceeds. It was the case in which the interest rate fluctuation arose after completion of the export activities and the receipts which were kept in EEFC account. The facts of the present case are therefore, distinguishable. 6. The question No.3 arises out of the revenue s objection to the assessee s claim of deduction of income arising out of sale of scrap. The revenue argues that such income cannot be stated to have been derived from the assessee s export business. In this respect, we notice that the Commissioner appeals while granting the relief to the assessee had come to factual finding that the assessee was engaged in manufacturing activity. During the course of such manufacturing activity scrap was generated out of use of various raw materials till the finished goods are produced. Such scrap wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnative contention and held that such disallowance would be restricted to the net of the benefit and not gross. Here also we do not find any error in view of the Tribunal. Even if the benefits of the DEPB and duty drawback were to be excluded from the purview of deduction for the assessee s export business, the costs incurred for receiving such benefits must be accounted for. 8. In Income Tax Appeal No.1139 of 2016 the revenue has suggested one more question which reads as under: Whether on the facts and circumstances of the case and in Law, the Tribunal was justified in deleting the addition made by AO on account of setting off the loss amounting to ₹ 1,10,79,284? 9. This question rises out of the revenue s objection to the assessee s claim of deduction under Section 80IC of the Act in respect of its one of the units. The assessee had claim a deduction of 1.70 crores (rounded off). The Assessing Officer noticed that the assessee had incurred loss of ₹ 1.10 crores (rounded off) in relation to the said unit in the earlier assessment year which was absorbed against other incomes. The Assessing Officer was of the opinion that the assessee should have brought f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties before deciding the matter. Without considering the same, the Tribunal simply rejecting the contention of the revenue in respect of Tax Case No. 918 of 2008 is not correct and this Court may remand the matter to the Tribunal to decide the issue afresh in respect of the initial assessment year. 8. Heard the counsel appearing for the parties and perused the materials available on record. 9. On a perusal of the order of the assessing officer, it is seen that the eligible income for deduction under Section 80 IA is worked out in all the cases as follows: Tax Case No. 909 of 2009 Net income from Windmill Division 1 1,70,76,945 (2002 03) Less: (a) Unabsorbed depreciation 8,26,84,110 allowance assessment year 2003 04 (b) Income from Windmill Division 1 71,16,270 (2002-03) assessment year 2004 05 Balance of unabsorbed depreciation 7,55,67,840 allowance Unabsorbed depreciation allowance ( ) 5,84,90,895 balance Tax Case No. 940 of 2009 Net income from Windmill Division 2,82,67,370 Less: Unabsorbed depreciation allowance (initial assessment year) Asst. yr. 2003 -04 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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