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TMI Blog2016 (12) TMI 1764X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s 80IC on other income such as scrap sale, insurance claim, foreign exchange fluctuation and credit balance when these incomes were not derived in true sense from the business of the eligible undertaking - Held that:- The assessee’s claim having been allowed from year to year there is no merit in the present ground raised by the revenue vis a vis claim of deduction under section 80IC on scrap sales and insurance claim received by the assessee - the amount received on scrap sale, the credit balance written off of parties, insurance claim received towards material damage during transit is directly attributable to the activities of the industrial unit and hence eligible for deduction under section 80IC of the Act. However, the assessee is not entitled to the deduction claimed under section 80IC of the Act on the misc. income received being refund of security deposit and the insurance claim on machinery repairs. In view thereof we direct the Assessing Officer to recompute the deduction allowable under section 80IC of the Act. Deduction under section 80 IC on foreign exchange fluctuation received - Held that:- It is not disputed that the foreign exchange fluctuations relate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee undertook substantial expansion of its manufacturing facilities making it eligible to claim deduction under section 80IC of the Act. This is the 9th year of claim of the assessee. During assessment proceedings the AO discussed the manufacturing activities in respect of the various products made by the assessee and disallowed the entire deduction under section 80IC claimed by the assessee by holding that the assessee was not engaged in any manufacturing activity. The relevant findings of the AO are at para 5-5.4 for of his order. Ld.CIT (Appeals) allowed the assessee s appeal by following the decision of the ITAT in the assessee s own case in the preceding year, i.e. assessment year 2011-12. 7. Aggrieved by the same the revenue filed the present appeal before us. 8. Before us Ld.AR argued that in all earlier years the claim of the assessee had been allowed either by the AO or the CIT(A) and further upheld by the ITAT. Ld. AR stated that in the first year of claim i.e. A.Y. 2004-2005, the claim was duly accepted by the Assessing Officer. Ld.AR thereafter stated that from assessment year 2008 09 to assessment year 2011-12 the claim under section 80IC had been denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d/2006 relating to assessment year 2005-06 was allowed by the Tribunal vide order dated 17.9.2009 under which the manufacturing process undertaken by the assessee was considered in paras 11 and 12 and vide para 13 it was held that the activity in relation to DGX amounts to manufacturing and therefore, the resultant income earned by the assessee was eligible for deduction under section 80IC of the Act. The Tribunal also vide para 6 observed that the assessee had clarified that the claim of deduction under section 80IC of the Act in respect of manufacturing activities carried on by the assessee. The claim of the assessee of deduction under section 80IC of the Act in relation to income earned from undertaking job work for supplying DGX cartridge was held to be allowable. Further the Tribunal in ITA No No.120/Chd/2011 and ITA No. 255/Chd/201I relating to assessment year 2007-08 in cross appeals filed by the assessee and Revenue, vide order dated 21.6.2011 had allowed the claim of deduction under section 80IC of the Act both on job work charges and part of other income. The Tribunal in ITA No. 532/Chd/2012 relating to assessment year 2008-09 vide order dated 30.07.2012 in the appeal fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the ITAT for assessment year 2011-12 which in turn had based its decision on its earlier decisions for assessment year 2007-2008 and assessment year 2008 2009. 16. Aggrieved by the same the revenue filed the present appeal before us. 17. Before us Ld. AR contended that this issue had been decided in favour of the assessee in earlier years by the Hon ble ITAT in assessee s own case. 18. Ld.DR on the other hand relied upon the order of the AO. 19. We have heard the rival submissions and carefully perused the material available on record. 20. We find that this issue has been decided by the ITAT in favour of the assessee in assessment year 2005 2006, 2007-2008 , 2008-2009 and 2011-2012. The Hon ble ITAT in its order for assessment year 2011-2012 in the assessees case in ITA No. 1106/CHD/2014 held at para 21 22 of its order as follows: 21. We find that disallowance of deduction u/s 80IC on job work income was for the first time made in Assessment year 2005-06 which was allowed in appeal before the Tribunal in ITA No. 883/Chd/2006 vide order dt. 17/09/2009. In the impugned order the manufacturing process undertaken by the assessee was considered in para 11 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preferred appeal before the Hon ble Punjab and Haryana High Court on this issue for the assessment year 2007-2008 and assessment year 2008 2009, to keep consistency, the addition was made in this year also. Ld. CIT(A) allowed the assessee s claim for deduction under section 80IC on scrap sales and insurance claim, following the decision of the ITAT in the assessee s own case for assessment year 2011-2012. As for the assessee s claim for deduction under section 80IC on foreign exchange fluctuation the Ld. CIT(A) allowed the same following the decision of the ITAT Chandigarh bench in the case of JCBL India Pvt. Ltd in ITA No. 368/CHD/2012 dated 15.06.2015. The credit balance of parties written back was allowed by the Ld.CIT(A) following the order of the ITAT in the assessee s own case for assessment year 2007-2008 in ITA No. 120 and 255/CHD/2011. 25. Aggrieved by the same the Revenue file the present appeal before us. 26. Before us Ld.AR relied on the order of the CIT(A) while the Ld.DR relied on the order of the Assessing Officer. 27. We have heard the rival contentions and perused the orders of the authorities below as also the documents placed before us. We find no infir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t para 13 of the order the ITAT held as follows: 13. Coming to the facts before us and following the ratio laid down by the Ahmedabad Bench of the Tribunal in Arvind Fashions Ltd. Vs. ACIT (supra) we hold that the interest income received by the assessee is not eligible for deduction under section 80IC of the Act. However, the amount received on scrap sale, the credit balance written off of parties, insurance claim received towards material damage during transit is directly attributable to the activities of the industrial unit and hence eligible for deduction under section 80IC of the Act. However, the assessee is not entitled to the deduction claimed under section 80IC of the Act on the misc. income received being refund of security deposit and the insurance claim on machinery repairs. In view thereof we direct the Assessing Officer to recompute the deduction allowable under section 80IC of the Act. The ground No.1 raised by the assessee is partly allowed. 30. Following the same we allow the claim of the assessee for the current year also since no change in the fact situation has been brought to our notice by the Ld.DR. 31. As for the assessee s claim for deduction unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1976 and 1978 of 2009). In the circumstances, we would affirm the judgment of the Tribunal insofar as the question of exchange rate fluctuation is concerned. 12. From the above, it is clear that the Hon'ble High Court has categorically held that the exchange rate fluctuation arises out of and is directly related to the sale transaction involving the export of goods of the industrial undertaking and, therefore, difference on account of exchange rate fluctuation is entitled to deduction under section 80IB of the Act. No contrary decision was brought to my notice. Respectfully following the judgment of the Hon'ble Bombay High Court in the case of CIT Vs. Rachna Udyog (supra), I hold that the difference on account of exchange rate fluctuation is entitled to deduction under section 80IC of the Act. This ground of appeal is allowed. 32. Since in the present case also it is not disputed that the foreign exchange fluctuations relate to the export activity carried out by the assessee, the foreign exchange fluctuation earned by the assessee is to be treated as its trading receipts/receipts from the manufacturing activity carried out by it and thereby entitling the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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