9911796707
TMI Blog2019 (12) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... if the claim of deduction u/s. 10B is disallowed as assessee unit is included in the business of trading of Computers, Computer Peripherals, software development etc. and was granted license setting up 100% EOU under STP scheme as per letter of permission - HELD THAT:- Assessee has also filed copy of letter from STPI, Gandhinagar, Gujarat and assessee is reflecting on the website of Department of Electronics Information Technology and assessee has also filed the copy of extract of the said website and which has not been disputed by the ld. A.O. and in the past, assessee has been claiming deduction u/s. 10A. Moreover, assessee company set up in the 100% EOU under STP Scheme as per letter of permission No. STPIG/EXIM/S/503/STTL-SWED/13 dated 2-1-2007 by the Designated officer Software and IT enabled services and same details were submitted before the lower authorities. The assessee is in this business since 2007 and company has been set up in the 100% EOU under STP Scheme and all details have been submitted before the lower authorities. Since assessee has complied with all the condition for availing of benefit of section 10A. Therefore, we dismiss this ground of the revenue. Allowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngaged in the business of trading of Computers, Computer Peripherals, software development, IT enabled services and export of Software from 100% EOU situated in Software Technology Park. 3. During the year the assesee has shown amount receivable of ₹ 4,51,607/- on account of unutilized/closing balance of VAT and ₹ 11,04,607/- on account of service tax under Loans and advances. The assessing officer has wrongly considered closing balance of VAT and service tax of ₹ 31,11,757/- instead of ₹ 15,55,879/-. The appellant has wrongly added the closing balance of service tax of ₹ 11,04,272/- in the value of closing stock even though it is deducted from the respective expenses and can never be a part of valuation of closing stock. Similarly the Ld. Assessing officer has wrongly included closing balance of VAT of ₹ 4,51,607/- in the closing stock valuation even though the purchases are accounted net of VAT. 4. During the year the assessee claimed deduction U/s.lOB in respect of profit earned from 100% Export oriented Unit (STP) of ₹ 4,30,87,1757- since the appellant had complied with all the conditions required U/s. 10B of the Income-tax Act, Durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing followed by the appellant company since last so many year by including an annexure in the audit report to show that the effect would be revenue neutral. If would also be relevant to quote from the judgment of ITAT, Ahmedabad in case of Alpanil Industries (Supra) - "17.We have heard the rival submissions and perused the orders of the lower authorities and the materials available on record. In the instant case, the dispute is regarding valuation of closing stock in view of the insertion of provisions of section 145A of the Act, The Learned Assessing Officer observed that the assessee has not included (he element of excise, duty which was paid by the assessee on his purchases of raw material. In view of non-inclusion of this excise, duly in respect of which Modvat Credit wan available to the assesses according to the Learned Commissioner of Income Tax (Appeals), income of ₹ 26,95,884/- was understated by the assessee. On the other hand the claim of the assessee is that by inclusion of this excise duty in the closing stock there In view of the above will no effect in the profit as the corresponding amount will also be then included in the purchases. The assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial not utilized for manufacturing in the illustration the ld. CIT(A) has shown that assesseehas utilized amount of ₹ 180 out of amount of ₹ 200/- of excise duty paid on purchase against the excise duty liability of ₹ 180 on sales. However, this utilization of ₹ 180 was allowed to the assessee in respect of stock which was not used for manufacturing also to the extent of ₹ 80. The CIT(A) ignored the fact that if in future the closing stock is not utilized for manufacturing then the Modvat Credit utilized would be reversed and the assessee would be further liable to pay ₹ 80 to the Government. In a nutshell the ld. CIT(AA) arrived at a wrong conclusion because of not considering the assessee's liability for utilization of Modvat Credit in respect of unconsumed raw material. The issue can be looked into from another angle. Section 145A requires revaluation of not , lone but also requires revaluation of purchase and sales. On revaluation of purchase by including the amount off excise duty in respect of which Mo, vat Credit is available to the assessee, (he purchase of the assesses will increase resulting in corresponding (Increase in the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purchases, sales and the stock is being followed by the assessee company since last several years. 10. Section 145A requires the valuation of purchase and sale of goods or services and of the inventory shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever have been called) actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on date of valuation. In our considered opinion, assessee is following the same method for several years and therefore this ground of Revenue is dismissed. 11. Now we come to next ground relating to deduction of ₹ 4,11,14,242/- . The assessee claimed deduction u/s. 10A if the claim of deduction u/s. 10B is disallowed as assessee unit is included in the business of trading of Computers, Computer Peripherals, software development etc. and was granted license setting up 100% EOU under STP scheme as per letter of permission: "The assessee granted license for setting up 100% EOU under STP Scheme as per letter of permission no. STPIG/EXIM/S/S03/STIL-SWED/13 DATED 2-1-2007 by the Designated officer Software Technology Parks ofIndiafor carrying on business of com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted before the lower authorities. 13. The assessee is in this business since 2007 and company has been set up in the 100% EOU under STP Scheme and all details have been submitted before the lower authorities. Since assessee has complied with all the condition for availing of benefit of section 10A. Therefore, we dismiss this ground of the revenue. 14. Now we come to next ground relating to allowing of foreign exchange gain in the claim of deduction u/s 10A. 15. The ld. A.O. noted that the export turnover shown in Form 56G was more than the FOB. Value realized. The assessee explained that the difference in due to the appreciation of foreign currency at the time of realization of the proceeds of goods exported on an earlier date. The A.O. held that income due to foreign exchange gain are not eligible for deduction. 16. In appeal before the ld. CIT(A), he granted relief to the assessee with the following observations: I have carefully perused the assessment order and the submissions given by the appellant. The A. O. noted that the export turnover shown in Form 56G was more than the FOB value realized. The appellant explained that the difference is due to the appreciation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 10B of the Act by the ld. A.O. In appeal, the Ld CIT(A) allowed deduction on the same. We find that the third member of the tribunal in the case of ITO vs. Banyan Chemicals Lt. (2009) 117 ITD 376, has held that the gain on account of exchange fluctuation results in the receipt of foreign currency due to export sales made by an assessee. It is a part of the receipt of sale proceeds converted in India rupee as held by the Hon'ble Gujart High Court in CIT vs. Amba Impax (2006) 282 ITR 144 (Guj.) Though it was a case under section 80HHC but he provisions of section 10B are in para material and therefore, the decision would apply mutatis matandis to section 10B. Respectfully following the same, we find that in the instant case, it is not the fact that the assessee has received sale proceeds of exports and deposited the same in any bank account and earned exchange fluctuation gain at the time of withdrawal from the said bank account. On the other hand, the facts of the case is that the assessee made an export sale and recorded the sale value at the value mentioned in the invoice and later on when it actually received the sale proceeds due to change in rate of exchange the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
