COMMISSIONER OF INCOME TAX vs. TOP IMPEX PVT. LTD.

O/TAXAP/344/2007 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 344 of 2007 With TAX APPEAL NO. 345 of 2007

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE KS JHAVERI

and HONOURABLE MR.JUSTICE K.J.THAKER

================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus TOP IMPEX PVT. LTD.....Opponent(s) ================================================================ Appearance: MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1 RULE SERVED for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and Page 1 of 4

O/TAXAP/344/2007 JUDGMENT HONOURABLE MR.JUSTICE K.J.THAKER

Date : 18/12/2014

ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Though served none appears for the respondent – assessee. 1.1 Being aggrieved and dissatisfied with the impugned orders passed by the Income Tax Appellate Tribunal, Ahmedabad Bench ‘B’ (hereinafter referred to as ‘the Tribunal’) dated 18.08.2006 in ITA Nos. 2708/Ahd/2004 & 2709/Ahd/2004 for the Assessment Year 2001-02, the revenue has preferred the present Tax Appeals. 1.2 The following substantial question of law was raised while admitting the appeals on 17.09.2007 : Whether, the Appellate Tribunal is right in law and on facts in cancelling the order passed by the Commissioner of Income Tax u/s. 263 of the Act whereby he had directed the Assessing Officer to disallow the assessee’s claim of deduction u/s. 80HHC of the Act on the foreign exchange received on account of foreign exchange rate difference, after verification? 2. The Assessing Officer during the course of assessment proceedings disallowed the claim of the assessee for grant of deduction u/s. 80HHC on the amount of sale of DEPB license and foreign exchange rate difference. On appeal before CIT(A) by the assessee, the CIT (Appeals) allowed the appeal Page 2 of 4

O/TAXAP/344/2007 JUDGMENT and accepted the claim of the assessee. 3. On appeal before the Tribunal by the revenue, by impugned order, Tribunal dismissed the appeal and upheld the findings of CIT(A) and further directed the Assessing Officer to grant deduction u/s. 80HHC on the amount of foreign exchange rate difference. Being aggrieved and dissatisfied with the impugned order passed by the Tribunal, the revenue has preferred the present Tax Appeals for consideration of the aforesaid substantial question of law. 4. The issue involved in the present Tax Appeal is now not res integra in view of the decision of this Court in the case of Commissioner of Income-Tax vs. Bloom Decor Private Ltd rendered in Tax Appeal No. 457 of 2009 on 26.03.2014. 4.1. In the aforesaid decision this court relying on the decision of another co-ordinate Bench of this Court rendered in Tax Appeal No. 1468 of 2006 and allied appeals has held the issue in favour of the assessee. It is a settled proposition of law that the foreign exchange gain arising out of the fluctuation in the rate of foreign exchange cannot be divested from the export business of the assessee and once export is made, due to variety of reasons, the remission of the export sale consideration may not be made immediately and that all foreign currencies received by the assessee need not be converted into Indian Rupees on thelast date of the accounting period. 5. Mrs. Mauna Bhatt, learned advocate on behalf of the Page 3 of 4

O/TAXAP/344/2007 JUDGMENT revenue is not in a position to dispute the above and is not in a position to show and/or point out any contrary decision. 6. Having heard learned advocates appearing on behalf of the parties and the question posed for consideration before us reproduced hereinabove and considering the decision of this Court in the case referred hereinabove, the question, which is raised in the present appeals is required to be answered in favour of the assessee. We are not giving further elaborate reasons for the same the question raised has already been answered by this Court in Tax Appeal No. 457 of 2009 as well as Tax Appeal No. 1468 of 2006. 7. Accordingly, the question raised in the present appeals is answered in the affirmative i.e. against the revenue and in favour of the assessee. We hold that the Tribunal was justified in directing the Assessing Officer to disallow the assessee’s claim of deduction u/s. 80HHC of the Act on the foreign exchange received on account of foreign exchange rate difference, after verification. 8. In view of the above, the impugned order passed by the Tribunal is confirmed. Appeals are dismissed accordingly. (K.S.JHAVERI, J.) (K.J.THAKER, J) divya Page 4 of 4