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Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM
per the export invoices and as per the definition of export turnover, the
consideration received in respect of the exports, for example, total amount
realized for sale invoices shall form part of export turnover. Therefore, the
total turnover is denominator, which sale also includes the effect of foreign
exchange fluctuation. Therefore, such inclusion of foreign exchange
fluctuation in the profits shall qualify for deduction U/s 10AA of the Act.
Such view has been affirmed by the Hon’ble Bombay High Court.
Accordingly, the appeal of the revenue is hereby dismissed.
In the assessee’s C.O., the only issue involved, is against confirming
the addition of Rs. 1,04,736/- by excluding freight charges from the
turnover and not allowing deduction claimed U/s 10AA of the Act.
ITA 949/JP/2016 & CO 45/JP/2016_ 5 DCIT Vs Vishal Gems International
The ld. CIT(A) has upheld the addition by observing as under:-
“5.3 I have carefully considered the facts of the case, findings of the A.O. and submission of appellant. Regarding disallowance of freight charges the contention of the appellant is that freight and insurance all are part of export turnover eligible for deduction under section 10AA. This could not be accepted for the reason that assessee received Rs. 104736/- as against the payment of Rs 68040/- and thus had net gain of Rs 36,696/-. Assessee contended that if it is not a part of export turnover, it cannot be included in total turnover for which he placed reliance on a decision of Hon’ble Mumbai High Court. However Hon’ble High Court in same judgement held that if freight and insurance “does not have element of profit then it cannot be included in total turnover. In this case assessee itself admitted to have earned profit out of freight and insurance. Therefore, this disallowance is upheld. The Assessee is not eligible for deduction u/s 10AA on freight.”
Now the assessee is in C.O. before us. The ld. AR of the assessee
has reiterated the arguments as made before the authorities below and
prayed to allow the C.O. On the other hand, ld Sr. DR has relied on the
order of the authorities below.
We have heard the rival contentions of both the parties, perused the
material available on the record and also gone through the orders of the
authorities below on this issue. The Hon’ble Bombay High Court in the
ITA 949/JP/2016 & CO 45/JP/2016_ 6 DCIT Vs Vishal Gems International case of CIT Vs. Gem Plus Jewellery India Limited (2010) 194 Taxmann 192 (Bom) has held that receipt such as freight and insurance cannot be included in the total turnover. Therefore, the ld. CIT(A) has rightly decide the issue against the assessee. Accordingly, we uphold the order of the ld. CIT(A) on this issue. 10. In the result, the appeal of the revenue as well as the C.O. of the assessee are dismissed. Order pronounced in the open court on 09/03/2017.
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सहायक पंजीकार@Aेेज. त्महपेजतंत