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Income Tax Appellate Tribunal, ‘ B’ BENCH : CHENNAI
Before: SHRI CHANDRA POOJARI & Shri Duvvuru RL Reddy
आदेश / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER
This appeal of the Revenue is directed against the order of the Commissioner of Income-tax (Appeals)-8, Chennai dated 08.08.2016 pertaining to assessment year 2012-13.
ITA No.2903/Mds./16 :- 2 -:
The first issue in its appeal is that the Ld.CIT(A) erred in not accepting the contention of the AO that the assessee is eligible for 100% of deduction u/s.10AA for the first five years beginning from A.Y 2007-07, whereas for A.Y 2012-13, the assessment year under consideration being sixth year of the business of the assessee, the deduction u/s.10AA needs to be restricted to 50%.
The facts of the issue are that the assessee claimed deduction u/s.10AA of the Act at `57,45,649/-. The AO observed that this exemption is allowable at 100% for first five years and 50% for next five years. According to ld. Assessing Officer, the assessee claimed deduction u/s.10AA of the Act since 2006-07 and the present assessment year 2012-13 is the sixth year and the assessee is entitled for only 50% of deduction u/s.10AA of the Act. Aggrieved by the order of ld. Assessing Officer, the assessee carried the appeal before the Ld.CIT(A). On appeal, Ld.CIT(A) observed that assessment year 2012-13 is the 5th year of claim and not 6th year as alleged by the AO and he granted full 100% of the claim. Against the order of Ld.CIT(A), now the Revenue/Assessee is in appeal before us.
We have heard both the parties and perused the material on record. In our opinion, neither the AO nor the Ld.CIT(A) not ITA No.2903/Mds./16 :- 3 -:
mentioned the basis on which they came to the conclusion about the initial assessment year in which the assessee claimed deduction u/s.10AA of the Act. In our considered opinion, the AO is required to examine from the assessment records of the assessee regarding initial assessment year from which the assessee claimed deduction u/s.10AA of the Act. Accordingly, we remit the issue to the file of AO to examine the issue afresh with reference to the profits and gains derived from export and decide accordingly. Hence, this ground is partly allowed for statistical purposes.
The second issue is that the Ld.CIT(A) erred in holding that foreign exchange gain of `79,21,509/- is relatable to export business of the assessee and hence the same is eligible for deduction u/s.10AA of the Act.
5.1 The facts of the issue are that the AO had excluded the foreign exchange fluctuation gain of `79,21,509/- for the purpose of computing deduction u/s.10AA of the Act. Aggrieved by the order of ld. Assessing Officer, the assessee carried the appeal before the Ld.CIT(A). On appeal, the Ld.CIT(A) following the decision of jurisdictional High Court in the case of Pentasoft Technologies Ltd. ( 347 ITR 578 (Mad.) ), concluded that the gain from foreign exchange
ITA No.2903/Mds./16 :- 4 -: fluctuation is directly relatable to the export business of the assessee and therefore, the benefit of Sec.10AA has to be extended to such gain. Against the order of Ld.CIT(A), now the Revenue/Assessee is in appeal before us.
5.2. We have heard both the parties and perused the material on record. In our opinion, the issue to be examined whether the foreign exchange fluctuation derived from export proceeds with reference to the export bills and bank account decide accordingly. Accordingly, we remit the issue to the file of AO to examine the issue afresh with reference to the gains derived from foreign exchange fluctuations and decide accordingly. Hence, this ground is partly allowed for statistical purposes.
The third issue is that Ld.CIT(A) erred in holding that the foreign exchange fluctuation gain of `79,21,509/- has to be included in both export turnover as well as total turnover for computing the relief u/s.10AA of the Act.
6.1 We have heard both the parties and perused the material on record. This issue is akin to the second issue herein above. Since we have remitted the issue to the file of AO to examine the issue afresh
ITA No.2903/Mds./16 :- 5 -: with reference to gains derived from export and decides accordingly. Accordingly, the AO has to re-examine the issue, and also to take into consideration of the Special Bench decision of the Tribunal in the case of Saksoft Limited (313 ITR 353) (AT)(2009) and decide accordingly. Hence, this ground is partly allowed for statistical purposes.
In the result, the appeal of the Revenue is partly allowed for statistical purposes.