Assessee not entitled to deduction u/s 10A on the foreign exchange fluctuation gain which is derived on external commercial borrowings and not from the export activity of the assessee

Convergys India Services Pvt Ltd Vs DCIT (ITAT Delhi) – In the present case, we note that gain is not on account of fluctuation in foreign exchange relating to assessee’s export activities. The same is with respect to the external commercial borrowings. This cannot be termed as derived from the export activity of the assessee. The assessee’s reliance in this regard on section 10A(4) does not come to its rescue, as the said sub-section only provides the formula for computing profits derived from the export activity. First, the income or gain has to be derived from export activity, only then the computation formula can be applied.

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH “B” NEW DELHI

I.T.A. No. 4021/Del/2010

A.Y. : 2004- 05

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