Case Law Details

Case Name : M/s JCBL India Pvt. Ltd. Chandigarh Vs The A.C.I.T. Chandigarh (ITAT Chandigarh)
Appeal Number : ITA 368/Chd/2012
Date of Judgement/Order : 15/06/2015
Related Assessment Year : 2007-08
Courts : All ITAT (5324) ITAT Chandigarh (122)


Brief Facts:

This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals) , Chandigarh dated 16.1.2012 relating to assessment year 2007-08.

The assessee has claimed income of Rs.8,00,196/- on account of foreign exchange fluctuation.   The Assessing Officer did not allow deduction under section 80IC of the Income Tax Act, 1961 (in short ‘the Act’) on the income on account of foreign exchange fluctuation and the same was added to the taxable income of the assessee.

On appeal, the learned CIT (Appeals) upheld the order of the Assessing Officer and hence, the assessee is in appeal before the Tribunal.

Question of Law:

Whether Learned C. I .T. (A) has erred in sustaining the disallowance of rebate u/s 80IC on foreign exchange fluctuation amount of Rs. 8,00,196/-?


The Revenue supported the orders of the authorities and strongly opposed the contentions of assessee with respect to matter relating to the disallowance of rebate u/s 80IC on account of Exchange Rate Fluctuations


The issue in hand is squarely covered in favour of the assessee and against the Revenue by the decision of the Hon’ble Bombay High Court in the case of CIT Vs. Rachna Udyog (2010) 230 CTR (Bom) 72 wherein the Hon’ble High Court held as under –

“5. Having heard the learned counsel appearing on behalf of the appellant and learned counsel appearing for the assessee, we are of the view that the difference on account of exchange rate fluctuation is liable to be allowed under s. 80-IB. The exchange rate fluctuation arises out of and is directly related to the sale transaction involving the export of goods of the industrial undertaking. The exchange rate fluctuation between the rupee equivalent of the value of the goods exported and the actual receipts which are realized arises on account of the sale transaction. The difference arises purely as a result of a fluctuation in the rate of exchange between the date of export and the date of  receipt of proceeds, since there is no variation  in the sale price under the contract. The view which we have taken is also consistent with the view taken by a Division Bench of this Court on 15th Dec., 2009 in the case of Syntel Ltd. (IT Appeal Nos.1974, 1976 and 1978 of 2009). In the circumstances, we would affirm the  judgment of the Tribunal insofar as the question of exchange rate fluctuation is concerned.”

From the above, it is clear that the Hon’ble High  Court has categorically   held   that the exchange rate  fluctuation arises out of and is directly related to the sale  transaction involving the export of goods of the industrial  undertaking and, therefore, difference on account of exchange  rate fluctuation is entitled to deduction under section 80IB of  the Act.  This ground of appeal is allowed.

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