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| The Tax Publishers2019 TaxPub(DT) 8072 (Hyd-Trib) INCOME TAX ACT, 1961
Section 10A
For arriving at profit from export for purpose of computation of deduction under section 10A, the foreign exchange fluctuation gains included in “total turnover” would have to be included in “export turnover” also.
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Deduction under section 10A - Undertaking in a free-trade zone - Allowability - Foreign exchange fluctuation gains
AO while allowing deduction under section 10A to assessee, reduced foreign exchange fluctuation gains from the scope of 'export turnover' and did not adjust 'total turnover' to that extent. Held: In order to allow a claim under section 10A, what all is to be seen is whether such benefit earned by the assessee is derived by virtue of export made by the assessee. The exchange value based on upward or downward of the rupee value is not in the hands of the assessee. Therefore, when the fluctuation in foreign exchange rate was solely relatable to the export business of the assessee and the higher rupee value was earned by virtue of such exports carried out by the assessee, there was no reason why the benefit of section 10A should not be allowed to the assessee. Accordingly, foreign exchange fluctuation gains would be treated as part of export sales for the purpose of deduction under section 10A. Further, the 'principle of parity' demands inclusion of foreign exchange fluctuation gains in the definition of 'export turnover' when the same are included in the definition of 'total turnover'.
Relied:CIT v. HCL Technologies Ltd. (2018) 93 taxmann.com 33 (SC): 2018 TaxPub(DT) 2138 (SC) CIT v. Kshema Technologies Ltd. (2016) 66 taxmann.com 165 (Karnataka): 2016 TaxPub(DT) 1254 (Karn-HC) CIT v. Pentasoft Technologies Ltd. (2013) [33 taxmann.com 570] (Madras): 2012 TaxPub(DT) 2724 (Mad-HC)
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
INCOME TAX ACT, 1961
Section 10A
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