Gujarat High Court
Commissioner Of Income Tax vs Mitsu Limited....Opponent(S) on 19 March, 2014
Author: Akil Kureshi
Bench: Akil Kureshi, Sonia Gokani
O/TAXAP/658/2009 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 658 of 2009
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COMMISSIONER OF INCOME TAX....Appellant(s)
Versus
MITSU LIMITED....Opponent(s)
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Appearance:
MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1
MR RK PATEL, ADVOCATE for the Opponent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MS JUSTICE SONIA GOKANI
Date : 19/03/2014
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. While admitting Tax Appeal on 29.6.2010 following substantial question of law was framed:-
"Whether the Appellate Tribunal is right in law and on facts in directing the Assessing Officer to exclude the excise duty and sales tax for computing the deduction u/s. 80HHC of the Act, despite insertion of section 145A of the Act?"
2. Thereafter pursuant to the order of the Supreme Court dated 17.4.2013 in the appeal filed by the Revenue following two additional questions were also framed:-
"(i) Whether on the facts of the case and in law, the Appellate Tribunal was justified in granting relief u/s. 80HHC of the Act to assessee on the issue of gain on forward currency contract Page 1 of 3 O/TAXAP/658/2009 ORDER without appreciating the fact that the gain on exchange difference is nothing but speculation profit and not related to the business of the assessee?
(ii) Whether on the facts of the case and in law, the Appellate Tribunal was justified in directing the Assessing Officer not to exclude this income from the profits eligible for deduction u/s.80HHC without appreciating the fact that when the assessee enters into a forward contract, as in this case, the assessee stands to benefit by the fluctuations in foreign exchange irrespective of the fact whether the trade agreement exists or not?"
3. All three questions of law are covered by different decisions of this Court. Insofar as the first question is concerned, the same is covered in favour of the assessee by virtue of the judgment of this Court in Tax Appeal No.884 of 2006 and connected appeals dated 3.12.2013 in the case of Commissioner of Income-tax vs. Pogagen AMP Nagarsheth Powertronics Ltd. Such question is, therefore, answered in favour of the assessee.
4. With respect to the first additional question (i), such question was considered by this Court decided on 23.8.2011 in Tax Appeal No.251 of 2010 in the case of Commissioner of Income-tax-I vs. Friends and Friends Shipping Pvt.Ltd. By a bipartite hearing on 23.8.2011, Revenue's appeal was dismissed. The Court followed the decisions of CIT v. Badridas Gauridu (P) Ltd. reported in 261 ITR 256 and of the Calcutta High Court in the case of CIT v. Soorajmull Nagarmull reported Page 2 of 3 O/TAXAP/658/2009 ORDER in 129 ITR 169 (Cal.). The said decision was also followed in the order dated 28.3.2013 in the case of Commissioner of Income Tax-II vs. Panchmahal Steel Ltd. passed in Tax Appeal No.131 of 2013.Such question is accordingly answered against the Revenue.
5. Second additional question pertains to the deduction under section 80HHC of the Act relating to foreign exchange fluctuation gain, which came up for consideration before this Court in the case of Commissioner of Income Tax-III vs. M/s. Priyanka Gems in judgment dated 12.3.2014 passed in Tax Appeal No.1468 of 2006 and connected appeals, issue was decided in favour of the assessees.
6. All questions are, therefore, decided against the Revenue. Tax Appeal is dismissed.
(AKIL KURESHI, J.) (MS SONIA GOKANI, J.) SUDHIR Page 3 of 3