Asstt. CIT v. K.M. Enterprises

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The Tax Publishers2016 TaxPub(DT) 3394 (Ahd-Trib) Asstt. CIT v. K.M. Enterprises INCOME TAX ACT, 1961 --Deduction under section 80-IB--Exchange rate difference----Exchange rate difference arising out of hedging was not deductible under section 80-IB as it did not have first degree nexus with export sales of assessee.--Assessee claimed deduction under section 80-IB in respect of exchange rate difference relying upon Amba Implex case (2006) 282 ITR 144 (Guj). AO disallowed the same. *Held:* Facts of case of assessee were different from the said Amba Implex case. Exchange rate difference arising out of hedging did not have any first degree nexus with the export sales of assessee. AO was, therefore, justified in disallowing the deduction thereof. Income Tax Act, 1961, Section 80-IB *Applied:*CIT v. Sterling Food (1999) 237 ITR 579 (SC). *Distinguished:*CIT v. Amba Implex (2006) 282 ITR 144 (Guj). *REFERRED :* FAVOUR : Against the assessee A.Y. : 2009-10 INCOME TAX ACT, 1961 --Depreciation --Alleged non use of plant and machinery Plant and machinery shifted at complementary unit----Where plant and machineries were shifted at a complementary unit because of fire and assessee produced goods movement challan and electricity consumption bills, etc., in furtherance of the fact of using of plant and machinery and carrying of business activity during the year, AO was not justified in denying depreciation on the ground of non use of machinery by the main unit.--Assessee claimed depreciation on plant and machinery. AO, on the ground that no business activity was carried out during the year, disallowed the same. Assessee contended that there was a fire in its Unit-I, plant and machineries were, therefore, shifted at Unit-II and work in both the units was complementary for the finished product. *Held:* It was evident from goods movement challan and electricity consumption bills, etc., that plant and machineries were used during the year and were, therefore, eligible for depreciation. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2016 TaxPub(DT) 3394 (Ahd-Trib)

Asstt. CIT v. K.M. Enterprises

INCOME TAX ACT, 1961

--Deduction under section 80-IB--Exchange rate difference----Exchange rate difference arising out of hedging was not deductible under section 80-IB as it did not have first degree nexus with export sales of assessee.--Assessee claimed deduction under section 80-IB in respect of exchange rate difference relying upon Amba Implex case (2006) 282 ITR 144 (Guj). AO disallowed the same. Held: Facts of case of assessee were different from the said Amba Implex case. Exchange rate difference arising out of hedging did not have any first degree nexus with the export sales of assessee. AO was, therefore, justified in disallowing the deduction thereof.

Income Tax Act, 1961, Section 80-IB

Applied:CIT v. Sterling Food (1999) 237 ITR 579 (SC). Distinguished:CIT v. Amba Implex (2006) 282 ITR 144 (Guj).

REFERRED :

FAVOUR : Against the assessee

A.Y. : 2009-10

INCOME TAX ACT, 1961

--Depreciation --Alleged non use of plant and machinery Plant and machinery shifted at complementary unit----Where plant and machineries were shifted at a complementary unit because of fire and assessee produced goods movement challan and electricity consumption bills, etc., in furtherance of the fact of using of plant and machinery and carrying of business activity during the year, AO was not justified in denying depreciation on the ground of non use of machinery by the main unit.--Assessee claimed depreciation on plant and machinery. AO, on the ground that no business activity was carried out during the year, disallowed the same. Assessee contended that there was a fire in its Unit-I, plant and machineries were, therefore, shifted at Unit-II and work in both the units was complementary for the finished product. Held: It was evident from goods movement challan and electricity consumption bills, etc., that plant and machineries were used during the year and were, therefore, eligible for depreciation.