Prabal Kanti Pramanik, Purba Medinipur V. ACIT, CIR- HALDIA, Purba Medinipur

CO 32/KOL/2013

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1264 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 25-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 12-03-2013
• Court: TRIBUNAL
• Department Lawyers: T P KAR
• Assessee Lawyers: MD GHAYAS UDDIN
• Keywords: Double taxation relief
• Section: 44AD; 143(3); 28; 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M.BALAGANESH, AM ] ITA NO.207/KOL/2013 ASSESSMENT YEAR : 2008 - 09 ( A PPELLANT ) (RESPONDENT) A.C.I.T., CIRCLE, - VERSUS - MR.PRABAL KANTI PRAMANIK HALDIA PURBA MEDINIPUR (PAN: AEYPP 4276 P) C.O.NO.32/KOL/2013 A/O ITA NO.207/KOL/2013 ASSESSMENT YEAR : 2008 - 09 MR.PRABAL KANTI PRAMANIK - VERSUS - A.C.I.T., CIRCLE, PURBA MEDINIPUR HALDIA FOR THE APPELLANT : MD.GHAYASUDDIN, JCIT FOR THE RESPONDENT : SHRI T.P.KAR , FCA DATE OF HEARING : 11.09.2015. . DATE OF PRONOUNCEMENT : 21.09.2015. ORDER PER SHRI M.BALAGANESH, AM 1. THIS APPEAL OF THE REVENUE ARISES OUT OF THE ORDER OF THE LEARNED CITA IN APPEAL NO. 73/CIT(A) - XXX III/KOL./AC - CIRCLE/HAL./10 - 11 DATED 11.11.2012 PASSED AGAINST THE ORDER OF ASSESSMENT FOR THE ASST YEAR 2008 - 09 FRAMED BY THE LEARNED AO U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 2. THE REVENUE HAD PREFERRED THIS APPEAL IN ITA NO. 207 / 2013 AND ASSESSEE HAD PREFERRED CROSS OBJECTION IN CO 32 / 2013 AND THEY ARE TAKEN UP TOGETHER AND DISPOSED OFF BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 207 / 2013 REVENUE APPEAL 3. THE ONLY ISSUE TO BE DECI DED IN THIS APPEAL IS AS TO WHETHER THE LEARNED CITA IS JUSTIFIED IN CONSIDERING FOREIGN INCOME AT AVERAGE EXCHANGE RATE OF CONVERSION DURING THE YEAR WHEN CREDIT FOR TAX DEDUCTED AT SOURCE IS GIVEN BASED ON THE ACTUAL EXCHANGE RATE PREVAILING ON THE DATE OF TRANSACTION. ITA NO. 207/KOL/2013 & CO.32/KOL/2013 MR.PRABAL KANTI PRAMANIK . A.YR. 2008 - 09 2 3.1. THE BRIEF FACTS OF THIS APPEAL IS THAT THE ASSESSEE WAS IN RECEIPT OF 127613 OMAN RIAL OUTSIDE INDIA AND CHOSE TO BRING THE SAME INTO INDIA DURING THE ASSESSMENT YEAR UNDER APPEAL. THE LEARNED AO ADOPTED THE EXCHANGE RATE PREVA ILING AT THE END OF THE PREVIOUS YEAR TO CONVERT THE 127613 OMAN RIAL TO INDIAN RUPEES (INR) AND BROUGHT THE SAME TO TAX AS INCOME OF THE ASSESSEE AND GAVE CREDIT FOR TAX PAID IN OMAN IN THE SAME FASHION. ON FIRST APPEAL, THE LEARNED CITA HELD THAT THE D ETAILS OF ACTUAL DATE OF RECEIPT OF INCOME IN ABROAD (IE OMAN) IS NOT PROVIDED BY THE ASSESSEE AND HENCE DIRECTED THE LEARNED AO TO ADOPT THE AVERAGE EXCHANGE RATE OF CONVERSION OF OMAN RIAL TO INR FOR TAXING THE FOREIGN INCOME AND ALSO DIRECTED THE LEARNE D AO TO ADOPT THE EXCHANGE RATE PREVAILING ON THE DATE OF PAYMENT OF TAX IN OMAN AND GIVE CREDIT ACCORDINGLY TO THE ASSESSEE. AGGRIEVED BY THIS INCONSISTENCY OF THE LEARNED CITA FOR DIFFERENCE IN TREATMENT OF FOREIGN INCOME AND FOREIGN TAX CREDIT WHEREIN EXCHANGE RATE ON DIFFERENT DATES WERE DIRECTED TO BE ADOPTED BY THE LEARNED CITA , THE REVENUE IS IN APPEAL BEFORE US . 3.2. SHRI.MD.GHAYASU DDIN , JCIT, THE LEARNED DR ARGUED ON BEHALF OF THE REVENUE AND SHRI.T.P.KAR, FCA , THE LEARNED AR ARGUED ON BEHALF OF THE ASSESSEE. 3.3. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED AO. IN RESPONSE TO THIS, THE LEARNED AR SUPPORTED THE ORDER OF THE LEARNED CIT ( A ) . 3.4. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE LEARNED CIT ( A ) HAD GIVEN DIRECTIONS TO ADOPT THE EXCHANGE RATE PREVAILING ON THE DATE OF PAYMENT OF TAXES FOR THE PURPOSE OF GRANTING FOREIGN TAX CREDIT AND WHEREAS FOR THE PURPOSE OF ASSESSING THE FOREIGN INCOME, HE HAD ADOPTED A DIFFERENT VIEW OF ADOPTING THE AVERA GE EXCHANGE RATE OF CONVERSION DURING THE YEAR. WE HOLD THAT THE PROVISIONS OF RULE 26 AND RULE 115 OF INCOME TAX RULES PROVIDE COMPUTATION MECHANISM FOR CONVERSION OF FOREIGN CURRENCY INTO INDIAN CURRENCY IN RESPECT OF EACH SOURCE OF INCOME. HENCE WE DE EM IT FIT AND APPROPRIATE IN THE INTEREST OF JUSTICE AND FAIR PLAY TO SET ASIDE THIS ISSUE TO THE FILE OF THE LEARNED AO TO DETERMINE THE FOREIGN INCOME IN ACCORDANCE WITH RULE 26 AND RULE 115 OF INCOME TAX RULES DEPENDING UPON THE NATURE OF INCOME. WE AL SO ITA NO. 207/KOL/2013 & CO.32/KOL/2013 MR.PRABAL KANTI PRAMANIK . A.YR. 2008 - 09 3 DIRECT THAT IN CASE THE ASSESSEE IS ABLE TO PRODUCE ANY OTHER FRESH EVIDENCE TO DETERMINE THE FOREIGN INCOME BASED ON EXCHANGE RATE PREVAILING ON THE DATE OF INCOME, THE SAME NEED TO BE CONSIDERED BY THE LEARNED AO WHILE FRAMING THE SET ASIDE ASSESSMENT . IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. CO 32/ 2013 CROSS OBJECTION OF THE ASSESSEE 4. THIS CROSS OBJECTION OF THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED CIT ( A ) IN APPEAL NO. 73/CIT(A) - XXXIII/KOL./ AC - CIRCLE/HAL./10 - 11 DATED 11.11.2012 AGAINST THE ORDER OF THE LEARNED AO FRAMED U/S 143(3) OF THE ACT. 5. THE FIRST ISSUE TO BE DECIDED IN THIS CROSS OBJECTION IS THAT AS TO WHETHER THE LEARNED CIT ( A ) IS JUSTIFIED IN CONFIRMING THE ORDER OF THE LEAR NED AO FOR DETERMINATION OF PRESUMPTIVE PROFIT U/S 44AD IN SPITE OF THE FACT THAT THE TURNOVER OF THE ASSESSEE EXCEEDS RS 40 LACS. 5.1. WE FIND THAT THE PROVISIONS OF SECTION 44AD OF THE ACT COULD NOT BE MADE APPLICABLE IF THE TURNOVER EXCEEDS RS 40 LAC S. AT THIS JUNCTURE, IT WILL BE PERTINENT TO GET INTO THE PROVISIONS OF SECTION 44AD WHICH IS REPRODUCED BELOW FOR THE SAKE OF CONVENIENCE : - 44AD (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTIONS 28 TO 43C, IN THE CASE OF AN ASSESSEE EN GAGED IN THE BUSINESS OF CIVIL CONSTRUCTION OR SUPPLY OF LABOUR FOR CIVIL CONSTRUCTION, A SUM EQUAL TO EIGHT PER CENT OF THE GROSS RECEIPTS PAID OR PAYABLE TO THE ASSESSEE IN THE PREVIOUS YEAR ON ACCOUNT OF SUCH BUSINESS OR, AS THE CASE MAY BE, A SUM HIGHE R THAN THE AFORESAID SUM AS DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME, SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION . PROVIDED THAT NOTHING CONTAINED IN TH IS SUB - SECTION SHALL APPLY IN CASE THE AFORESAID GROSS RECEIPTS PAID OR PAYABLE EXCEED AN AMOUNT OF FORTY LAKH RUPEES. IN VIEW OF THE AFORESAID PROVISION, WE HOLD THAT THE ACTION OF THE LOWER AUTHORITIES IN ADOPTING THE PRESUMPTIVE RATE OF TAXATION U/S 4 4AD IN THE FACTS AND CIRCUMSTANCES OF THE CASE IS NOT APPRECIATED AND ACCORDINGLY THE CROSS OBJECTION NO. 1 OF THE ASSESSEE IS ALLOWED. ITA NO. 207/KOL/2013 & CO.32/KOL/2013 MR.PRABAL KANTI PRAMANIK . A.YR. 2008 - 09 4 6. THE NEXT ISSUE TO BE DECIDED IN THE CROSS OBJECTION OF THE ASSESSEE IS THAT THE LEARNED CIT ( A ) HAD NOT CONSIDERE D THE EFFECT OF DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) BETWEEN INDIA AND OMAN FOR THE PURPOSE OF ASSESSMENT OF FOREIGN INCOME OF THE ASSESSEE. 7. WE FIND LOT OF FORCE IN THE CROSS OBJECTION RAISED BY THE ASSESSEE IN THIS REGARD. ACCORDINGLY, WE DIR ECT THE LEARNED AO TO CONSIDER THE RELEVANT ARTICLE OF DTAA WITH REGARD TO THE FOREIGN INCOME DEPENDING UPON THE NATURE OF INCOME AND ASSESS THE FOREIGN INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 90 OF THE ACT. ACCORDINGLY, THIS CROSS OBJECTION N O.2 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT, THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. 8. THE APPEAL OF THE REVENUE IN ITA NO. 207/ 2013 IS ALLOWED FOR STATISTICAL PURPOSES AND CROSS OBJECTION OF THE ASSESSEE IN CO 32 / 2013 IS PARTLY ALLOWED. ORDER PRONOUNC ED IN TH E COURT ON 2 1.09.2015. SD/ - SD/ - [MAHAVIR SINGH] [M.BALAG ANESH] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 21.09.2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED T O : 1 . MR.PRABAL KANTI PRAMANIK, GARKAMALPUR, MAHISHADAL, PURBA MEDINIPUR. 2 THE A.C.I.T., CIRCLE, HALDIA. 3 . THE CIT - XV I II , KOLKATA , 4. THE CIT(A) - XXX I I I, KOLKATA. 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY , BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES ITA NO. 207/KOL/2013 & CO.32/KOL/2013 MR.PRABAL KANTI PRAMANIK . A.YR. 2008 - 09 5