COMMISSIONER OF INCOME TAX CENTRAL-I V. MEGHMANI DYES & INTERMEDIATES LTD

TAXAP/1366/2008

AI Insights

The case revolves around a dispute concerning the deduction claimed under section 80HHC of the Income Tax Act, 1961 by Meghmani Dyes & Intermediates Ltd., a manufacturer and exporter of dyes and intermediates. The Income Tax Officer (ITO) initially allowed the deduction but later rectified the order under section 154, reducing the taxable income after determining that some sale proceeds were not received within the stipulated period. The CIT(A) reversed this decision after the Reserve Bank of India granted an extension for the receipt of the foreign exchange, which was upheld by the ITAT. The Commissioner of Income Tax Central-I appealed against this decision, which led to the present judgment.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 699657 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 30-11-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SWATI SOPARKAR
• Assessee Lawyers: MAUNA BHATT
• Keywords: Convertible foreign exchange; Deduction; Export Turnover; Extension of time; Income Tax
• Section: 154; 143(1)(a); 80HHC(2)(a)

Judgement Text

"O/TAXAP/1366/2008 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1366 of 2008 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH Sd/- and HONOURABLE MR.JUSTICE R.P.DHOLARIA Sd/- ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? NO 2 To be referred to the Reporter or not ? NO 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? NO 5 Whether it is to be circulated to the civil judge ? NO ================================================================ COMMISSIONER OF INCOME TAX CENTRAL-I....Appellant(s) Versus MEGHMANI DYES & INTERMEDIATES LTD....Opponent(s) ================================================================ Appearance: MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1 MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.P.DHOLARIA Date : 30/11/2013 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) Page 1 of 5 O/TAXAP/1366/2008 JUDGMENT 1.00. Feeling aggrieved and dissatisfied with the impugned judgement and order passed by learned Income Tax Appellate Tribunal (hereinafter referred to as “the ITAT”) passed in ITA No.1384/Ahd/2004 for A.Y. 2000-2001, the revenue has preferred present Tax Appeal. 2.00. While admitting the present Tax Appeal, the Division Bench has framed the following substantial question of law:- “Whether on the facts and circumstances of the case, filing of application for extension of time before the competent authority will be sufficient for fulfilling the requirement of Section 80HHC(2)(a) of the Act?” 3.00. The assessee, who is manufacturer and exporter of dyes and intermediates, filed return of income for A.Y. 2000- 2001 assessing total income AT Rs.5,51,89,772, which was processed under section 143(1)(a) of the Income Tax Act, 1961 (hereinafter referred to as “the Act” ) 3.01. The assessee claimed deduction under section 80HHC amounting to Rs.5,48,49,110/- with respect to sale proceeds of the convertible foreign exchange which was came to be allowed by the AO and AO arrived at the conclusion that the total taxable income is Rs.3,40,662/-. 3.02. That thereafter, AO initiated proceedings under section 154 of the IT Act and the AO was of the opinion that the convertible foreign exchange to the tune of Rs.1,38,32,422/- was not received within the stipulated period granted by the Reserve Bank of India. According to AO as per Page 2 of 5 O/TAXAP/1366/2008 JUDGMENT section 80HHC of the IT Act, sale proceeds received or brought in India in convertible foreign exchange within the prescribed time or within the extended time limit shall only be considered for determining “export turnover” at the time of allowing deduction. After giving opportunity to the assessee, AO rectified his earlier order with respect to claim under section 80HHC of the IT Act and held revised total income at Rs.32,31,030/-. 3.03. Feeling aggrieved by and dissatisfied with the order passed by the AO under section 154 of the IT Act, assessee preferred appeal before the Commissioner (Appeals). 3.04. At the outset it is required to be noted that when the AO passed order under section 154 of the IT Act, the assessee had submitted application for extension before Reserve Bank of India, however the same was pending. At the time of hearing before the CIT(A), Reserve Bank of India granted extension upto 31/3/2002 and therefore, CIT(A) allowed the said appeal and cancelled the order passed by the AO under section 154 of the IT Act and directed to allow deduction under section 80HHC of the IT Act after including invoices amount in the export turnover of the assessee for which even Reserve Bank of India granted extension. 3.05. The order passed passed by the CIT(A) came to be confirmed by the learned ITAT. 3.06. Feeling aggrieved and dissatisfied with the order passed by the ITAT confirming the order passed by the CIT(A), revenue has preferred present appeal. Page 3 of 5 O/TAXAP/1366/2008 JUDGMENT 4.00. Having heard Mr.Bhatt, learned counsel appearing on behalf of the appellant – revenue and Mr.S.N. Soparkar, learned counsel appearing on behalf of the respondent – assessee and considering the fact that as such subsequently Reserve Bank of India did granted extension in favour of the assessee upto 31/3/2002, as rightly held by the CIT(A), the assessee was entitled to deduction under section 80HHC of the IT Act on the entire amount claimed before the AO which was allowed by the AO i.e. Rs.5,48,49,110/-. Therefore, when the extension was granted by the Reserve Bank of India upto 31/3/2002, it can be said that the requirements under section 80HHC of the IT Act are complied with. 4.01. Under the circumstances, the impugned judgement and orders passed by the CIT(A) as well as ITAT are not required to be interfered with by this Court. We see no error in the order passed by the CIT(A) confirmed by the ITAT. Under the circumstances, present appeal deserves to be dismissed and is accordingly dismissed. However, it is observed that in the present case, as Reserve Bank of India did granted extension upto 31/3/2002, during the pendency of the appeal before the CIT(A), the question which is framed while admitting the present appeal that filing of the application for extension of time before the competent authority will be sufficient for fulfilling the requirement under section 80HHC (2)(a) of the IT Act, is not answered and the said question is kept open. Sd/- (M.R.SHAH, J.) Sd/- Page 4 of 5 O/TAXAP/1366/2008 JUDGMENT (R.P.DHOLARIA,J.) Rafik. Page 5 of 5 "