DCIT, Hyderabad V. M/s AsterTek Services (P) Ltd., Secunderabad

ITA 1758/HYD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3173 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 03-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 19-12-2008
• Court: TRIBUNAL
• Department Lawyers: SHRIPHANI RAJU
• Assessee Lawyers: C SUBRAMANIAM

Judgement Text

ITE 1758/HYD/08 M/S ASTER TELE SERVICE P.LTD., HYD. IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHR I AKBER BASHA, ACCOUNTANT MEMBER . ITA NO. 1758/HYD/08 : ASSESSMENT YEARS 2004-05 DCIT, CIR-1(1), HYDERABAD. VS M/S. ASTER TELE SERVICES (P) LTD., SECUNDERABAD. PAN:AADFK 4716A (APPELLANT) (RESPONDENT) DEPARTMENTT BY : SHRIPHANI RAJU ASSESSEE BY : SHRI C. SUBRAMANIAM O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE CIT (A)-II, HYDERABAD DATED 8-10-2008 AND IT PE RTAINS TO THE ASSESSMENT YEAR 2004-05. THE ONLY ISSUE ARISES FO R CONSIDERATION IS GRANT OF DEDUCTION UNDER SECTION 10A OF THE I. T. A CT. 2. SHRI H. PHANI RAJU, LEARNED DEPARTMENTAL REPRESE NTATIVE SUBMITTED THAT FOR CLAIMING DEDUCTION UNDER SECTION 10A OF THE ACT, THE ASSESSEE HAS TO RECEIVE THE FOREIGN EXCHANGE IN INDIA WITHIN SIX MONTHS. HOWEVER, THE RESERVE BANK OF INDIA IS EMP OWERED TO 2 EXTEND THE PERIOD OF REALIZATION OF EXPORT PROCEEDI NGS BEYOND SIX MONTHS. THE RESERVE BANK OF INDIA HAS FURTHER DELEG ATED ITS POWERS TO THE AUTHORIZED DEALERS IN FOREIGN EXCHANGE TO EX TEND THE PERIOD BEYOND SIX MONTHS. THE RESERVE BANK OF INDIA MADE THIS DELEGATION BY A CIRCULAR DATED 1-11-2004 AND APPLICABLE IN RES PECT OF EXPORTS MADE ON OR AFTER 1ST SEPT. 2004. ACCORDING TO THE LEARNED REPRESENTATIVE FOR THE DEPARTMENT FOR THE ASSESSMEN T YEAR UNDER CONSIDERATION ONLY RESERVE BANK OF INDIA WAS EMPOWE RED TO GRANT EXTENSION AND THEREFORE THE CLAIM MADE BY THE ASSES SEE TO THE AUTHORIZED DEALERS IN FOREIGN EXCHANGE MAY NOT BE A REASON FOR GRANTING DEDUCTION UNDER SECTION 10A OF THE ACT. A CCORDING TO THE LEARNED REPRESENTATIVE FOR THE REVENUE THE CIT (A) DIRECTED THE ASSESSING OFFICER TO VERIFY FROM THE CITY BANK/RESE RVE BANK OF INDIA AND FIND OUT WHETHER THE APPLICANT WAS GRANTED EXTE NSION OF TIME. THE LEARNED REPRESENTATIVE FURTHER SUBMITTED THAT D URING THE YEAR UNDER CONSIDERATION ONLY RESERVE BANK OF INDIA HAS TO GRANT EXTENSION AND NOT THE CITY BANK AND THEREFORE THE C IT (A) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO VERIFY FROM RESERVE BANK OF INDIA AND NOT FROM THE CITY BANK. 3. ON THE CONTRARY, SHRI C. SUBRAMANIAM, LEARNED CO UNSEL FOR THE ASSESSEE SUBMITTED THAT THE RESERVE BANK OF INDIA I S EMPOWERED TO EXTEND THE PERIOD OF REALIZATION OF EXPORT PROCEEDS BEYOND SIX 3 MONTHS BY A NOTIFICATION NO. FEMA 23/2000-RB DATED 3RD MAY 2000. THE RESERVE BANK OF INDIA FURTHER DELEGATED ITS POWER TO THE AUTHORIZED DEALERS IN FOREIGN EXCHANGE. THEREFORE, IT MAY NOT BE CORRECT TO SAY THAT DURING THE ASSESSMENT YEAR UNDE R CONSIDERATION, ONLY THE RESERVE BANK OF INDIA HAS TO GRANT EXTENSI ON. ACCORDING TO THE LEARNED REPRESENTATIVE FOR THE ASSESSEE THE ASS ESSEE HAS MADE APPLICATION TO THE AUTHORIZED FOREIGN EXCHANGE DEAL ERS VIZ., CITY BANK AND EVEN NOW THE ASSESSEE WAS NOT INFORMED ABO UT THE DECISION TAKEN ON THE APPLICATION FILED BY THE ASSE SSEE EITHER BY CITY BANK OR RESERVE BANK OF INDIA. THEREFORE, THE CIT(A ) OUGHT TO HAVE GRANTED THE DEDUCTION UNDER SECTION 10A AS CLAIMED BY THE ASSESSEE. THE LEARNED REPRESENTATIVE FOR THE ASSESSEE HAS ALS O PLACED RELIANCE ON THE DECISION OF DELHI 'I' BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. INTERRA SOFTWARE (INDIA) PVT. LTD. (2007) 112 TTJ (DEL) 982 AND SUBMITTED THAT WHEN THE ASSESSEE BROUGHT TH E FOREIGN EXCHANGE INTO INDIA WITHIN THE EXTENDED PERIOD AND THE SAME IS ELIGIBLE FOR DEDUCTION UNDER SECTION 10A OF THE ACT . THE LEARNED REPRESENTATIVE FOR THE ASSESSEE AGAIN PLACED RELIAN CE ON THE JUDGMENT OF GUJARAT HIGH COURT IN THE CASE OF CIT VS. DHATU SANSKAR (P) LTD. (2007) 292 ITR 135 (GUJ.) AND SUBMITTED THAT WHEN T HE APPLICATION WAS NOT DISPOSED OFF OR IT WAS NOT INFORMED ABOUT T HE REJECTION OF THE APPLICATION, THE ASSESSEE WAS WELL WITHIN ITS R IGHTS TO ENTERTAIN A BELIEF THAT THE TIME SOUGHT FOR WAS GRANTED. IN TH IS CASE ALSO 4 ACCORDING TO THE LEARNED REPRESENTATIVE FOR THE ASS ESSEE, THE ASSESSEE WAS NOT INFORMED ABOUT THE RESULT OF ASSESSEE'S APP LICATION FOR EXTENSION OF TIME. THEREFORE, THE ASSESSEE WAS JUS TIFIED FOR CLAIMING DEDUCTION IN RESPECT OF THE SALE PROCEEDS RECEIVED AFTER SIX MONTHS UNDER SECTION 10A OF THE ACT. 4. THE LEARNED REPRESENTATIVE FOR THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE DECISION OF SPECIAL BENCH OF THIS T RIBUNAL (DELHI BENCH B) IN THE CASE OF BHAGWAD SWARUP SHRI SHRI D EVRAHA BABA MEMORIAL SHRI HARI PARMARTH DHAM TRUST VS. CIT (200 8) 111 ITD 175 AND SUBMITTED THAT WHEN THE ORDER WAS NOT PASSE D BY THE RESERVE BANK OF INDIA/ AUTHORIZED DEALER, IT IS PRE SUMED THAT THE APPLICATION OF THE ASSESSEE FOR EXTENSION OF TIME W AS ALLOWED. THE LEARNED REPRESENTATIVE ALSO PLACED RELIANCE ON THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF CIT VS. AXIS COMPUTERS (I NDIA) (P) LTD. (2009) 178 TAXMAN 143 (DEL) AND SUBMITTED THAT TIME LIMIT OF REALIZATION OF SALE PROCEEDS IS ONLY DIRECTORY AND NOT MANDATORY. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE W HAT IS REQUIRED TO BRING BACK THE SALE PROCEEDS INTO INDIA IN FOREIGN CURRENCY. SINCE ADMITTEDLY THE ASSESSEE BROUGHT THE SALE PROCEEDS I N FOREIGN EXCHANGE, THE ASSESSEE IS ENTITLED FOR DEDUCTION UN DER SECTION10A OF THE ACT. 5 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMI TTEDLY, THE ASSESSEE BROUGHT THE SALE PROCEEDS TO INDIA IN FORE IGN CURRENCY AFTER EXPIRY OF SIX MONTHS PERIOD. IT IS ALSO NOT IN DIS PUTE THAT THE ASSESSEE HAS MADE APPLICATION FOR EXTENSION OF TIME BEFORE THE AUTHORIZED FOREIGN EXCHANGE DEALER VIZ., CITY BANK. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE HAS NOT RECEIV ED ANY COMMUNICATION ABOUT THE APPLICATION FILED BY THE AS SESSEE EITHER FROM THE CITY BANK OR RESERVE BANK OF INDIA. IN SU CH CIRCUMSTANCES, THE CIT (A) DIRECTED THE ASSESSING O FFICER TO VERIFY THE STAGE OF APPLICATION AND IN CASE THE EXTENSION AS SOUGHT FOR BY THE ASSESSEE WAS GRANTED, THE ASSESSEE'S CLAIM MAY BE ALLOWED. THE MAIN CONTENTION OF THE LEARNED DEPARTMENTAL REPRESE NTATIVE IS THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE EXTENSION OF TIME HAS TO BE GRANTED ONLY BY THE RESERVE BANK OF INDIA AND NOT BY THE AUTHORIZED DEALER. THEREFORE, THE CIT (A) OUGHT NO T HAVE DIRECTED THE ASSESSING OFFICER TO VERIFY FROM THE AUTHORIZED DEALER I.E., CITY BANK. WE ARE UNABLE TO ACCEPT THE CONTENTION OF T HE LEARNED DEPARTMENTAL REPRESENTATIVE. WHEN THE RESERVE BANK OF INDIA AUTHORIZED CITY BANK TO DEAL IN FOREIGN EXCHANGE IN THE INDIAN TERRITORY, THE APPLICATION RECEIVED BY THE CITY BAN K AS AUTHORIZED DEALER/AGENT HAS TO BE BROUGHT TO THE NOTICE OF THE RESERVE BANK OF INDIA, IN CASE THE CITY BANK HAS NO AUTHORITY TO GR ANT EXTENSION AS 6 SOUGHT FOR. THE CITY BANK BEING AN AUTHORISED FOREI GN EXCHANGE DEALER/AGENT HAS TO ACT PRUDENTLY AND TAKE NECESSAR Y STEPS AS AND WHEN THE ASSESSEE FILED AN APPLICATION FOR EXTENSIO N OF TIME. IN OTHER WORDS, THE CITY BANK WAS EXPECTED TO FORWARD THE AP PLICATION OF THE ASSESSEE TO THE CONCERNED AUTHORITY IN CASE IT AS N O POWER TO EXTEND THE PERIOD AS SOUGHT FOR BY THE ASSESSEE. THEREFO RE, MERELY BECAUSE THE CITY BANK HAS NO AUTHORITY TO GRANT EXTENSION O F TIME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, IT DOES NOT ME AN THAT CITY BANK BEING A AUTHORIZED FOREIGN EXCHANGE DEALER WOU LD SLEEP OVER ON THE APPLICATION FILED BY THE ASSESSEE. AS AN AUT HORIZED FOREIGN EXCHANGE DEALER, THE CITY BANK HAS A RESPONSIBILITY EITHER TO DECIDE THE APPLICATION BY ITSELF OR FORWARD THE SAME TO TH E RESERVE BANK OF INDIA FOR GRANT OF EXTENSION OF TIME IN CASE THE AU THORITY WAS VESTED WITH THE RESERVE BANK OF INDIA. THEREFORE, THE APP LICATION FILED BY THE ASSESSEE HAS TO BE CONSIDERED IN ACCORDANCE WIT H LAW BY THE CONCERNED AUTHORITY WHO IS EMPOWERED TO DO SO. THE DECISION TAKEN ON SUCH APPLICATION HAS TO BE COMMUNICATED TO THE A SSESSEE ALSO. HOWEVER, IN THE CASE BEFORE US THOUGH ADMITTEDLY TH E ASSESSEE FILED AN APPLICATION FOR EXTENSION OF TIME, THE DECISION TAKEN THEREON WAS NOT COMMUNICATED TO THE ASSESSEE SO FAR. THEREFORE , WE CANNOT BLAME THE ASSESSEE FOR CLAIMING THE DEDUCTION UNDER SECTION 10A OF THE ACT. IN SUCH CIRCUMSTANCES, THE CIT (A), IN OU R OPINION, HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO VERIFY WI TH CITY 7 BANK/RESERVE BANK OF INDIA TO FIND OUT WHETHER EXTE NSION SOUGHT FOR BY THE ASSESSEE WAS GRANTED OR NOT. IN THESE C IRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT ( A) AND ACCORDINGLY THE SAME IS CONFIRMED. 6. IN THE RESULT, THE REVENUE'S APPEAL STAND DISMIS SED. ORDER WAS PRONOUNCED IN THE COURT ON 25 - 6-2010. SD/- SD/- (AKBER BASHA) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 25 - 6-2010. COPY FORWARDED TO: 1. DCIT, CIR-1(1), 4TH FLOOR, AAYAKAR BHAVAN, HYDER ABAD. 2. 3. 4. M/S. ASTER TELE SERVICES (P) LTD., E-67, 4TH CRESCE NT, SAINIKPURI, SECUNDERABAD. CIT (A)-II, HYDERABAD. CIT, A P, HYDERABAD. 3. THE D.R., ITAT, HYDERABAD JMR 8