Dy. CIT, Circler-2(3), Hyderabad V. M/s Green Fire Agri Commodities Limited, Hyderabad

ITA 24/HYD/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82633 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 06-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G APARNA RAO
• Assessee Lawyers: P V S S PRASAD
• Keywords: Competent authority
• Section: 10; 143(3)

Judgement Text

ITA NO.24 OF 2014 GREEN FIRE AGRI COMMODITIES LTD H YDERABAD PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD ABENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.24/HYD/2014 (ASSESSMENT YEAR: 2006-07) DY. COMMISSIONER OF INCOME TAX, CIRCLE 2(3) HYDERABAD VS. M/S. GREEN AGRI COMMODITIES LIMITED 8-2-334, 1 ST FLOOR, SDE SERENE CHAMBERS, ROAD NO.5, BANJARA HILLS, HYDERABAD 500034 PAN: AABCN 7735 P (APPELLANT) (RESPONDENT) DEPARTMENT BY: SMT. G. APARNA RAO, (DR) ASSESSEE BY: SHRI P.V.S.S. PRASAD, CA DATE OF HEARING: 11/12/2014 DATE OF PRONOUNCEMENT: 31/12/2014 O R D E R PER ASHA VIJAYARAGHAVAN , J.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT (A)-III HYDERABAD, DATED 11.10.2013 FOR THE A.Y 2006- 07, U/S 143(3) R.W.S. 263 OF THE I.T. ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY FILED ITS RETURN OF INCOME FOR THE A.Y 2006-07 ON 28.11.2 006, ADMITTING TOTAL INCOME AT RS.5,50,48,491/-. THE ASS ESSMENT WAS COMPLETED U/S143(3) OF THE ACT. SUBSEQUENT TO THE C OMPLETION OF THE ASSESSMENT, THE CIT-IV HYDERABAD OBSERVED THAT THE INWARD FOREIGN REMITTANCES U/S 10A(3) SHOULD BE RECEIVED B Y THE ASSESSEE WITHIN SIX MONTHS FROM THE END OF THE PREV IOUS YEAR OR ITA NO.24 OF 2014 GREEN FIRE AGRI COMMODITIES LTD H YDERABAD PAGE 2 OF 8 WITHIN SUCH FURTHER PERIOD AS THE COMPETENT AUTHORI TY MAY ALLOW THE ASSESSEE COMPANY TO BRING THE FOREIGN EXCHANGE INTO INDIA AND THAT THE ASSESSEE COMPANY DID NOT RECEIVE FOREI GN EXCCHANGE WITHIN THE TIME STIPULATED U/S 10A(3). A SHOW CAUSE NOTICE U/S 263 DATED 29.11.2012 WAS ISSUED TO THE ASSESSEE COM PANY BY THE CIT-IV, HYDERABAD. AFTER SATISFYING HIMSELF TH E ORDER PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF THE REVENUE, IN EXERCISE OF POWERS VESTED U/S 263 THE C IT SET ASIDE FOR COMPUTATION OF DEDUCTION U/S 10A DE NOVA TO THIS EXTENT WITH A SPECIFIC DIRECTION TO THE AO TO GIVE AN OPPORTUNI TY TO THE ASSESSEE TO PRODUCE THE NECESSARY PERMISSION FROM T HE RBI AND IN CASE THE ASSESSEE COMPANY DOES NOT PRODUCE THE P ERMISSION FROM THE RBI AS REQUIRED UNDER THE PROVISIONS OF SE CTION 10A(3), THE ASSESSING SHOULD DECIDE THE ISSUE ACCORDING TO THE PROVISIONS OF LAW. 3. THE ASSESSEE COMPANY SUBMITTED BEFORE THE AO THA T THEIR COMPANY IS A 100% EXPORT ORIENTED UNIT REGISTERED U NDER SOFTWARE TECHNOLOGY PARK OF INDIA (STPI), THEREBY A S PER SECTION 10A OF THE I.T. ACT, THE INCOME ARISING FROM THE SO FTWARE EXPORTS ARE DEDUCTIBLE FROM THE TAXABLE INCOME SUBJECT TO T HE CONDITION THAT THE SALE PROCEEDS OF ARTICLES OR THINGS OR COM PUTER SOFTWARE EXPORTED OUT OF INDIA ARE RECEIVED IN, OR BROUGHT I NTO INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE, WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE PREVIOUS YEAR, OR, WITHI N SUCH FURTHER PERIOD, AS THE COMPETENT AUTHORITY(RBI/AUTH ORISED DEALER) MAY ALLOW IN THIS BEHALF. 4. DURING THE A.Y 2006-07, EXPORT PROCEEDS OF RS.15 .00 CRORES WERE REALIZED AND BROUGHT INTO INDIA WITHIN THE 12 MONTHS PERIOD ITA NO.24 OF 2014 GREEN FIRE AGRI COMMODITIES LTD H YDERABAD PAGE 3 OF 8 FROM THE DATE OF EXPORT AS PROVIDED BY COMPETENT AU THORITY I.E. RBI BUT BEYOND THE SIX MONTHS PERIOD FROM THE PREVI OUS YEAR. 5.A. AN ORDER U/S 263 DATED 29-12-2011 WAS ISSUED TO THE ASSESSEE COMPANY BY CIT(IV) HYDERABAD THAT IN RESPE CT OF TWO INWARDS REMITTANCES FOR USD 27,99,975.50 DATED 05-01-2007 & USD 5,99,985, DATED 29-03-2007 EQUIVALENT TO INR 15 CRORES THE SAME WAS RECEIVED BEYOND THE STIPULATED PERIOD OF 6 MONTHS AS STIPULATED U/S 10A(3) AND FOR REMITTANCES BEYOND 6 MONTHS THE ASSESSEE COMPANY NEEDS TO TAKE THE SPECIFIC APPROVAL OF RBI. 5.B. IT WAS EXPLAINED THAT THOUGH THE SALE PROCEEDS OF RS. 15 CRORES WAS NOT RECEIVED WITHIN 6 MONTHS THE SAME WAS RECEIVED WITHIN 12 MONTHS FROM THE DATE OF EXPO RT. THE RELEVANT PORTION OF CIRCULAR NO. 25 OF RBI DATED 01 -11-2004 WAS REPRODUCED WHICH CLEARLY STATES THAT EXPORT ORI ENTED UNITS (EOU'S) WILL BE ALLOWED TO REALISE AND REPATR IATE THE FULL VALUE OF 'EXPORT PROCEEDS WITHIN A PERIOD OF TWELVE MONTHS FROM THE DATE OF EXPORT. HOWEVER, THE CIT (IV), HYD ERABAD IN HIS ORDER VIDE PARA NO. 7 OBSERVED ABOUT THE ABOVE SAID CIRCULAR WHICH IS AS UNDER: 'THE ABOVE CIRCULAR WAS NOT ISSUED UNDER THE PROVISIONS OF INCOME TAX ACT, 1961 . THE PROVISIONS OF SECTION 10A(3) OF THE INCOME TAX ACT, 1961 PREVAIL OVER THE PROVISIONS OF FEMA FOR COMPUTATION OF DEDUCTION U/S .10A OF THE INCOME TAX ACT. AN ASSESSEE HAS TO COMPLY WITH THE SPECIFIC PROVISIONS OF THE INCOME TAX ACT FOR CLAIM ING THE DEDUCTION AND IT CANNOT RELY ON THE GENERAL CIRCULAR ISSUED BY THE RESERVE BANK OF INDIA UNDER THE PROVISIONS O F A DIFFERENT STATUE. NO DOUBT, THE RESERVE BANK OF INDIA IS THE COMPETENT AUTHORITY FOR RELAXING TH E PERIOD OF ITA NO.24 OF 2014 GREEN FIRE AGRI COMMODITIES LTD H YDERABAD PAGE 4 OF 8 SIX MONTHS UNDER THE PROVISIONS OF THE INCOME TAX A CT. BUT AN ASSESSEE HAS TO MAKE AN APPLICATION TO THE RESER VE BANK OF INDIA FOR CLAIMING THE RELAXATION UNDER THE PROVISIONS OF SECTION 10A(3) OF THE INCOME TAX ACT. THE ASSESSEE CANNOT RELY ON THE GENERAL CIRCULAR OF THE RESERVE BANK OF INDIA. AS THE ASSESSEE DID NOT PRODUCE PERM ISSION FROM COMPETENT AUTHORITY FOR BRINGING THE FOREIGN E XCHANGE INTO INDIA BEYOND 6 MONTHS FROM THE DATE OF EXPORT, THE ASSESSING OFFICER SHOULD NOT HAVE ALLOWED THE DEDUC TION U/S. 10A ON THE SUM OF RS.15 CRORES. THUS, THE ACTI ON OF THE ASSESSING OFFICER IN ALLOWING THE DEDUCTION U/S. 10 A IS ERRONEOUS AND IS PREJUDICIAL TO THE INTERESTS OF RE VENUE. THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/ S. 143(3) IS HEREBY SET ASIDE. THE ASSESSEE COMPANY SUBMITTED A LETTER TO THE LD. AO FROM HDFC BANK BEING THE AUTHORIZED DEALER WHICH CL EARLY STATED THAT THEY ARE AUTHORIZED BY RBI UNDER SUB SE CTION (1) OF SECTION 10 FOREIGN EXCHANGE MANAGEMENT ACT 1999 (FEMA) AS AUTHORIZED PERSON. HDFC IN THEIR LETTER D ATED 4TH MAY 2012 VIDE LETTER NO. HYD/WBO/TF/434/2012-13 CONFIRMED THAT THE EXPORT PROCEEDS HAS BEEN RECEIVE D AS PER NOTIFICATION NO. FEMA/23/2000-RBDATED3 RD MAY 2000. HDFC BANK VIDE THEIR LETTER DATED 14TH FEBRUARY 201 3 AND 1 ST MARCH 2013 HAVE STATED THAT THEY ARE AUTHORISED BY RBI UNDER SUB SECTION (1) OF SECTION 10 TO DEAL IN FOREIGN EXCHANGE OR FOREIGN SECURITIES AS PER FEMA ACT 1999. RBI HAS NOTIFIED UNDER FEMA (EXPORT OF GOODS AND SERVIC ES) REGULATIONS 2000 RELATING TO EXPORT OF GOODS AND SE RVICES FROM INDIA. THE REALISATIONS HAVE TAKEN PLACE AS PER RBI GUIDEL INES VIDE ITS CIRCULAR NO. 25 AP(DIR SERIES) /RBI/2004-05/264 DATED 01.11.2004 WHICH ALLOWS ALL STPI UNITS TO REA LIZE THE EXPORT PROCEEDS WITHIN 1 YEAR FROM THE DATE OF EXPO RT. THE ITA NO.24 OF 2014 GREEN FIRE AGRI COMMODITIES LTD H YDERABAD PAGE 5 OF 8 COMPANY HAS REALIZED ALL EXPORT PROCEEDS WITHIN 12 MONTHS FROM THE DATE OF EXPORT. 6. FURTHER THE ASSESSEE COMPANY VIDE ITS LETTER DAT ED 08.03.2012 REITERATED ON ITS SUBMISSIONS MADE VIDE THEIR LETTER DATED 14.05.2012 AND REQUESTED TO CONSIDER THE EXPO RT PROCEEDS RECEIVED WITHIN THE STIPULATED TIME EXTENDED BY THE COMPETENT AUTHORITY I.E. HDFC. 7. HOWEVER, THE AO HELD THAT SINCE THE ASSESSEE DID NOT PRODUCE THE PERMISSION FROM THE COMPETENT AUTHORITY UNDER THE PROVISIONS OF THE INCOME TAX ACT FOR BRINGING THE F OREIGN EXCHANGE INTO INDIA BEYOND SIX MONTHS FROM THE DATE OF EXPORT, THE SALE PROCEEDS OF RS.15 CRORES WHICH WERE NOT RE CEIVED WITHIN SIX MONTHS IS NOT ELIGIBLE FOR EXEMPTION U/S 10A OF THE ACT. HENCE THE DEDUCTION U/S 10A WAS RECALCULATED AFTER REDUCING THE AMOUNT OF RS.15 CRORES FROM EXPORT TURNOVER. HOWEVE R, ALL THE OTHER ADDITIONS THAT WERE MADE TO THE TOTAL INCOME IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) ON 24.12.2009 HO LDS GOOD FOR ALL PURPOSES. ACCORDINGLY, HE HELD THAT THE EXP ORT TURNOVER IS TO BE TAKEN AT RS.13,74,63,680/- (I.E. RS.28,74,63, 680 RS.15,00,00,000) AND ACCORDINGLY DEDUCTION U/S 10A IS TO BE RECOMPUTED. 8. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE L D CIT (A) AND THE CIT (A) PLACED RELIANCE ON THE ORDERS OF THE HO N'BLE ITAT BANGALORE BENCH IN THE CASE OF HCL EAI SERVICES LTD VS. DCIT (2013) 35 TAXMANN 146 (BANG) WHEREIN AN IDENTICAL I SSUE HAS BEEN CONSIDERED BY THE ITAT AND IT HAS BEEN HELD TH AT THE RBI ITA NO.24 OF 2014 GREEN FIRE AGRI COMMODITIES LTD H YDERABAD PAGE 6 OF 8 CIRCULAR NO.25 ALLOWS THE ASSESSEE TO REPATRIATE TH E EXPORT EARNING WITHIN ONE YEAR AND IF THAT IS DONE AS PER THE CIRCULAR, THEN THOSE EXPORTS ARE NOT TO BE EXCLUDED FOR THE P URPOSE OF SECTION 10A. IT WAS CONCLUDED BY THE CIT (A) THAT T HE DECISION OF THE ITAT IS APPLICABLE TO THE CASE OF THE ASSESSEE BECAUSE THE FACTS ARE VERY SIMILAR. THE CIT(A) HELD THAT THE CU RRENT CASE THE EXPORT PROFITS HAVE BEEN REPATRIATED INTO INDIA WIT HIN ONE YEAR, THOUGH IT IS LATER THAN SIX MONTHS. THE CIT(A) FOLL OWING THE DECISION OF THE ITAT HELD THAT THE AMOUNTS IN QUEST ION, ARE NOT TO BE REDUCED FROM THE EXPORT TURNOVER FOR THE PURP OSES OF SECTION 10A AND THE AO WAS DIRECTED TO VERIFY WHETH ER THE AFOREMENTIONED CIRCULAR WAS APPLICABLE DURING THE A .Y, AND IF IT WAS VALID AND APPLICABLE, THEN THE DECISION OF THE ITAT IS TO BE FOLLOWED AND THE AMOUNT OF RS.15.00 CRORE IS NOT TO BE REDUCED FROM THE EXPORT TURNOVER. 9. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US AN D HAS RAISED THE FOLLOWING GROUNDS: 1. THE LD CIT (A) ERRED ON FACTS AND IN LAW IN GRA NTING DEDUCTION U/S 10A TO THE PAYMENTS BROUGHT INTO INDI A IN FOREIGN EXCHANGE AFTER 6 MONTHS FROM THE DATE OF EX PORT THOUGH RBI DID NOT ISSUE ANY PERMISSION U/S 10A(3) PERMITTING EXTENSION OF THE PERIOD. 2. THE LD CIT (A) ERRED IN LAW IN HOLDING THAT THE CIRCULAR ISSUED BY RBI UNDER FEMA IS VALID UNDER INCOME TAX ACT, THOUGH THERE IS NO PROVISION IN LAW TO APPLY SUCH C IRCULAR MUTATIS MUTANDIS TO THE INCOME TAX ACT. 3. THE LD CIT (A) ERRED ON FACTS AND IN LAW IN GRAN TING DEDUCTION TO AN AMOUNT OF US$ 246921/- THOUGH THE SAME WAS BROUGHT INTO INDIA AFTER ONE YEAR FROM THE DATE OF EXPORT. ITA NO.24 OF 2014 GREEN FIRE AGRI COMMODITIES LTD H YDERABAD PAGE 7 OF 8 10. THE LD DR RELIED ON THE ORDERS OF THE AO. THE L D COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE ITAT HYDERA BAD IN THE ASSESSEES OWN CASE IN ITA NO.516/HYD/2013 U/S 263 OF THE I.T. ACT, 1961 DATED 27.02.2012 FOR A.Y 2006-07 IN PARA 12 OF ITS ORDER OBSERVED AS UNDER: IN THE PRESENT CASE, THE ASSESSEE COMPANY ALSO SUB MITTED A LETTER TO THE LD AO FROM HDFC BANK BEING THE AUTH ORIZED DEALER WHICH CLEARLY STATED THAT THEY ARE AUTHORIZE D BY RBI U/S (1) OF SECTION 10 FOREIGN EXCHANGE MANAGEMENT A CT, 1999 (FEMA) AS AUTHORIZED PERSON. CONFIRMATION WAS PROVIDED BY THE AUTHORIZED DEALER I.E. HDFC BANK TH AT THE REALIZATION AND REPATRIATION OF THE REMITTANCES OF RS.15.00 CRORES WAS PERMITTED BY RBI UNDER NOTIFICATION NO.FEMA/25/2000-RB DATED 3.5.2000 TO BE BROUGHT INT O INDIA WITHIN 12 MONTHS FROM THE DATE OF EXPORT. THE PROCEEDS HAVE BEEN BROUGHT INTO INDIA WITHIN EXTEND ED TIME STIPULATED BY RBI AND HENCE, THE ISSUE IS SQUA RELY COVERED BY THE DECISION OF COORDINATED BENCH OF THE TRIBUNAL. FURTHER, AS SEEN FROM THE RECORD, THE ASS ESSEE HAS RECEIVED THE AMOUNT WITHIN THE PERMITTED PERIOD BY THE COMPETENT AUTHORITY. ACCORDINGLY, THE ORDER OF THE AO IS NOT PREJUDICIAL TO THE INTERESTS OF THE REVENUE NOR IS ERRONEOUS. THEREFORE, THE OPINION EXPRESSED BY THE CIT IS NOT CORRECT AND ACCORDINGLY THE CIT DOES NOT HAVE JURISDICTION TO INITIATED PROCEEDINGS U/S 263 OF THE I.T. ACT, 1961 . THEREFORE, THE ORDER OF THE CIT IS SET ASIDE AND AS SESSEES APPEAL IS ALLOWED. IN THE RESULT, APPEAL OF THE AS SESSEE IS ALLOWED. 11. WE FIND THAT THE ISSUE HAS BEEN DECIDED BY THE TRIBUNAL WHILE DISPOSING THE APPEAL BY THE ASSESSEE AGAINST THE ORDER PASSED U/S 263 AND THE PRESENT APPEAL RELATES TO TH E APPEAL FILED AGAINST SECTION 143(3) R.W.S. 263. SINCE THE APPEAL PASSED U/S 263 HAS BEEN DECIDED ALREADY BY THE TRIBUNAL WHEREI N IT HAS BEEN HELD THAT THE CIT DOES NOT HAVE JURISDICTION T O INITIATE PROCEEDINGS U/S 263 OF THE I.T. ACT, THE PRESENT AP PEAL IN ITA NO.24/HYD/2014 PASSED BY THE AO U/S 143(3) R.W.S. 2 63 ITA NO.24 OF 2014 GREEN FIRE AGRI COMMODITIES LTD H YDERABAD PAGE 8 OF 8 BECOME INFRUCTUOUS AND HENCE APPEAL OF THE REVENUE IS DISMISSED. 12. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DECEMBER, 2014. S D/ - S D/ - (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD DATED 31 ST DECEMBER, 2014. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER