Ramsons Organics Ltd., Gurgaon V. ITO, New Delhi

ITA 2549/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58469 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 19-01-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 16-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHWANI TANEJA
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `F : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER ITA NO.2549/DEL./2011 (ASSESSMENT YEAR : 2003-04) RAMSONS ORGANICS LIMITED, VS. ITO, WARD 15(2), B-VILLA CENTRAL PARK, SECTOR 42, NEW DELHI. GOLF COURSE ROAD, GURGAON (HARYANA) (PAN/GIR NO.AAACR6191C) AND I.T.A. NO.2684/DEL./2011 (ASSESSMENT YEAR : 2003-04) ITO, WARD 15(2), VS. RAMSONS ORGANICS LIMITED, NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHWANI TANEJA, FCA. REVENUE BY : SHRI ROHIT GARG, SR.DR ORDER PER U.B.S. BEDI, J.M. THESE CROSS APPEALS ONE BY THE ASSESSEE AND OTH ER BY THE DEPARTMENT ARE DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-XVI II, NEW DELHI DATED 02.02.2011, RELEVANT TO ASSESSMENT YEAR 2003-04. 2. IN THE APPEAL OF THE DEPARTMENT, THE EFFECTIVE G ROUND NO.2 HAS BEEN RAISED AS UNDER: THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE CIT(A) HAS FAILED TO APPRECIATE THAT FOREIGN EXCHANGE FLUCTUATION GAI N WAS NOT DERIVED FROM EXPORTS AND HENCE IT IS NOT ENTITLED TO EXEMPTION U/S 10B. I.T.A. NOS.2549 & 2684/DEL./2011 (A.Y. : 2003-04) 2 3. AT THE VERY OUTSET, LD.COUNSEL FOR THE ASSESSEE PLEADED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY EARLIER DECISI ON OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08 IN I.T.A. NO.224/D EL./2011 DATED 25.3.2011. BY FILING COPY OF THE SAID ORDER, IT IS PLEADED FOR DISMISSAL OF THE APPEAL OF THE REVENUE. 4. LD.DR COULD NOT CONTROVERT THIS FACTUAL ASPECT A ND JUST RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 5. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE MATERIAL ON RECORD, AS WELL AS PRECEDENT RELIED UPON BY THE ASSESSEES LD. COUNSEL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08, WE FIND THAT SIMILAR TYPE OF ISSUE WAS CONSIDERED AND DECIDED BY THE TRIBUNAL BY CONCLUDING IN PARA.6 OF ITS ORDE R WHICH IS REPRODUCED AS UNDER: WE HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER, ORDER OF CIT(A) AND THE SUBMISSION MADE BY LD.DR. A FINDING OF FACT HAS RE CORDED BY LD.CIT(A) THAT ASSESSEE AS A MATTER OF PRACTICE IS CREDITING THE S ALES IN ITS BOOKS OF ACCOUNT ON THE DATE OF SENDING THE CONSIGNMENT TO THE BUYER ON THE BASIS OF EXCHANGE RATE PREVALENT AT THAT TIME. SINCE SALE PROCEEDS ARE RE ALIZED LATER ON, THERE IS DIFFERENCE IN THE AMOUNT REALIZED AND THE AMOUNT RECORDED IN T HE BOOKS OF ACCOUNT. THE RESULT WILL EITHER BE MORE AMOUNTS RECEIVED OR LESS AMOUNT RECEIVED AND AT THE TIME OF UTILIZATION OF THE FOREIGN EXCHANGE THE ASS ESSEE IS SHOWING THE INCOME/LOSS IN THE ACCOUNT AS FOREIGN EXCHANGE FLUCTUATION. THIS FINDING OF FACT HAS NOT BEEN CONTROVERTED BY THE REVENUE. IF IT IS SO, THE N THE EXCESS REALIZATION ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION RELATE TO THE SALE PRICE OF THE ASSESSEE WHICH IS VERY MUCH PART OF EXPORT TURNOVER AND ACCO RDING TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ZE M PLUS JEWELLERY INDIA LTD. (SUPRA) HAS HELD THAT EXEMPTION U/S 10A SHOULD BE G RANTED ON THE FOREIGN EXCHANGE GAIN EARNED ON REALIZATION OF EXPORT RECEI PTS IN THE YEAR OF EXPORT AND GAINS ON THE SALE OF EARLIER YEARS SHOULD BE EXCLUD ED FROM THE PROFIT OF YEAR UNDER CONSIDERATION. THUS, THE GAIN REALIZED BY THE ASSE SSEE OF EXPORT RECEIPTS IS ELIGIBLE FOR DEDUCTION U/S 10B AND CIT(A) HAS RIGHTLY ALLOWE D THE CLAIM OF THE ASSESSEE. NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE . WE DECLINE TO INTERFERE IN THE RELIEF GRANTED BY THE CIT(A). 6. SINCE THE ISSUE IS SQUARELY COVERED AND NO CONTR ARY DECISION OR ANY HIGHER COURT DECISION HAS BEEN PLACED ON RECORD OR NOTICED. THE REFORE, FOLLOWING THE PRECEDENT, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPE AL OF THE REVENUE. I.T.A. NOS.2549 & 2684/DEL./2011 (A.Y. : 2003-04) 3 7. AS REGARDS APPEAL OF THE ASSESSEE IN I.T.A. NO.2 549/DEL./2011 IS CONCERNED, THE EFFECTIVE GROUND NO.2 HAS BEEN RAISED AS UNDER: THE LOWER AUTHORITIES HAS GROSSLY ERRED IN MAKING/ CONFIRMING THE ADDITION OF RS.1,07,142/- BEING AMOUNT ALLEGED NOT TO HAD BEEN COLLECTED UNDER ASSUMPTIONS/SURMISES THAT APPELLANT HAS NOT COLLECT ED RS.1,07,142/- OUT OF EXPORT SALES WITHOUT REALIZING THAT WHOLE OF SALE PROCEEDS TO SAVITRI OVERSEAS EUROPE HAS BEEN DULY COLLECTED BY APPELLANT. 8. THE FACTS INDICATE THAT THE ASSESSING OFFICER H AS TREATED RS.1,07,142/- ALLEGING THAT SO MUCH AMOUNT HAS BEEN REMITTED IN INDIA AND ADDED THE SAME IN THE INCOME OF THE ASSESSEE. ASSESSEE HAS DULY SUBMITTED IN THE ASSES SMENT PROCEEDINGS THAT THE FOREIGN EXCHANGE REMITTANCE DUE FORM SAVITRI OVERSEAS EUROP E AS ON 30.09.2003 WAS RS.13,36,752/- AND HAD DULY SUBMITTED CERTIFICATES OF THE BANK TO PROVE THAT BALANCE AMOUNT RECEIVABLE ON 30.09.2003 WAS RS.13,36,752/-. AUDITOR HAD MENTIONED RECEIVABLE AMOUNT AT RS.14,43,894/- IN REPORT IN FORM 56G. TH E DIFFERENCE WAS DUE TO CALCULATION OF FOREIGN EXCHANGE FLUCTUATION CALCULATED AS ON 30 .09.2003. ASSESSEE HAS RECEIVED WHOLE OF THE REMITTANCE FROM SAVITRI OVERSEAS EUROP E IN THE EXTENDED PERIOD. EVEN IF 100% EOU IS NOT ABLE TO RECOVER ANY AMOUNT AGAINST THE EXPORT PROCEEDS IS PERMITTED TO WRITE OFF THE SAME SUBJECT TO 10% OF EXPORT PROCEED S DURING THE YEAR AS PER THE GUIDELINES OF RBI. FIRSTLY, THE ASSESSEE HAS RECEIVED WHOLE O F THE AMOUNT FROM ITS BUYER AGAINST THE EXPORT PROCEEDS. SECONDLY, EVEN IF IT COULD NOT HA VE RECOVERED ANY EXPORT PROCEEDS, ASSESSEE WAS ENTITLED TO CONSIDER THE SAME AS BAD D EBT IN THE SUBSEQUENT YEAR UNDER THE RBI GUIDELINES. IN THESE CIRCUMSTANCES THERE COULD NOT BE ANY OCCASION TO TREAT THE SAME AS INCOME OF THE ASSESSEE. IT WAS STRANGE THAT THE AMOUNT WHICH COULD NOT BE RECOVERED FROM EXPORTER CAN BE TREATED AS INCOME OF THE EXPOR TER. THE ASSESSING OFFICER HAS I.T.A. NOS.2549 & 2684/DEL./2011 (A.Y. : 2003-04) 4 MISCONCEIVED THE CONCEPT AND HAS ERRED IN MAKING AD DITION OF RS.1,07,142/- IN THE TAXABLE INCOME OF THE ASSESSEE WHICH WAS SOUGHT TO BE DELETED IN APPEAL. 9. LD.CIT(A) WHILE CONSIDERING BUT NOT ACCEPTING TH E PLEA OF THE ASSESSEE, CONCLUDED TO CONFIRM THE ADDITION VIDE PARA.6.1 OF HIS ORDER, WHICH IS REPRODUCED AS UNDER: 6.1 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R AND THE SUBMISSION MADE BY THE LD.AR. AS PER THE LD.AR, THE ABOVE AMOUNT O F RS.1,07,142/- RELATES TO LOSS ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION IN RESPECT OF EXPORTS MADE TO M/S SAVITRI OVERSEAS EUROPE. HOWEVER, SINCE GAINS MADE ON FOREIGN EXCHANGE FLUCTUATION IN RELATION TO EXPORT IS CONSIDERED A B USINESS RECEIPT FOR THE PURPOSE OF DEDUCTION U/S 10B, GOING BY THE SAME LOGIC THE LOSS ON SUCH FOREIGN EXCHANGE FLUCTUATION SHOULD ALSO BE REDUCED FROM BUSINESS RE CEIPT FOR THE PURPOSE OF DEDUCTION U/S 10B OF THE ACT. CONSIDERING THE ABOV E, I UPHOLD THE IMPUGNED ADDITION OF RS.1,07,142/-. THIS GROUND OF APPEAL I S REJECTED. 10. STILL AGGRIEVED, THE ASSESSEE IS IN FURTHER APP EAL AND WHILE REITERATING THE SUBMISSIONS AS MADE BEFORE LOWER AUTHORITIES, IT WA S PLEADED FOR DELETION OF THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). 11. LD.DR RELIED UPON THE ORDER OF THE CIT(A) AS WE LL AS OF ASSESSING OFFICER TO PLEAD FOR CONFIRMATION OF THE IMPUGNED ORDER. 12. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MA TERIAL ON RECORD AS WELL AS ORDERS OF THE ASSESSING OFFICER AND CIT(A). IT IS UNDISPU TED FACT THAT IMPUGNED AMOUNT OF RS.1,07,142 HAS NOT BEEN REMITTED IN INDIA WHEN ASS ESSEE DULY SUBMITTED IN THE ASSESSMENT PROCEEDINGS THAT THE FOREIGN EXCHANGE RE MITTANCE DUE FROM SAVITRI OVERSEAS EUROPE AS ON 30.09.2003 WAS RS.13,36,752/- AND A BA NK CERTIFICATE TO THIS EFFECT TO PROVE THAT BALANCE AMOUNT RECEIVED ON 30.09.2003 WAS RS.1 3,36,752/-. THE ASSESSEE HAS ALREADY RECEIVED WHOLE OF THE REMITTANCES FROM SAVI TRI OVERSEAS EUROPE IN THE EXTENDED I.T.A. NOS.2549 & 2684/DEL./2011 (A.Y. : 2003-04) 5 PERIOD AND IF 100% EOU IS NOT ABLE TO RECOVER ANY A MOUNT AGAINST THE EXPORT PROCEEDS IS PERMITTED TO WRITE OFF THE SAME SUBJECT TO !0% OF T HE EXPORT PROCEEDS DURING THE YEAR AS PER THE GUIDELINES OF RBI. SINCE ASSESSEE HAD RECO VERED WHOLE OF THE AMOUNT FROM ITS BUYERS AGAINST EXPORT PROCEEDS. THEREFORE, IN OUR CONSIDERED VIEW, NO ADDITION WAS CALLED FOR. AS SUCH ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) IS DIRECTED TO BE DELETED. 13. AS A RESULT, THE APPEAL OF THE ASSESSEE IS AC CEPTED AND THAT OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE CONCLUSION O F THE HEARING ITSELF ON 19.01.2012. SD/- SD/ - (A.N. PAHUJA) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : JANUARY 19, 2012 SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XVIII, NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT