DCIT, Jaipur V. SUMIT GUPTA, Jaipur

ITA 282/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54242 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 31-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: RAJIV SOGANI
• Section: 80HHC

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO. 282/ JP/2011 ASSESSMENT YEAR 2003-04 PAN: ABPPG 3787 J D.C.I.T. CIRCLE-2, JAIPUR V SHRI SUMIT GUPTA S-205, SANGAM TOWERS CHURCH ROAD, JAIPUR (APPELLANT ) (RESPONDENT) DEPARTMENT BY : SHRI D.K. MEENA ASSESSEE BY: SHRI RAJIV SOGANI DATE OF HEARING: 11-10-2011 DATE OF PRONOUNCEMENT: -10-2011 ORDER PER N.L. KALRA, AM:- THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)- I, JAIPUR DATED 18-01-2011. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. C.I.T(A) HAS ERRED IN ALLOWING EXCESS CLAIM OF RS. 15,48,060/- U/S 80HHC OF THE ACT. 2. THE ASSESSEE IS ENGAGED IN EXPORT OF GRANITE, M ARBLE AND STONE TILES. THE AO NOTICED THAT THE ASSESSEE HAS NOT RECEIVED FOREIGN CONVERTIBLE EXCHANGE OF RS. 38,72,306/- IN RESPECT OF GOODS EXP ORTED OUT OF INDIA. THEREFORE, THE EXPORT TURNOVER WAS REDUCED BY RS. 3 8,72,306/-. THE 2 ASSESSEE CLAIMED DEDUCTION OF RS. 4,54,64,475/- U/S 80HHC. SINCE THE EXPORT TURNOVER WAS REDUCED BY RS. 38,72,206/- AND THEREFORE, THE ASSESSEE FILED REVISED COMPUTATION. FOR COMPUTATION DEDUCTI ON U/S 80HHC OF THE ACT, THE COST OF TOTAL DIRECT COST WAS REDUCED BY T HE SAME PROPORTION AS LOCAL TURNOVER THAT OF RS. 38,72,206/-. THE METHOD SO AD OPTED BY THE ASSESSEE WAS REJECTED. THE AO ACCORDINGLY COMPUTED THE DEDUCTION U/S 80HHC OF THE ACT TO RS. 4,55,78,505/-. 3. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE ASSESSEE HAS NOT REALIZED EXPORT PROCEEDS OF RS. 38,72,306/- HENCE S UCH PROCEEDS ARE TO BE CONSIDERED AS PART OF THE DOMESTIC TURNOVER BECAUSE THIS HAS BEEN REDUCED FROM EXPORT TURNOVER. IT IS NOT PROVIDED IN THE AC T THAT TURNOVER WHICH IS NOT TO BE INCLUDED IN EXPORT TURNOVER ON ACCOUNT OF NO N-REALISATION OF FOREIGN EXCHANGE IS NOT TO BE INCLUDED IN THE TOTAL TURNOVE R. HENCE THE DIRECT AND INDIRECT COST PROPORTIONATE TO THE EXPORT TURNOVER CONSIDERED AS DOMESTIC TURNOVER RESULTED IN CLAIM OF THE DEDUCTION U/S 80H HC AT RS. 4,71,26,565/-. IN CASE OF TRADE EXPORT, THE EXPORT TURNOVER WAS RE DUCED ON ACCOUNT OF NON REALIZATION OF CONVERTIBLE FOREIGN EXCHANGE THAN D IRECT AND INDIRECT COST ATTRIBUTABLE TO SUCH TRADE GOODS SHOULD BE PROPORTI ONATELY REDUCED IN CALCULATING DEDUCTION. RELIANCE WAS PLACED ON THE PUBLICATION OF BOMBAY CHARTERED ACCOUNTANT SOCIETY, BOMBAY. 4 THE LD. CIT(A), AFTER CONSIDERING THE CONTENTION OF THE ASSESSEE, DELETED THE DISALLOWANCE MADE BY THE AO AFTER OBSER VING AS UNDER:- CONTENTION OF THE LD. AR IS CONSIDERED. IF THE EX PORTERS TURNOVER IS REDUCED FOR NON REALIZATION OF EXPORT PROCEEDS THEN THE DIRECT AND INDIRECT COST ATTRIBUTABLE TO SUCH TRADING GOODS SH OULD ALSO BE 3 PROPORTIONATELY REDUCED IN CALCULATING THE DEDUCTIO N. THE DIRECT COST PERTAINING TO THE UNREALIZED EXPORTS SHOULD NOT BE CONSIDERED AS PART OF THE DIRECT COST ATTRIBUTABLE TO EXPORTS. SIMILA RLY, INDIRECT COST RELATING TO ACTIVITIES OTHER THAN TRADING EXPORTS S HOULD NOT BE CONSIDERED IN CALCULATING THE PROFITS DERIVED FROM TRADING EXPORTS. THUS, THE INDIRECT COST ATTRIBUTABLE TO UNREALIZED EXPORTS SHOULD NOT BE CONSIDERED IN CALCULATING THE DEDUCTION. THE ACTI ON OF THE AO CANNOT BE APPROVED. THE AO IS THEREFORE, DIRECTED TO ALLO W CLAIM OF DEDUCTION U/S 80HHC AS CLAIMED BY THE APPELLANT. T HE DISALLOWANCE MADE BY THE AO IS DELETED. 5 WE HAVE HEARD BOTH THE PARTIES. WE FIND NO INFIR MITY IN THE ORDER OF LD. CIT(A). ONCE THE EXPORT TURNOVER IS REDUCED TH EN THE DOMESTIC TURNOVER WILL STAND INCREASED. THE DIRECT COST AND INDIRECT COST RELATED TO EXPORT TURNOVER WILL HAVE TO BE RECALCULATED. THE LD. CIT (A) HAS FOUND THAT THE CALCULATION MADE BY THE ASSESSEE, IS CORRECT. WE, THEREFORE, UPHOLD THE FINDINGS OF LD. CIT(A). 6 IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON -10-2011 (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; /10/2011 SURESH COPY FORWARDED TO :- 1. THE D.C.I.T. CIRCLE2, JAIPUR 2. SHRI SUMIT GUPTA 3. THE LD. CIT 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.39/JP /11) A.R, ITAT, JAIPUR 4 5 6 7 8 9