DCIT Range-I, V. Kohinoor Crafts,

ITA 2827/DEL/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2130 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-12-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 01-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N J ANSARI; B K GUPTA SR DRS
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI RAJPAL YADAV, JM AND SHRI R.C.SHARMA, A M ITA NO.2827/DEL/2008 ASSESSMENT YEAR : 2004-05 DY.COMMISSIONER OF INCOME TAX, RANGE-1, MORADABAD. VS. M/S KOHINOOR CRAFTS, MORADABAD. PAN NO.AADFK7275N. (APPELLANT) (RESPONDENT) APPELLANT BY : MS.N.J.ANSARI AND SHRI B.K.GUPTA, SR.DRS. RESPONDENT BY : NONE. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 21.5.2008 FOR AY 2004-05, WHEREIN ACTION OF CIT(A) FOR DIRECTING TO TREAT A SUM OF RS.77.82 LAKHS AS AN EXPORT SALE, WAS ALLEGED. 2. WE HAVE HEARD THE LEARNED DR AND GONE THROUGH TH E ORDERS OF THE AUTHORITIES BELOW. THE AO IN THE ASSESSMENT ORDER HAS MENTIONED THAT AS PER AUDITORS REPORT ALL EXPORT SALES HAVE BEEN REALIZE D WITHIN THE STATUTORY PERIOD. THE AO FURTHER OBSERVED THAT ON SCRUTINY OF DETAILS FURNISHED IN RESPECT OF EXPORT SALES IT WAS NOTICED THAT IN RESPECT OF EXPORT SALE S OF RS.77,82,717/- THE BILL OF LADING WAS ISSUED ON DATE(S) AFTER THE EXPIRY OF TH E FINANCIAL YEAR. THE AO THUS OPINED THAT THE GOODS INTENDED FOR EXPORT IS HANDED OVER TO THE SHIPPING COMPANY AT A DATE WHICH IS NOT FALLING WITH THE SPAN OF THE FINANCIAL YEAR HENCE THE AO EXCLUDED THE SALES DISCLOSED BY THE ASSESSEE TO THE TUNE OF RS.77,82,717/- AND ALSO CORRESPONDING DEDUCTION CLAIMED U/S 80HHC. BY THE IMPUGNED ORDER, THE CIT(A) DIRECTED THE AO TO TREAT SALE OF RS.77.82 LAKHS AS EXPORT OF THE YEAR UNDER ITA-2827/D/2008 2 CONSIDERATION AND ALLOW DEDUCTION THEREON U/S 80HHC AFTER HAVING THE FOLLOWING OBSERVATION:- I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE AR FOR THE APPELLANT. THE APPELLANT IS FOLLOWING THE MERCANTI LE SYSTEM OF ACCOUNTING. THE AUDITORS REPORT INDICATES THAT AL L EXPORT SALES HAVE BEEN REALIZED WITHIN STATUTORY PERIOD AS MENTIONED BY THE AO IN THE ASSESSMENT ORDER. FURTHER THE DECISION AS CITED BY THE AR FOR THE APPELLANT, OF THE JURISDICTIONAL ALLAHABAD HIGH COU RT REPORTED AT 222 ITR 606 MADE IT CLEAR THAT WHAT EXPLANATION (AA) M EANS IS THAT IT WILL NOT BE AN EXPORT OUT OF INDIA IF IT IS A TRANS ACTION BY WAY OF SALE OTHERWISE IN A SHOP, EMPORIUM OR AN ESTABLISHMENT S ITUATE IN INDIA AND IT DOES NOT INVOLVED CLEARANCE AT ANY CUSTOM ST ATION AS DEFINED IN THE CUSTOMS ACT. IN THE PRESENT CASE BEFORE ME THE APPELLANT EXPORTED THE GOODS AND ALSO REALIZED THE SALE PROCE EDS WITHIN THE STATUTORY PERIOD TO WHICH THE, AUDITOR HAS CERTIFIE D AND THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SUGGEST THAT THE REPORT OF THE AUDITOR IS INCORRECT OR THE APPELLANT HAS FAILED TO REALIZE THE SALE PROCEED IN TIME. IN THE CIRCUMSTANCES OF THE CASE, IN MY CONSIDERED VIEW THE AO IS NOT JUSTIFIED IN RECASTING THE PROFI T AND LOSS ACCOUNT, HENCE THE AO IS DIRECTED TO ALLOW DUE DEDUCTION U/S 80HHC ON SALE PROCEED OF RS.77,82,717/-. THE GROUND OF APPEAL AS RAISED BY THE APPELLANT SUCCEEDS. 3. WE HAVE CONSIDERED THE CONTENTIONS OF THE LEARNE D DR AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO D ISPUTE TO THE FACT THAT SALE BILL WAS ISSUED BY THE ASSESSEE DURING THE YEAR UNDER CO NSIDERATION AND THE EXPORT PROCEEDS WERE ALSO RECEIVED DURING THE TIME FRAME A LLOWED UNDER SECTION 80HHC. ONLY GRIEVANCE OF THE AO WAS THAT BILL OF LADING WA S ISSUED AFTER THE CLOSE OF THE FINANCIAL YEAR. THE CIT(A) BY THE IMPUGNED ORDER H ELD THAT ASSESSEE WAS ELIGIBLE FOR DEDUCTION IN RESPECT OF SALES AFTER RELYING ON THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF RAM BABU SONS 222 ITR 6 06 WHEREIN FOLLOWING WAS THE OBSERVATION OF THE HONBLE COURT:- SECTION 80HHC WAS ENACTED TO GIVE CERTAIN BENEFITS TO THE EXPORTERS. HOWEVER, EXPLANATION (AA) WAS INSERTED BY THE FINANCE (NO.2) ACT, 1991, WITH EFFECT FROM 1-4-1986. WHAT THE EXPLANATION ITA-2827/D/2008 3 (AA) MEANS IS THAT IT WILL NOT BE AN EXPORT OUT OF INDIA IF TWO CONDITIONS ARE SATISFIED: (I) IT SHOULD BE A TRANSA CTION BY WAY OF SALE OTHER WISE AN SHOP, EMPORIUM OR AN ESTABLISHMENT SI TUATE IN INDIA; (II) IT SHOULD NOT INVOLVE CLEARANCE IN THE CUSTOMS AS DEFINED IN THE CUSTOMS ACT. BOTH THESE CONDITIONS MUST BE SATISFI ED IF THE TRANSACTION IS TO BE HELD TO BE NOT AN EXPORT OUT O F INDIA. HENCE, IF EITHER OF THESE TWO CONDITIONS IS NOT SATISFIED, IT IS AN EXPORT OUT OF INDIA. EXPLANATION (AA) HAS NOTHING TO DO WITH THE SELLER OR THE PURCHASER. IT IS THE TRANSACTION WHICH SHOULD INVO LVE CLEARANCE AT CUSTOMS IF IT IS TO BE AN EXPORT OUT OF INDIA WITHI N THE MEANING OF EXPLANATION (AA). IF THE GOODS ARE REQUIRED TO BE CLEARED THROUGH THE CUSTOMS STATION EITHER BY PURCHASER OR BY SELLER, I T WOULD BE AN EXPORT OUT OF INDIA. 4. WE FOUND THAT THIS DECISION OF THE HON'BLE ALLAH ABAD HIGH COURT HAS BEEN AFFIRMED BY THE HON'BLE SUPREME COURT IN THE CASE O F CIT VS. SILVER ARTS PALACE 129 TAXMAN 56 WHEREIN IT WAS HELD THAT EVEN IN RESP ECT OF COUNTER SALES, PROCEEDS OF WHICH ARE RECEIVED IN CONVERTIBLE FOREIGN EXCHAN GE, IS ELIGIBLE FOR DEDUCTION U/S 80HHC. 5. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE ALLAHABAD HIGH COURT WHICH GOT AFFIRMED BY THE HON' BLE SUPREME COURT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR A LLOWING CLAIM OF DEDUCTION IN RESPECT OF EXPORT SALES THE PROCEEDS OF WHICH WERE RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE WITHIN THE STIPULATED PERIOD LAID DOWN U/S 80HHC, NOTWITHSTANDING THE FACT THAT BILL OF LADING WAS DATED SUBSEQUENT TO TH E CLOSE OF FINANCIAL YEAR. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 17 TH DECEMBER, 2009. SD/- SD/- (RAJPAL YADAV) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 17.12.2009. VK. ITA-2827/D/2008 4 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR