M/s. Swati Menthol & Allied Products Ltd., Rampur V. DCIT, Moradabad

ITA 3371/DEL/2010

• Counselvise Citation: 337120114 RSA 2010
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 26-11-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 09-07-2010

Judgement Text

ITA NO.3371/DEL/2010 ASSTT. YEAR: 2004-05 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G NEW DELHI BEFORE SHRI A.N. PAHUJA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.3371/DEL/2010 ASSESSMENT YEAR : 2004-05 SWATI MENTHOL & ALLIED PRODUCTS LTD., VS DCIT, RANGE-I, OPP. RADIO STATION AKASHWANI, M ORADABAD. BAREILLY ROAD, RAMPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ANSHUM JAIN RESPONDENT BY : SMT. SHUMANA SEN, SR.DR O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(A), BAREILLY FOR AY 2004 -05. THE GROUNDS RAISED IN THIS APPEAL READ AS UNDER:- 1. THAT THE LD. C1T(A) IS NOT JUSTIFIED IN HOLDIN G TO EXCLUDE THE EXPORT SALE AMOUNT OF SIX BILLS FROM 10 5 TO 110 FOR THE AMOUNT OF RS.1,33,87,680 FROM THE TOTAL SAL E AMOUNT AS WELL AS FROM THE EXPORT TURNOVER FOR F.Y. 2003- 04. THIS BEING CONTRARY TO FACTS AND PROVISIONS OF LAW IS LIABLE TO BE UNDONE AND DEDUCTION U/S 80HHC BE ALLO WED. 2. THAT THE LD. CIT(A) OUGHT TO HAVE HELD THAT AS SESSEE ENGAGED IN THE BUSINESS OF EXPORT OF GOODS SOLD IN EXCHANGE FOR FOREIGN EXCHANGE DURING THE FY 2003-04 ITA NO.3371/DEL/2010 ASSTT. YEAR: 2004-05 2 REQUIRING CUSTOM CLEARANCE IS EXPORT AND RESULTANT SPECIAL DEDUCTION U/ S 80HHC OUGHT TO BE ALLOWED. 3. THAT LD. CIT(A) ACTION OF NOT CONSIDERING THE SALE AMOUNT OF RS.L,33,87,680 AS SALE FOR F.Y 2003-04 IS AGAINST THE GENERALLY ACCEPTED ACCOUNTING PRINCIPLE S AND ACCOUNTING STANDARDS PRESCRIBED BY ICAI AND AS SUCH CONTRARY TO PRINCIPLES OF LAW AND LIABLE TO BE STRU CK DOWN. 4. THAT LD. CIT(A) ACTION OF NOT CONSIDERING SALE AMOUNT OF RS.1,33,87,680 AS SALE AND EXPORT SALE FO R F.Y 2003-04 IS AGAINST THE LAW OF CONSISTENCY AND AS SU CH LIABLE TO BE UNDONE. 5. THAT LD. CIT(A) IS UNJUSTIFIED IN NOT HOLDING T HAT PROVISION OF SEC 145(3) ARE INAPPLICABLE AS PER FAC TS AND PROVISIONS OF LAW AND AS SUCH DEDUCTIONS AND RESULT ANT PROFIT BE ACCEPTED AS RETURNED. 6. THAT THE APPELLANT CRAVES RIGHT TO AMEND, ADD, DELETE OR WITHDRAW ANY OF THE GROUNDS OF APPEAL EITHER BEF ORE OR AT THE TIME OF HEARING OF THIS APPEAL. 2. BRIEFLY STATED, THE FACTS GIVING RISE TO THIS AP PEAL ARE THAT THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY, ACCORDIN GLY, STATUTORY NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE A CT) WAS SERVED ON THE ASSESSEE. THE ASSESSING OFFICER DEALT WITH THE ISS UES RELATED TO THE GROUND TAKEN IN THIS APPEAL WITH THE FOLLOWING OBSERVATION S:- 2- ISSUE REGARDING BILL OF LADING : I- THE ASSESSEE IS A MANUFACTURER AND EXPORTER OF M ENTHOL PRODUCTS. AS PER AUDITOR'S REPORT ALL EXPORT SALES HAVE BEEN REALIZED WITHIN THE STATUTORY PERIOD. ON SCRUT INY OF DETAILS FURNISHED IN RESPECT OF EXPORT SALES IT WAS NOTICED ITA NO.3371/DEL/2010 ASSTT. YEAR: 2004-05 3 THAT IN RESPECT OF EXPORT SALES OF RS. 1,30,71,956/ -(FOB VALUE) THE BILL OF LADING WAS ISSUED ON DATE(S) AFT ER THE EXPIRY OF THE FINANCIAL YEAR RELEVANT TO THE ASSESS MENT YEAR UNDER CONSIDERATION. IN THIS CONNECTION, I WOULD LI KE TO DRAW ATTENTION THAT AS PER THE INFORMATION AVAILABL E THE DOCUMENT NAMED AS BILL OF LADING WOULD MEAN THAT A DOCUMENT ISSUED BY SHIPPING COMPANIES OR THEIR AGEN T ACKNOWLEDGING THE RECEIPT OF GOODS MENTIONED IN THE BILL FOR SHIPMENT ON BOARD THE VESSEL AND UNDERTAKING TO DELIVER THE GOODS IN THE LIKE ORDER AND CONDITION A S RECEIVED TO THE CONSIGNEE OR HIS ORDER OR ASSIGNEE, PROVIDED THE FREIGHT AND OTHER CHARGES SPECIFIED IN THE BILL OF LADING HAVE BEEN DULY PAID. FROM THE LEGAL STAND POINT, A BILL OF LADING IS- - A FORMAT RECEIPT BY THE SHIP OWNER OR THE MASTER OF THE SHIP ACKNOWLEDGING THAT GOODS OF THE STATED SPECIFICATIONS, QUANTITY AND CONDITION HAVE BEEN R ECEIVED IN A CERTAIN SHIP OR' AT LEAST RECEIVED IN THE CUST ODY OF THE SHIP OWNER FOR THE PURPOSE OF SHIPMENT. A MEMORANDUM OF THE CONTACT OF CARRIAGE, REPEATIN G IN DETAIL, THE TERMS OF THE CONTACT WHICH WAS IN FACT WERE CONCLUDED PRIOR TO THE SIGNING OF THE BILL; AND - A DOCUMENT OF THE TITLE OF THE GOODS ENABLING TH E CONSIGNEE TO DISPOSE OFF THE GOODS BY ENDORSEMENT A ND DELIVERY OF THE BILL OF LADING. II- THUS FROM THE ABOVE, IN MY CONSIDERED OPINION, THE BILL OF LADING IS ONLY THE ACKNOWLEDGMENT OF THE RECEIPT OF GOODS MENTIONED IN THE BILL FOR SHIPMENT ON BOARD T HE VESSEL. LOOKING TO THE FACT THAT AS PER THIS ACKNOWLEDGMENT, THE GOODS INTENDED FOR EXPORT IS HA NDED OVER TO THE SHIPPING COMPANY AT A DATE WHICH IS NOT FALLING WITH THE SPAN OF THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE GOODS AS O N THE 31ST DAY OF MARCH-2004 CAN IN NO WAY BE CONSIDERED AS HAVING BEEN EXPORTED OUTSIDE INDIA. HENCE, THE AMOU NT UNDER CONSIDERATION IS LIABLE TO BE EXCLUDED FROM T HE SALES ITA NO.3371/DEL/2010 ASSTT. YEAR: 2004-05 4 DISCLOSED BY THE ASSESSEE AND THESE SHALL BE INCLUD ED IN THE EXPORT SALES AFFECTED DURING THE ASSESSMENT YEAR 20 05-06. S1.NO. INVOICE NO. AMOUNT DATE OF DEPB . C.I.F. VALUE F.O.B. VALUE B/LADING 1. 105 & 106 5,119,200.00 5,017,493 .00 5-APR-04 47,253.00 2. 107 & 108 3,960,000.00 3,845,190.00 10-APR-04 3. 109 & 110 4,308,480.00 4,209 273.00 17 -APR-0 4 - 13,317,810.00 13,071,956.00 47,2113.00 III- DEDUCTION U/S 80HHC OF THE IT ACT-1961 IS AVAI LABLE ON THE PROFITS DERIVED BY THE ASSESSEE FROM THE BUS INESS OF EXPORT OUT OF INDIA. UNDER THE ABOVE MENTIONED CIRCUMSTANCES, THE MAJOR QUESTION IN MY CONSIDERED OPINION WOULD BE INVOLVED IN THIS CASE AS TO WHETHE R AT WHAT POINT OF TIME THE GOODS WOULD BE TREATED AS BE ING EXPORTED OUT OF INDIA. UNLESS THIS POINT OF TIME IS DECIDED, PROVISIONS OF SECTION 80HHC CAN NOT BE APPLIED. THE ASSESSEE IN ITS WRITTEN REPLY HAS MENTIONED VARIOUS ASPECTS BUT ARE NOT FOUND ACCEPTABLE DUE TO THE BAS~-REASON S AS MENTIONED ABOVE A WELL AS IN THE FOREGOING PARAGRAP HS IN THIS ORDER BELOW. IV- IN THIS CONNECTION, THE PROVISIONS OF SECTION 51 OF CUSTOMS ACT, 1961 ARE BEING REPRODUCED AS UNDER:- 'CLEARANCE OF GOODS FOR EXPORTATION- WHERE THE PROP ER OFFICER IS SATISFIED THAT ANY GOODS ENTERED FOR EXP ORT ARE NOT PROHIBITED GOODS AND THE EXPORTER HAS PAID THE DUTY, IF ANY, ASSESSED THEREON AND ANY CHARGE UNDER THIS ACT IN RESPECT OF THE SAME, THE PROPER OFFICER MAY MAKE AN ORDER PERMITTING CLEARANCE AND LOADING OF THE GOODS FOR EXPORTATION.' V- APPARENTLY THE AFORE-REPRODUCED PROVISIONS OF TH E CUSTOM ACT FAVORS THE VIEW ADOPTED BY THE UNDERSIGN ED. THIS WOULD BE BECAUSE OF THE FACT THAT THE CUSTOM CLEARANCE IS NOTHING BUT THE CLEARANCE ALLOWED BY T HE ITA NO.3371/DEL/2010 ASSTT. YEAR: 2004-05 5 CUSTOM AUTHORITIES AS REGARDS TO THE, GOODS WHICH I S LEGALLY EXPORTABLE AND IT IS NOT CONTAINING ANY ITE M WHICH IS NOT ALLOWABLE FOR BEING SENT OUTSIDE INDIAN TERR ITORY AND THE DESIRED CHARGES ASSESSED BY THE COMPETENT AUTHO RITY ARE PAID. THUS UNLESS THE CLEARANCE IS OBTAINED FRO M THE CUSTOM AUTHORITIES THAT GOODS PROPOSED TO BE EXPORT ED DO NOT CONTAIN ANY BANNED ITEM IT COULD NOT BE ALLOWED FOR ITS ACTUAL TRANSPORTATION TO ITS BUYER'S PLACE. AS A MA TTER OF FACT IN THE PROCESS OF EXPORT OF GOODS OUTSIDE INDI AN TERRITORY, CUSTOM CLEARANCE IS NECESSITATED AT FIRS T POINT AND ONLY THEREAFTER THE GOODS IS HANDED OVER TO THE CARGO AUTHORITIES FOR ACTUAL TRANSPORTATION OF THE GOODS. THUS FROM THE CLEARANCE ALLOWED BY THE CUSTOM AUTHORITIE S DOES IN NO WAY LEAD TO ANY CONCLUSION THAT THE IMMEDIATE LY AFTER GETTING THE SAID CLEARANCE, THE GOODS CAN BE SAID T O HAVE BEEN EXPORTED OUT OF INDIA IN THE CONTEXT OF THE PR OVISIONS OF SECTION 80HHC OF THE IT ACT-1961: VI- THUS THE GOODS WHICH ARE LYING AT PORT AND EVEN HAVE NOT BEEN LOADED ON THE SHIP DURING THE YEAR UNDER CONSIDERATION, CAN NOT BE SAID TO BE EXPORTED OUT O F INDIA. AT THE BEST THE COST OF SUCH GOODS CAN BE TREATED A S GOODS IN TRANSIT AND THAT MUST BE FORMING PART OF THE CLO SING STOCK LYING WITH THE ASSESSEE. VII- IN THIS CONNECTION, IT IS BEING CLARIFIED THAT UNLESS THE P & L ACCOUNT(S) ARE RE-CASTED AS BELOW, THE TRUE PRO FITS EARNED BY THE ASSESSEE ASSESSABLE FOR THE ASSESSMEN T YEAR UNDER CONSIDERATION WOULD NOT BE WORKED OUT AS PER THE DETAILS APPEARING IN THE BOOKS OF ACCOUNT MAINTAINE D BY THE ASSESSEE. LOOKING TO THIS FACT BOOKS A( ACCOUNT S MAINTAINED BY THE ASSESSEE ARE HEREBY REJECTED FOR THE LIMITED PURPOSES AND THE P & L ACCOUNT(S) FOR BOTH THE ABOVE PERIODS HAVE BEEN RE-CASTED AFTER INVOKING TH E PROVISIONS CONTAINED U/S 145(3) OF THE IT ACT-1961. ITA NO.3371/DEL/2010 ASSTT. YEAR: 2004-05 6 SALES 310,046,855.00 LESS: DEPB 1,161,914.00 308,883,941. 00 13,071,956.00 LESS: INVOICES 295,811.9 85.00 BALANCE: DEPB 1,161,914.00 1,114,661.00 LESS: LNVOICES 47,253.00 OTHER INCOME(S) 100,557.00 OP.STOCK 1,457.750.00 C/STOCK 21,999 .00 ADD: INVOICES 13,071,956.00 11,858,878.48 1 1,880,877.48 LESS: G.P. 9.28% 1,213,077.52 INCREASE IN STOCK 10,423,127 TOTAL: 307,45 0,330,48 LESS: EXPENDITURE AS PER P & I ACCOUNT 301,793,363.00 PROFIT BEFORE TAX 5,6 56,967.48 3. THE ASSESSING OFFICER IN PARA 2 ABOVE, RECASTED THE P&L ACCOUNT AND FINALIZED THE ASSESSMENT AT TOTAL TAXABLE INCOM E OF RS.72,97,248. THE ASSESSING OFFICER ALSO HELD THAT WHILE COMPUTING TH E ALLOWABLE DEDUCTION U/S 80HHC OF THE ACT, NO DEDUCTION ON ACCOUNT OF EL EMENT OF EXCISE DUTY IS ALLOWED OUT OF THE TOTAL TURNOVER DISCLOSED BY THE ASSESSEE. THE AGGRIEVED ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(A), BAREILLY. 4. THE COMMISSIONER OF INCOME TAX(A) WHILE DEALING WITH THE ISSUE OF DISALLOWANCE HELD AS UNDER:- THE PROVISION SUB-SECTION 145(3) IS APPLICABLE WHE RE THE ASSESSING OFFICER IS NOT SATISFIED OF THE CORRE CTNESS OR COMPLETENESS ARE NOT OF ACCOUNT OF ASSESSEE ARE WHE RE IS ITA NO.3371/DEL/2010 ASSTT. YEAR: 2004-05 7 METHOD ANY ACCOUNT PROVIDED U/S SUB-SECTION 1 OR AC COUNTING STANDARD AS NOTIFIED UNDER SUB-SECTION (2) HAS NOT BEEN FOLLOWED REGULARLY. THE ASSESSEE IS FOLLOWING A ME RCANTILE SYSTEM OF ACCOUNTING REGULARLY AND FOLLOWED THE ACC OUNTING STANDARD. THE LD. ASSESSING OFFICER HAS NOT POINTED OUT ANY CORRECTNESS OR INCOMPLETENESS ARE THE CONTRAVENTION OF PROVISION SUB-SECTION 1 AND 2 OR SUB-SECTION. IF T HE PROVISION 145(3) IS APPLICABLE, THEN ASSESSMENT ORDER U/S 144 OF THE I.T.ACT. THE LD. ASSESSING OFFICER HAS ONLY EXCLUDED THE EX PORT TURNOVER OF RS. 13387680 AND RECASTED THE PROFIT AN D LOSS ACCOUNT AND THE ASSESSMENT ORDER HAS BEEN PASSED U/ S 145(3) AFTER ACCEPTING THE BOOKS OF ACCOUNTS. THE ASSESSE E HAS CONSISTENTLY FOLLOWED THE PRINCIPLE OF ACCOUNTING F ROM LAST SEVERAL YEARS WHICH HAS BEEN ACCEPTED BY THE DEPART MENT AT THE PAST. NOW THE DEPARTMENT CAN NOT TREAT THE EXP ORT SALE OF LAST DATE OF YEAR NOT RELATED TO THIS YEAR U/S 145 OF THE I.T.ACT AS HELD IN INDO NIPPOEN CHEMICALS LTD. (2003) 261 I TR 275. THE HONBLE SUPREME COURT IN THE CASE OF REALEST BUILDE RS AND SERVICES LTD. (2008) 307 ITR 202 HAS HELD THAT IS THE ASSESSING OFFICER COMES TO THE COMPULSION THAT THER E IS UNDER ESTIMATION OF PROFIT HE MUST HAVE GIVEN FEET IN FIG URE IN THAT REGARD OTHERWISE THE PRESUMPTION WOULD BE THAT THE ENTIRE EXCUSE IS REVENUE NEUTRAL. THE ASSESSEE HAS MADE THE SALE OF FINISHED PRODUCT TO VARIOUS PARTY OF 31.3.2004 AS PER DETAIL GIVEN HERE UNDER AFTER TAKING A.R.E.-1 NO FORM THE EXCISE DEPARTMENT. S.R. BILL NO. DATE NAME OF THE PARTY CIP VALUE A.R.E.-1 NO. 01. 105 31.03.04 M/S ANHUI FENGLE PERFUME CO. LTD. CHINA 2559600 63/S(IV)/R(II)200 3-04 DT. 31.03.04 02. 106 31.03.04 M/S ANHUI FENGLE PERFUME CO. LTD. CHINA 2559600 63/S(IV)/R(II)200 3-04 DT. 31.03.04 ITA NO.3371/DEL/2010 ASSTT. YEAR: 2004-05 8 03. 107 31.03.04 M/S DAZZLERO & TOPPER PVT. LTD. SINGAPORE 1980000 64/S(IV)/R(II)200 3-04 DT. 31.03.04 04. 108 31.03.04 M/S DAZZLERO & TOPPER PVT. LTD. SINGAPORE 1980000 64/S(IV)/R(II)200 3-04 DT. 31.03.04 05. 109 31.03.04 M/S TEDXSOON HONG ZHUHAI FLAVOURS AND FRAGRANCES LTD., CHINA 2154240 65/S(IV)/R(II)200 3-04 DT. 31.03.04 06. 110 31.03.04 M/S TEDXSOON HONG ZHUHAI FLAVOURS AND FRAGRANCES LTD., CHINA 2154240 65/S(IV)/R(II)200 3-04 DT. 31.03.04 THE BILL WAS RAISED ON 31.3.04 AND GOODS WAS DISPAT CHED ON 31.,3.04 AS EXPORT SALE WHICH HAS BEEN SAME IN T HE MONTHLY RETURN OF SALE UNDER U.P. TRADE TAX/CST ACT AND ALSO UNDER EXCISE LAW, THE COPIES OF THE RETURN FOR THE MONTH OF MARCH DETAIL OF SALE ARE ENCLOSED HEREWITH . THE TRADE TAX DEPARTMENT AND EXCISE DEPARTMENT HAS ACCEPTED AS EXPORT SALE OF THE BILL NO. 105 TO 110 FOR A.Y. 2003-04. THE PHOTOSTAT COPY OF ASSESSMENT ORDER UP TT AND CST ACT ARE ENCLOSED HEREWITH FOR YOUR READY REFERENCE. THE ASSESSEE HAS SHOWN ALL THE SALE WHE THER DOMESTIC SALE, INDIRECT EXPORT SALE OR DIRECT EXPOR T SALE OF LAST DAY OF THE YEAR AS SALES OF THAT FINANCIAL YEA R WHICH HAS BEEN ACCEPTED BY INCOME TAX DEPARTMENT ALSO CONSISTENTLY. NOW THE LD. ASSESSING OFFICER CANNOT CHANGE THE STAND FOR THIS YEAR THAT THE SALE OR NOT RELATE D TO THIS FINANCIAL YEAR. THE SALES OF THESE BILLS MAY PLEAS E BE TREATED AS SALE FOR THIS YEAR AND ACCORDINGLY THE D EDUCTION U/S 80HHC BE RECALCULATED. THE FACTS IN ISSUE ARE THAT THE ASSESSEE DISPATCHE D GODS FROM HIS FACTORY PREMISES AND RAISED ITS BILLS BEFO RE 31.3.2004 BY TREATING THE SALES AS EXPORT. HE INCL UDED THESE TRANSACTIONS IN HIS TOTAL TURNOVER AS WELL AS EXPORT TURNOVER. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ACTUAL BILLS OF LAD ING WERE ISSUED ON OR AFTER 1.4.2004 I.E. IN THE SUBSEQUENT YEAR. THEREFORE, THE ACTUAL EXPORT OF GOODS OUT OF INDIA WAS EFFECTED AFTER THE END OF THE RELEVANT F.Y. IT IS A FACT THAT THE ASSESSEE DISPATCHED GOODS FROM HIS CUSTODY BEFO RE 31.3.2004 BUT IT WAS SUBJECT TO FURTHER CLEARANCE B Y THE ITA NO.3371/DEL/2010 ASSTT. YEAR: 2004-05 9 CUSTOM AUTHORITIES BEFORE LOADING IT INTO THE SHIP FOR FINAL MOVEMENT OUT OF CUSTOM CLEARANCE HOUSE. AS A MATTE R OF FACT, THE GOODS WERE FINALLY HANDED OVER TO THE SHI PPING COMPANY, WHICH IN TURN ISSUED RECEIPT OF GOODS WITH THE CONDITION TO DELIVER IT TO THE DESTINATION OUT OF T HE COUNTRY. IN SUCH FACTS AND CIRCUMSTANCES, FOR THE PURPOSE OF DEDUCTION U/S 80HHC, THE TRANSACTION CANNOT BE CONSIDERED AS EXPORT. HOWEVER, THE FACT ALSO REMAI NS THAT THE EXPORT TOOK PLACE IN THE SUBSEQUENT YEAR. THER EFORE, THE ASSESSING OFFICER IS DIRECTED TO MAKE CORRESPON DING CHANGE FOR DETERMINING INCOME OF THE AY 2005-06 AS PER LAW. THE APPEAL OF THE ASSESSEE THEREFORE IS DISMI SSED. 5. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN EXCLUDING EXPORT SALE AMOUNT FROM THE TOTAL SALE OF EXPORT TURNOVER BECAUSE THE SALE WAS COMPLETED IN THE YEAR UNDER CONSIDERATION. HE FURTHER SUBMITTED THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF EXPORT OF GOODS IN EXCHANGE FOR FOREIGN EXCHANGE FOR AY 2003- 04 WHICH REQUIRES CUSTOM CLEARANCE AND SPECIAL DEDUCTION U/S 80HHC OU GHT TO BE ALLOWED TO THE ASSESSEE. THE AR ALSO SUBMITTED THAT THE ACTIO N OF THE ASSESSING OFFICER WAS AGAINST THE WELL-ACCEPTED ACCOUNTING PRINCIPLES AND ACCOUNTING STANDARD PRESCRIBED BY THE INSTITUTE OF CHARTERED ACCOUNTANT S OF INDIA AND THE SAME IS NOT SUSTAINABLE. THE AR VEHEMENTLY CONTENDED THAT THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX(A) WERE TOTALLY UNJUSTIFIED IN NOT HOLDING THAT THE PROVISIONS OF SECTION 145(3) ARE A PPLICABLE AS PER FACTS AND ITA NO.3371/DEL/2010 ASSTT. YEAR: 2004-05 10 CIRCUMSTANCES OF THE CASE AND RELATED PROVISIONS OF LAW. SUCH DEDUCTION AND PROFIT AS RETURNED MUST BE ACCEPTED. 6. REPLYING TO THE ABOVE SUBMISSIONS, THE DR SUBMIT TED THAT FOR THE CLAIM OF DEDUCTION U/S 80HHC OF THE ACT, THE ONUS I S ON THE ASSESSEE TO SHOW THAT A DEDUCTION TO THE EXTENT OF THE PROFITS WAS RETAINED FROM EXPORT BUSINESS. HE FURTHER SUBMITTED THAT IF THE DETAILS AND DOCUMENTS OFFERED BY THE ASSESSEE REVEAL THAT THE TRANSACTION OF SALE WA S NOT COMPLETED IN THE YEAR UNDER CONSIDERATION, THEN THE DEDUCTION IN THIS REG ARD WOULD NOT BE GIVEN TO THE ASSESSEE. THE DR HAS DRAWN OUR ATTENTION TOWAR DS PAGE NO. 89, 101, 102 & 103 AND STATED THAT FROM THE BANK CERTIFICATE OF EXPORT AND REALISATION AND SHIPPING AND TRANSPORTATION DOCUMENTS, IT IS VE RY MUCH CLEAR THAT THE SALE TRANSACTION WAS COMPLETED IN THE MONTH OF APRI L 2004. THEREFORE, THE AUTHORITIES BELOW RIGHTLY DENIED THE DEDUCTION. TH E DR ALSO POINTED OUT THAT AS PER PAPER BOOK PAGE NO. 87 AND 88, NO DATE HAS B EEN MENTIONED IN THE CONSIGNMENT NOTE AND RECEIPT ISSUED BY THE TRANSPOR TER (GULSHAN ROAD CARRIER). THE DR SUBMITTED THAT THE ASSESSEE HAS N OT DISCHARGED ITS ONUS THAT THE TRANSACTION OF SALE WAS COMPLETED PRIOR TO 31.3.2004, THEREFORE, THE ACTION OF THE ASSESSING OFFICER AND ITS CONFIRMATIO N BY THE COMMISSIONER OF INCOME TAX(A) CARRIES NO ILLEGALITY OR PERVERSITY. ITA NO.3371/DEL/2010 ASSTT. YEAR: 2004-05 11 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THE PAPER BOOK AND OTHER RECORDS BEFORE US. AT THE OUTSET, W E FIND IT APPROPRIATE TO MENTION THAT FOR DEDUCTION U/S 80HHC, THE ONUS IS O N THE ASSESSEE TO ESTABLISH THAT HE DERIVED INCOME FROM THE EXPORT BU SINESS DURING THE YEAR UNDER CONSIDERATION AND THEN ONLY, HE MAY BE ALLOWE D DEDUCTION IN RESPECT OF THE PROFITS RETAINED FROM THE EXPORT BUSINESS ON WHICH DEDUCTION IS ALLOWABLE AS PER LAW AND OTHER RELATED STATUTORY PR OVISIONS. IN THE PRESENT CASE, IN VIEW OF THE TOTALITY OF THE FACTS AND CIRC UMSTANCES AS REVEALED FROM THE PAPER BOOK FILED BY THE ASSESSEE, WE OBSERVE TH AT THE SALE TRANSACTION WAS NOT COMPLETED PRIOR TO 31.3.2004. ACCORDINGLY , WE ARE UNABLE TO SEE ANY PERVERSITY OR INFIRMITY IN THE ORDERS OF THE AU THORITIES BELOW BECAUSE THE CLAIM OF DEDUCTION U/S 80HHC IS ALLOWABLE ONLY FOR THE PROFITS RETAINED FROM THE EXPORT BUSINESS DURING THE ASSESSMENT YEAR UNDE R CONSIDERATION. AT THIS STAGE, WE ALSO FIND IT APPROPRIATE TO MENTION THAT THE AUTHORITIES BELOW DID NOT DISPUTE THE GENUINENESS OF THE TRANSACTION BUT THE DEDUCTION WAS DISALLOWED MERELY ON THE GROUND THAT THE TRANSACTIO N OF EXPORT SALE WAS NOT RELATED TO THE FINANCIAL YEAR UNDER CONSIDERATION. THEREFORE, THERE IS NO REASON BEFORE US TO INTERFERE WITH THE IMPUGNED ORD ER AND WE CONFIRM THE SAME. ITA NO.3371/DEL/2010 ASSTT. YEAR: 2004-05 12 8. IN VIEW OF DISCUSSIONS MADE HEREINABOVE, WE HOLD THAT THE APPEAL OF THE ASSESSEE IS DEVOID OF MERITS AND DESERVES TO BE DISMISSED AND WE DISMISS THE SAME. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5.12.2012. SD/- SD/- (A.N. PAHUJA) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 5 TH DECEMBER 2012 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR