ITO, New Delhi V. M/s PCL Exports, New Delhi

ITA 3563/DEL/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0119 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 22-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 13-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Section: 143(3); 10B; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.G . BANSAL, ACCOUNTANT MEMBER I.T.A. NO.3563 /DEL/2009 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER, VS. M/S PCL EXPORTS, M-10 5, WARD 31(2), NEW DELHI CONNAUGHT PLACE, N.D. PAN NO.AABFD 2051 R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.K. LAL, SR. DR RESPONDENT BY : NONE ORDER PER K.G. BANSAL, AM: THE ONLY GROUND TAKEN BY THE REVENUE IN THIS APPEAL IS T HAT THE LEARNED CIT(A) ERRED IN ALLOWING DEDUCTION U/S 10B ON THE EXPORT PROCEED S OF `36,13,485/-, WHEREAS HIS OWN ORDER FOR ASSESSMENT YEAR 2004-05 WAS AG AINST THE ASSESSEE IN THIS MATTER. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN ON 31.10.2005 DECLARING TOTAL INCOME OF `5,86,120/-. ASSESSMENT U/S 143(3) WAS COMPLETED ON 03.12.2007 AT TOTAL INCOME OF `27,30,350/-. WHILE MA KING THE ASSESSMENT, THE CLAIM OF DEDUCTION U/S 10B WAS REDUCED BY AN AMOUNT OF `21,44,221/- ON THE GROUND THAT EXPORT PROCEEDS TO BE REALIZED IN CONVERTIBLE FOREIGN EXCHANGE WERE NOT RECEIVED WITHIN THE TIME PRESCRIBED UNDER THE STATUTE. TH IS FINDING WAS REVERSED BY THE LEARNED CIT(A), WHO MENTIONED THAT EXPORT PROCEEDS O F `36,13,485/- WERE RECEIVED IN THE MONTH OF OCTOBER, 2005. THEREFORE, THE ASSES SEE WAS ENTITLED TO 2 DEDUCTION ON THIS AMOUNT KEEPING IN VIEW THE CIRCULAR OF THE RESERVE BANK OF INDIA NO.91 DATED 01.04.2003 AND THE PROVISION CONTAINED IN SECTION 10B(3). HE ALSO REFERRED TO THE PROVISION CONTAINED IN SECTION 155(11A), W HICH OBLIGES THE ASSESSING OFFICER TO AMEND THE ASSESSMENT ORDER IN CASE CONVERTIBLE FO REIGN EXCHANGE IS RECEIVED IN INDIA AFTER THE EXPIRY OF TIME PRESCRIBED IN THE STATUTE. HIS FINDINGS, RECORDED IN PARAGRAPH NOS. 5 & 6 ARE REPRODUCED BELOW:- 5.6 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF T HE APPELLANT AND REASONS RECORDED BY THE AO. THE AO. HAS DISALLOWED DEDUCTION U/S 10B IN VIEW OF SUB-SECTION (3) ON THE GROUND THAT THE APPE LLANT HAD NOT RECEIVED EXPORT PROCEEDS IN FOREIGN CONVERTIBLE EXCHANGE WIT HIN THE PERIOD OF SIX MONTHS FROM THE END OF THE PREVIOUS YEAR AND THE AP PELLANT HAD NOT SOUGHT ANY APPROVAL FROM THE RBI FOR EXTENSION OF TIME. HO WEVER, IT MAY BE NOTED THAT THE APPELLANT'S UNIT IS ESTABLISHED IN SEZ. AS PER CIRCULAR NO.91 DATED 01.04.2003, THE RBI HAS ALLOWED THE FACILITY REGARDING THE REALIZATION OF EXPORT PROCEEDS TO THE UNIT LOCATED IN SEZ WHEREIN NO TIME LIMIT HAS BEEN PRESCRIBED. THE RELEVANT PORTION OF THE CIRCULAR IS REPRODUCED AS UNDER: A. REALIZATION OF EXPORT PROCEEDS: IN TERMS OF PARA 11 (C) OF AP (DIR SERIES) CIRCULAR NO.28 DATED MARCH 30,2001 UNITS SITUATED IN SPECIAL ECONO MIC ZONES HAVE BEEN PERMITTED TO REALIZE AND REPATRIATE TO INDIA THE FULL VALUE OF GOODS OR SOFTWARE WITHIN A PERIOD OF TWELVE MONTHS FROM THE DATE OF EXPORT. IT HAS NOW B EEN DECIDED TO REMOVE THE STIPULATION OF TWELVE MONTHS OR EXTENDED PERIOD THEREOF FOR REALIZATION OF EXPORT P ROCEEDS. ACCORDINGLY, THERE SHALL BE NO PRESCRIPTION OF ANY TIME LIMIT FOR REALIZATION OF EXPORTS MADE BY UNITS IN SEZS. H OWEVER, THE UNITS IN SEZS WILL CONTINUE TO FOLLOW THE GR/PP/SOFTEX EXPORT PROCEDURE OUTLINED IN PART B OF ANNEXURE TO A.P.(DIR SERIES ) CIRCULAR NO. 12 DATED SEPTEMBER 9,2000 AS AMENDED FROM TIME TO TIME.' THE APPELLANT HAS ALSO RECEIVED THE EXPORT PROCEEDS OF RS. 36,13,485/- IN THE MONTH OF OCTOBER,2005. THEREFORE , KEEPING IN VIEW THE RBI'S CIRCULAR NO. 91 DATED 01. 04.2003 READ WITH SECTION 10B(3), THE APPELLANT IS ELIGIBLE FOR 3 DEDUCTION U/S 10B ON THE EXPORT PROCEEDS REALIZED I N OCTOBER, 2005 OF RS.36,13,485/-. 'HERE IT MAY ALSO BE RELEVANT TO REFER TO SECTION 1 55(11A) WHICH READS AS UNDER:- ' SECTION 155 (11A): WHERE IN THE ASSESSMENT FOR AN Y YEAR, THE DEDUCTION UNDER SECTION 10A OR SECTION 10B OR SECTI ON 10BA HAS NOT BEEN ALLOWED ON THE GROUND THAT SUCH INCOME HAS NOT BEEN RECEIVED IN CONVERTIBLE. FOREIGN EXCHANGE IN INDIA, OR HAVING BEEN RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE OUTSI DE INDIA, OR HAVING BEEN CONVERTED INTO CONVERTIBLE FOREIGN EXCH ANGE OUTSIDE INDIA, HAS NOT BEEN BROUGHT INTO INDIA, BY OR ON BE HALF OF THE ASSESSEE WITH THE APPROVAL OF THE RESERVE BANK OF I NDIA OR SUCH OTHER AUTHORITY AS IS AUTHORIZED UNDER ANY LAW FOR THE TIME BEING IN FORCE FOR REGULATING PAYMENTS AND DEALINGS IN FO REIGN EXCHANGE AND SUBSEQUENTLY SUCH INCOME OR PART THERE OF HAS BEEN OR IS RECEIVED IN, OR BROUGHT INTO, INDIA IN T HE MANNER AFORESAID, THE ASSESSING OFFICER SHALL AMEND THE OR DER OF ASSESSMENT SO' AS TO ALLOW DEDUCTION UNDER SECTION 10A OR SECTION 10B OR SECTION 10BA, AS THE CASE MAY BE, IN RESPECT OF SUCH INCOME OR PART THEREOF AS IS SO RECEIVED IN, O R BROUGHT INTO, INDIA, AND THE PROVISIONS OF SECTION 154 SHALL, SO FAR AS MAY BE, APPLY THERETO, AND THE PERIOD OF FOUR YEARS SHALL B E RECKONED FROM THE END OF THE PREVIOUS YEAR IN WHICH SUCH INC OME IS SO RECEIVED IN, OR BROUGHT INTO, INDIA.' NOW IN THE APPELLANT'S CASE, THE DEDUCTION U/S10B H AS NOT ALLOWED ON THE GROUND THAT THE INCOME TO THE EXTENT OF RS.36,13,48 5/- WAS NOT RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE IN INDIA, BUT SUBSEQUE NTLY SUCH RECEIPT OF RS. 36,13,485/- HAS BEEN RECEIVED IN INDIA BY THE APPEL LANT IN CONVERTIBLE FOREIGN EXCHANGE. THEREFORE, THE AO. SHALL AMEND TH E ORDER OF ASSESSMENT IN VIEW OF SECTION 155 (11A) SO AS TO ALLOW DEDUCTI ON U/S 10B IN RESPECT OF SUCH RECEIPT ALSO. THEREFORE, EVEN UNDER SUB SECTIO N (11A) OF SECTION 155, THE AO. HAS TO RECTIFY THE ASSESSMENT ORDER TO ALLO W THE DEDUCTION U/S 10B. THUS, CONSIDERING THE TOTALITY OF THE FACTS AND CIR CUMSTANCES OF THE CASE, SPECIALLY CIRCULAR NO.91 DATED 01.04.2003 OF THE RB I AND PROVISIONS OF SECTION 155(11A) OF THE I.T. ACT, I AM OF THE OPINI ON THAT THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S 10B ON THE EXPORT PROCEE DS OF RS. 36,13,485/- AND, THEREFORE, THE AO. IS DIRECTED TO ALLOW DEDUCT ION U/S 10B ON THE EXPORT PROCEEDS REALIZED IN FOREIGN CONVERTIBLE EXC HANGE OF RS. 36,13,485/- IN OCTOBER, 2005. 4 3. NONE ATTENDED ON BEHALF OF THE ASSESSEE ON 22.03.2011 AL THOUGH THE CASE WAS FIXED ON A NUMBER OF OCCASIONS EARLIER WHEN EITHER THE ASSESSEE OR THE REVENUE SOUGHT ADJOURNMENT. ON 06.10.2010, THE LEARNED AR OF T HE ASSESSEE HAD SOUGHT ADJOURNMENT, WHICH WAS GRANTED TO 22.03.2011. IN ABS ENCE OF THE ASSESSEE, THE LEARNED DR EXPLAINED THE FACTS OF THE CASE. HOWEVER, HE COUL D NOT POINT TO ANY ERROR IN THE IMPUGNED ORDER, WHICH REQUIRES CORRECTIONS FR OM US. ON PERUSAL OF THE ORDER, WE FIND THAT SECTION 155(11A) PERMITS A MECHANISM TO MODIFY THE ORDER IN CASE SALE PROCEEDS ARE NOT RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE IN INDIA WITHIN THE PRESCRIBED TIME BUT ARE RECEIVED AFTER THE EXPIRY OF THE LIM ITATION. IN VIEW THEREOF, IT WOULD NOT BE PROPER TO ALLOW DEDUCTION AT LOWER AMOUNT AND THEREAFTER RECTIFY THE ORDER TO GRANT CORRECT DEDUCTION U/S 155(11A). IN VIEW THEREOF, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LEARNED CIT(A). 4. IN RESULT, THE APPEAL IS DISMISSED. THIS ORDER WAS PRONOUNCED IN OPEN COURT ON 22.03.2011 SOON AFTER CONCLUSION OF THE HEARING. SD/- SD/- ( I.P. BANSAL ) ( K.G. BANSAL ) JUDICIAL MEMBER ACCOUNTA NT MEMBER NS DT. 22.03.2011. COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER 5 (ITAT, NEW DELHI).