ACIT, New Delhi V. M/s. Barco Electronic Systems (P) Ltd., New Delhi

ITA 5518/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65465 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 08-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GAUTAM JAIN SAILESH GUPTA
• Section: 143(3); 10B; 10; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `A : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI J.S. REDDY, ACCOUNTANT MEMBER ITA NOS.5518 & 1804/DEL./2011 (ASSESSMENT YEAR : 2007-08 & 06-07) ACIT, CIRCLE 2(1), VS. BARCO ELECTRONICS SYSTEMS P LTD., NEW DELHI. E-20, 1 ST & 2 ND FLOOR, 14, COMMUNITY CENTRE, PUSHAP VIHAR, NEW DELHI. (PAN/GIR NO.AAABC5865F) (APPELLANT) (RESPONDENT) ASSESSEE BY : GAUTAM JAIN, SAILESH GUPTA REVENUE BY : SHRI D.K. MISRA, CIT(DR) PER U.B.S. BEDI, J.M. THESE TWO APPEALS OF THE REVENUE ARE DIRECTED AGAIN ST THE SEPARATE ORDERS PASSED BY THE CIT (A)-V, NEW DELHI DATED 31.1.2011 & 19.9. 2011, RELEVANT TO ASSESSMENT YEARS 2006-07 & 2007-08, RESPECTIVELY. THESE APPEALS WER E HEARD TOGETHER AND INVOLVE ONE OF THE COMMON ISSUES, THEREFORE, BEING DISPOSED OF BY A SINGLE ORDER FOR THE SAKE OF CONVENIENCE. 2. LD.CIT(DR), AT THE VERY OUT SET SUBMITTED THAT A PPEAL FOR THE ASSESSMENT YEAR 2007-08 SHOULD BE TAKEN UP FIRST AS IT HAS TWO ISSU ES AND ONE OF THEM IS COMMON AND TO THIS PLEA, LD.AR OF THE ASSESSEE DID NOT RAISE ANY OBJECTION, HENCE, WE WILL FIRST CONSIDER THE APPEAL FOR THE ASSESSMENT YEAR 2007-08 IN WHICH FOLLOWING TWO EFFECTIVE GROUNDS HAVE BEEN RAISED: I.T.A. NO.5518 & 1804/DEL./2011 (A.Y. : 2007-08 & 06-07) 2 1. THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOL DING THAT CONSIDERATION RECEIVED FOR REFURBISHMENT OF PROJECTION OF RS.19,8 5,993/- IN CONVERTIBLE FOREIGN IS PART OF EXPORT TURNOVER. 2. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFI CER TO EXCLUDE THE FOREIGN EXCHANGE GAIN OF RS.5,56,92,7181/- AND UNSPENT LIAB ILITY WRITTEN BACK FROM THE TOTAL TURNOVER FOR CALCULATING DEDUCTION U /S 10B OF THE ACT. 2. AS REGARDS SECOND GROUND, DEPARTMENT HAS CHALLEN GED THE ORDER OF CIT(A) IN DIRECTING THE ASSESSING OFFICER TO EXCLUDE THE FORE IGN EXCHANGE GAIN OF RS.5,56,92,718/- (WRONGLY WRITTEN IN THE GROUND OF APPEAL AS 5569271 81/-) AND RS.33,46,340/- ON ACCOUNT OF UNSPENT LIABILITY WRITTEN BACK FROM THE TOTAL TU RNOVER FOR CALCULATING DEDUCTION U/S10B OF THE I.T. ACT, 1961. 3. THE ISSUE IS REGARDING FOREIGN EXCHANGE FLUCTUAT ION OF RS.5,56,92,718/- WHICH HAS BEEN HELD TO BE FORMING PART OF TOTAL TURNOVER. IN THIS REGARD, THE ASSESSEE IN APPEAL SOUGHT TO RELY UPON THE ORDER OF THE TRIBUNAL FOR T HE ASSESSMENT YEAR 2005-06 IN ITA NO. 4255/D/2009 DATED 27.05.2011, WHEREIN IT WAS HE LD THAT, FOREIGN EXCHANGE GAIN SHALL FORM PART OF BOTH EXPORT TURNOVER AND TOTAL TURNOVE R AND SOUGHT RELIEF. 4. IN RELATION TO SECOND ITEMS, IT WAS SUBMITTED TH AT, SINCE THE UNSPENT LIABILITIES WRITTEN BACK, DOES NOT INVOLVE ANY ELEMENT OF TURNO VER, THEREFORE THE SAME CANNOT JUSTIFIABLY BE HELD TO BE PART OF TOTAL TURNOVER AN D SOUGHT RELIEF. 5. LD.CIT(A) WHILE CONSIDERING AND ACCEPTING THE PL EA OF THE ASSESSEE HAS DECIDED THE AS UNDER: (I)) SO FAR AS EXCHANGE FLUCTUATION IS CONCERNED, HON'BLE TRIBUNAL VIDE ORDER DATED 27.05.2011 IN ITA NO. 4255/D/2009 IN ASSESSME NT YEAR 2005-06, I.T.A. NO.5518 & 1804/DEL./2011 (A.Y. : 2007-08 & 06-07) 3 THE SAME TO BE PART OF EXPORT TURNOVER AND, TOTAL T URNOVER. IT WAS HELD THEREIN AS UNDER: 'IN THE CASE OF THE ASSESSEE THE BILLING OF GOODS E XPORTED IS MADE IN FOREIGN CURRENCY AND THE AMOUNT IS CREDITED IN THE BOOKS OF ACCOUNTS IN TERMS OF RUPEES WHEN THE SALE PROCEEDS ARE REALIZED IN CONVERTIBLE FOREIGN EXCHANGE. THIS WOULD MEAN IF THERE IS GAIN ON ACCOUNT OF FOREIGN EXCHANG E THE ASSESSEE WILL RECEIVE THE SALE PROCEEDS IN TERMS OF RUPEES AT HIGHER FIGURE W HEREAS IN CASE THERE IS LOSS DUE TO FOREIGN EXCHANGE THE ASSESSEE WILL RECEIVE LOWER AMOUNT OF THE SALE PROCEEDS IN TERMS OF RUPEES. IN BOTH THE CASES THE SALE PROCEED S REALIZED IN TERMS OF INDIAN RUPEES WHICH INCLUDES FOREIGN EXCHANGE GAINS WILL F ORM PART OF THE EXPORT TURNOVER. IN OTHER WORDS, LET US TAKE AN EXAMPLE WH ERE THE ASSESSEE EXPORTS THE GOODS IN TERMS OF DOLLARS AT U5$ 100 WHEN THE ASSES SEE REALIZED SALE PROCEEDS THE EXCHANGE RATE IS RS.46/-AS AGAINST RS. 45/- WHEN TH E GOODS WERE EXPORTED. ON REALIZATION OF THE SALE PROCEEDS THE ASSESSEE HAS T O CREDIT THE SALES AT RS. 4,600/-. THUS, THE FOREIGN EXCHANGE GAIN OF 100/- GETS INCLU DED IN SALE PROCEEDS ON REALIZATION IN CONVERTIBLE FOREIGN EXCHANGE. THEREF ORE, FOREIGN EXCHANGE GAIN RECEIVED BY THE ASSESSEE HAS TO BE TREATED AS PART OF THE TOTAL TURNOVER. IN THE INSTANT CASE, IT HAS NOT BEEN POINTED OUT THAT THE FOREIGN EXCHANGE GAIN DOES NOT RELATE TO EXPORTS MADE DURING THE YEAR UNDER CONSID ERATION. IN THE ABSENCE OF ANY CONTRARY EVIDENCE ON RECORD TO THIS EXTENT, IT IS H ELD THAT THE FOREIGN EXCHANGE GAIN WILL FORM PART OF EXPORT TURNOVER AS WELL AS PART O F TOTAL TURNOVER. THE AO IS DIRECTED TO COMPUTE DEDUCTION UNDER SECTION 10B BY TAKING FOREIGN EXCHANGE GAIN AS PART OF EXPORT TURNOVER AS WELL AS OF TOTAL TURN OVER.' HENCE, FOREIGN EXCHANGE FLUCTUATION IS HELD TO BE P ART OF EXPORT TURNOVER AND, TOTAL TURNOVER AND SO FAR AS INCLUSION OF UNSPENT L IABILITY WRITTEN BACK IS CONCERNED, IT WAS CONCLUDED AS UNDER: FINALLY, UNSPENT LIABILITY WRITTEN BACK OF ~ 33,46, 340/- DOES NOT INVOLVE ANY ELEMENT OF TURNOVER, THEREFORE THE SAME IS DIRE CTED TO BE EXCLUDED FROM TOTAL TURNOVER. 6. AGGRIEVED BY THE ORDER OF CIT(A), DEPARTMENT HAS COME UP IN APPEAL AGAINST THE ACTION OF LD.CIT(A) DIRECTING THE ASSESSING OFFICER TO EXCLUDE THE FOREIGN EXCHANGE GAIN AND UNSPENT LIABILITY WRITTEN BACK FROM THE TOTAL T URNOVER FOR CALCULATING DEDUCTION U/S 10B OF THE ACT . 7. AT THE VERY OUTSET, LD.DR VERY FAIRLY SUBMITTED THAT SO FAR AS FIRST LIMB OF THIS GROUND OF APPEAL IS CONCERNED, IT WAS NOT APPROPRIA TE FOR THE DEPARTMENT TO HAVE RAISED SUCH GROUND AND SINCE IT HAS BEEN TAKEN, SAME CAN B E DISMISSED. I.T.A. NO.5518 & 1804/DEL./2011 (A.Y. : 2007-08 & 06-07) 4 8. LD.AR FOR THE ASSESSEE, ON THIS PLEA OF THE LD.D R. DID NOT OBJECT AND RELIEF UPON THE ORDER OF LD.CIT(A) 8.1 CONSIDERING THE ENTIRETY OF FACTS AND CIRCUMST ANCES AND JURISDICTIONAL HIGH COURTS DECISION IN THE CASE OF CIT VS. BARCO ELECT RONICS SYSTEMS PVT. LTD., IN I.T.A. NO.125/2012 DATED 27.02.2012 SUCH GROUND IS DISMISS ED IN THE LIGHT OF THE CONCLUSION AS DRAWN IN THE SAID ORDER AS UNDER: IN THE PRESENT CASE, THE ASSESSEE IS ENGAGED IN EX PORTS AND HAD CLAIMED DEDUCTION U/S 10B OF THE I.T. ACT, 1961 (ACT) FOR SHORT). TH E ASSESSEE HAD RAISED INVOICES IN FOREIGN EXCHANGE FOR THE EXPORTS, WHICH WERE RECORD ED IN THE BOOKS OF ACCOUNTS IN INDIAN RUPEES BY APPLYING THE CONVERSION RATE APPLI CABLE ON THE DATE WHEN THE INVOICES WERE ISSUED. LATER ON PAYMENTS WERE RECEI VED IN FOREIGN EXCHANGE. THE ASSESSEE, ACCORDINGLY APPLIED THE EXCHANGE RATE APP LICABLE ON THE DATE WHEN PAYMENTS WERE RECEIVED. THE DIFFERENCE IN EXCHANGE RAGE ON THE DATE WHEN THE INVOICE WAS ISSUED AND WHEN THE PAYMENT WAS RECEIVE D REQUIRED ADJUSTMENT ENTRIES. THE SAID LOSS/GAIN WAS DULY RECORDED IN T HE BOOKS OF ACCOUNT. DEDUCTION U/S 10B WAS CLAIMED ON THE BASIS OF AMOUNT ACTUALLY RECEIVED I.E. THE EXCHANGE RATE APPLICABLE WHEN PAYMENT WAS RECEIVED FROM THE FOREIGN BUYER. WE ENTIRELY AGREE WITH THE REASONING OF THE TRIBUN AL QUOTED ABOVE. THE ALLEGED LOSS/GAIN DUE TO THE DIFFERENCE IN EXCHANGE RATES IS INCOME RECEIVED FROM EXPORTS AND IS TO BE ACCOUNTED FOR, WHILE COMPUTING THE EXPORT TURNOVER AND INCOME FROM EXPORTS. WE HAD EXAMINED A SIMILAR ISS UE IN I.T.A. 72/2012, CIT VS. RAMSONS ORGANICS LTD. DECIDED ON 07.02.2012 AND DIS MISSED THE APPEAL OF THE REVENUE. 9. AS REGARDS SECOND GROUND OF UNSPENT LIABILITY OF WRITTEN BACK OF RS.33,46,340/- IS CONCERNED, IT IS DEPARTMENTS CASE THAT THE SAME DO ES NOT INVOLVE ANY ELEMENT OF TRANSFER. THEREFORE, IT COULD NOT BE EXCLUDED FROM THE TOTAL TURNOVER. IT WAS ALSO PLEADED THAT NEITHER ANY SERIOUS OBJECTION HAS BEEN RAISED BY TH E AS BEFORE THE ASSESSING OFFICER NOR IT HAS BEEN STRONGLY CHALLENGED BEFORE CIT(A). FURTHE R DETAILS HAVE ALSO NOT BEEN FURNISHED AS TO WHAT ARE THE CONSTITUENT OF THIS ITEMS. THER EFORE, THERE WAS NO OCCASION FO THE CIT(A) TO DIRECT THE ASSESSING OFFICER TO EXCLUDE T HE UNSPENT LIABILITY WRITTEN BACK FROM THE TOTAL TURNOVER FOR CALCULATING DEDUCTION U/S 10 B OF THE ACT. WHILE SUPPORTING THE I.T.A. NO.5518 & 1804/DEL./2011 (A.Y. : 2007-08 & 06-07) 5 ASSESSING OFFICER IN THIS REGARD, IT WAS PLEADED T HAT SINCE NO REASONABLE BASIS HAVE BEEN GIVEN AS TO HOW IT IS NOT PART OF THE TOTAL TURNOVE R. SO, IN ALL FAIRNESS THE ISSUE SHOULD BE SET ASIDE AND MATTER BE RESTORED BACK TO THE ASSESS ING OFFICER FOR RECONSIDERATION OF THE ISSUE AFRESH BY OBTAINING NECESSARY DETAILS FROM TH E ASSESSEE. 10. LD.AR OF THE ASSESSEE, WHILE RELYING UPON CIT(A ) S ORDER IN THIS REGARD HAS PLEADED FOR CONFIRMATION OF THE SAME. IT WAS STRON GLY CONTENDED THAT THE DETAILS ON THIS ISSUE WERE FURNISHED BEFORE THE ASSESSING OFFICER A S WOULD BE SEEN FROM PAGES 41 & 43 OF THE PAPER BOOK. RELIANCE WAS ALSO PLACED ON SUP REME COURT DECISION IN THE CASE OF CIT VS. LAKSHMI MACHINE WORKS, REPORTED IN 290 I.T .R. 667 AS MENTIONED IN PAGE 42 OF THE PAPER BOOK AND SINCE DETAILED SUBMISSIONS WERE MADE BEFORE LD.CIT(A) WHICH ARE THERE FORM PAGES 70-71 AND RELYING UPON SUCH SUBMIS SION, IT WAS PLEADED THAT IT COULD NOT BE TAKEN AS PART OF THE TOTAL TURNOVER. IT WAS THU S PLEADED FOR CONFIRMATION OF THE IMPUGNED ORDER. 11. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MA TERIAL ON RECORD AS WELL AS PRECEDENTS RELIED UPON AND FIND THAT THE BASIS AND REASONING AS GIVEN BY LD.CIT(A) , IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CASE, ARE SO UND AND CONVINCING, SINCE NO CONTRARY MATERIAL HAS BEEN FILED AND OTHERWISE NO INFIRMITY OR FLAW HAS BEEN POINTED OUT OR NOTICED, THEREFORE, WE WHILE CONCURRING WITH THE FI NDINGS OF LD.CIT(A), UPHOLD THE IMPUGNED ORDER IN THIS REGARD AND DISMISS THE APPEA L ON THIS GROUND 12. SO FAR AS GROUND NO.1 OF DEPARTMENTS APPEAL FO R ASSESSMENT YEAR 2007-08 AND ONLY GROUND IN APPEAL FOR ASSESSMENT YEAR 2006-07, WHICH ARE COMMON, THE CHALLENGE IS AGAINST CIT(A)S ACTION IN HOLDING THAT CONSIDERAT ION RECEIVED FOR REFURBISHMENT OF I.T.A. NO.5518 & 1804/DEL./2011 (A.Y. : 2007-08 & 06-07) 6 PROJECTOR OF RS.19,85,993/- AND RS.1,66,79,827/- IN CONVERTIBLE FOREIGN EXCHANGE IS A PART OF EXPORT TURNOVER FOR THE ASSESSMENT YEAR 2007-08 AND 06-07, RESPECTIVELY. 13. WE SHALL DISCUSS THIS ISSUE FOR THE ASSESSMENT YEAR 2007-08, ASSESSING OFFICER IN PARA. 5.2 OF HIS ORDER, FOR ASSESSMENT YEAR 2007-08 , HAS HELD AS UNDER: FROM THE ABOVE REPLY, IT IS CLEAR THAT THE EXPORT PROCEEDS, ONCE RECEIVED AGAINST THE MANUFACTURED GOODS EXPORTED TO ITS PARENTS COMP ANY, WERE CONSIDERED IN THE 'EXPORT TURNOVER'. AS HAS BEEN ADMITTED ABOVE, THE ASSESSEE COMPANY TAKES BACK THE DEFECTED PRODUCTS FROM ITS PARENT COMPANY AND R EPLACES IT WITH THE NEW ONE. CONSIDERING THE GOODS GIVEN BACK AS REPLACEMENT OF THE PRODUCTS EXPORTED EARLIER, THERE SHOULD NOT BE ANY CHANGE IN THE VALUE OF 'EXP ORT TURNOVER'. THE REPLY OF THE ASSESSEE COMPANY IS ALSO SILENT ABOUT THE TREATMENT GIVEN TO THE MANUFACTURED GOODS RETURNED TO THE ASSESSEE COMPANY DUE TO DEFEC TS AS TO WHETHER THE COST OF THE DEFECTED GOODS WERE REDUCED FROM ITS EXPORT TUR NOVER OR NOT. EVEN IF THERE HAS BEEN ANY FRESH ASSEMBLY OF PRODUCTS MADE OUT OF THE DEFECTED GOODS SENT EARLIER AND THE EXPORT THEREOF, THE CHARGES RECEIVED AGAINS T WHICH CANNOT BE SAID TO BE FORMING PART OF THE 'EXPORT TURNOVER' AS THE SAME W AS ALREADY TAKEN INTO ACCOUNT BY THE ASSESSEE COMPANY AT THE INSTANCE OF SUCH EXP ORT INITIALLY MADE.' 14. ASSESSEE TOOK UP THE MATTER IN APPEAL AND LD.AR . OF THE ASSESSEE CONTENDED BEFORE FIRST APPELLATE AUTHORITY THAT ID. OFFICER D ID NOT ACCEPT THE CLAIM ON THE GROUND THAT, INCOME FROM REPLACEMENT OF PRODUCTS EXPORTED EARLIE R CANNOT BE PART OF EXPORT TURNOVER AS THE GOODS HAVE ALREADY BEEN TAKEN AS PART OF EXP ORT TURNOVER, WHEN THE EXPORTS WERE INITIALLY MADE. IT WAS SUBMITTED THAT, SUCH A BASIS IS INCORRECT. IT WAS SUBMITTED THAT, AO HAS FAILED TO APPRECIATE THAT, ONCE THE GOODS ARE E XPORTED, THERE IS NO DISPUTE THAT, SALE CONSIDERATION RECEIVED IN LIEU IN CONVERTIBLE FOREI GN EXCHANGE IS PART AND PARCEL OF EXPORT TURNOVER. HOWEVER, IF AT A LATER STAGE SUCH GOODS A RE FOUND TO BE DEFECTIVE AND AS A RESULT THEREOF, ARE TO BE REPLACED OR REPAIRED THEN FURTHE R SUMS ARE CHARGED BY THE APPELLANT COMPANY (IN CASE OF GOODS BEYOND THE WARRANTY PERIO D). IT WAS SUBMITTED THAT, THE CONSIDERATION THUS DUE ON EXPORT OF SUCH GOODS AND RECEIVED IN CONVERTIBLE FOREIGN I.T.A. NO.5518 & 1804/DEL./2011 (A.Y. : 2007-08 & 06-07) 7 EXCHANGE FORMS PART OF EXPORT TURNOVER. IT WAS FURT HER SUBMITTED THAT, EVEN IN ASSESSMENT YEAR 2005-06, SUM OF RS.1,20,34,984/- HAD BEEN RECE IVED FOR RE-FURBISHMENT OF OLD PRODUCTS AND, SAME WAS HELD TO BE PART OF EXPORT TU RNOVER IN ASSESSMENT MADE U/S 143(3) OF THE ACT. ALSO, IN THE AY 2006-07, THE AO HAD HEL D SERVICE OF RS.16,23,759/- TO PART OF EXPORT TURNOVER BUT THE SAME WAS DELETED VIDE ORDE R DATED 31.01.2011. 15. WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE, LD.CIT(A) HAS CONCLUDED TO HOLD THE ISSUE IN FAVOUR OF THE ASSESS EE AS PARA.5.2 AND 5.3 AS UNDER: 5.2 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AS WELL AS THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT. THE ISSUE RAISE D BY THE APPELLANT IN THE INSTANT GROUND IS THAT, SUM OF RS. 19,85,993/REPRESENTS PAR T OF EXPORT TURNOVER. THIS ISSUE IS IDENTICAL TO THE ISSUE INVOLVED IN ASSESSMENT YE AR 2006-07 WHEN VIDE ORDER DATED 31.01.2011, IT WAS HELD THAT SERVICE INCOME O F RS. 16,23,579/- IS PART OF EXPORT TURNOVER. IT WAS HELD THEREIN AS UNDER: '5.3 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT OR DER AS WELL AS THE WRITTEN SUBMISSION FILED BY THE APPELLANT. THE ISSU E RAISED BY THE APPELLANT IN THE INSTANT GROUND IS THAT, SUM OF RS. 1,66,79,8 27/-REPRESENTS PART OF EXPORT TURNOVER. THE UNDISPUTED FACTS ARE THAT, ASS ESSEE COMPANY EXPORTS PROJECTOR TO ITS HOLDING COMPANY M/S BARCO CONTROL ROOMS GMBH (BCD), (GERMANY) FOR ONWARD SALES TO CUSTOMERS UNDE R A WARRANTY. HOWEVER, ON COMPLAINTS FROM THE CUSTOMERS, THE APPE LLANT COMPANY AT TIMES TAKES BACK THE PRODUCTS WARRANTY PERIOD, NO S UM IS RECEIVED FROM THE HOLDING COMPANY, WHO IS THE SALE CUSTOMER, SO F AR AS THE APPELLANT IS CONCERNED. HOWEVER, WHERE THE REPLACEMENT OF PRODUC TS IS BEYOND THE WARRANTY PERIOD, THE CONSIDERATION IS RECEIVED IN C ONVERTIBLE FOREIGN EXCHANGE. IN THE INSTANT YEAR, ACCORDINGLY THE APPE LLANT COMPANY UNDISPUTEDLY RECEIVED RS.1,66,79,827/- IN CONVERTIB LE FOREIGN EXCHANGE. THE ASSESSING OFFICER HAS HELD THAT, SUCH PROCEEDS RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE DO NOT FORM PART OF EXPORT TURNOVE R SINCE THE SAME HAVE ALREADY BEEN TAKEN INTO ACCOUNT BY THE APPELLANT CO MPANY AT THE TIME OF EXPORTS INITIALLY MADE. IN THE OPINION OF THE LEARN ED OFFICER, SINCE THE GOODS GIVEN BACK AS REPLACEMENT OF THE PRODUCTS EXP ORT EARLIER ARE SAME THERE IS NO CHANGE IN THE VALUE OF EXPORT TURNOVER. THE EXPRESSION 'EXPORT TURNOVER' IS DEFINED IN CLAUSE (III) OF EXPLANATION 2 BELOW SUBSECTION (8) OF THE SECTION 10B AS UNDER: EXPORT TURNOVER' MEANS THE CONSIDERATION IN I.T.A. NO.5518 & 1804/DEL./2011 (A.Y. : 2007-08 & 06-07) 8 RESPECT OF EXPORT [BY THE UNDERTAKING] OF ARTICLES OR THINGS OR COMPUTER SOFTWARE RECEIVED IN, OR BROUGHT INTO, INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE, IN ACCORDANCE WITH SUBSECTION (3) , BUT DOES NOT INCLUDE FREIGHT, TELECOMMUNICATION CHARGES OR INSURANCE ATT RIBUTABLE TO THE DELIVERY OF THE ARTICLES OR THINGS OR COMPUTER SOFT WARE OUTSIDE INDIA OR EXPENSES, IF ANY, INCURRED IN FOREIGN EXCHANGE IN P ROVIDING THE TECHNICAL SERVICES OUTSIDE INDIA; 5.4 ACCORDING TO THE AFORESAID STATUTORY PROVISION, EXPORT TURNOVER MEANS CONSIDERATION IN RESPECT OF EXPORT BY UNDERTA KING OF ARTICLES OR THINGS AND RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE BUT DOES NOT FREIGHT, TELECOMMUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OUTSIDE INDIA OR EXPENSES INCURRED IN FOREIGN EXCHA NGE IN PROVIDING TECHNICAL SERVICES OUTSIDE INDIA. THUS, CONSIDERAT ION RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE IN RESPECT OF EXPORT O F ARTICLES OR THINGS IS FORMING PART OF EXPORT TURNOVER. IN THE INSTANT CA SE, THERE IS NO DISPUTE THAT, SUM OF RS.1,66,79,827/- HAS BEEN RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE ON EXPORT OF ARTICLES OR THINGS I.E. PROJE CTORS. ALL WHAT HAS BEEN DISPUTED IS THAT SINCE THE PRODUCT EXPORTED NOW IS A REPLACEMENT OF THE PRODUCTS EXPORTED EARLIER, THEREFORE, THE SAME DOES NOT FORM PART OF EXPORT TURNOVER. THIS CONCLUSION IS NOT IN CONFORMITY WIT H THE STATUTORY DEFINITION OF EXPORT TURNOVER. IN MY OPINION, ONCE THE SUM OF RS.1,66,79,827/- HAS BEEN RECEIVED IN CONVERTIBLE F OREIGN EXCHANGE ON EXPORT OF PROJECTORS, THE SAME FORMS PART OF EXPORT TURNOVER. IN FACT, EVEN IN THE IMMEDIATE PRECEDING YEAR SUM OF RS.1,20,34,0 98/- HAD BEEN RECEIVED FOR REFURBISHMENT OF OLD PRODUCTS THE SAME WAS HELD TO BE PART OF EXPORT TURNOVER IN ASSESSMENT MADE U/S 143(3) OF TH E ACT. ALSO, CUSTOMS NOTIFICATION NO.52/2003 PERMITS RE-IMPORTATION OF G OODS WITHIN THREE YEARS FROM THE DATE OF EXPORTATION OF GOODS WITHIN THREE YEARS FROM THE DATE OF EXPORTATION FOR REPAIR OR RE-CONDITIONING A ND RE-EXPORT SUCH GOODS AFTER REPAIR OR RE-CONDITIONING. HENCE, IT IS HELD THAT, CONSIDERATION RECEIVED FOR REFURBISHMENT OF PROJECTORS OF RS.1,66 ,79,827/- IN CONVERTIBLE FOREIGN EXCHANGE IS PART OF EXPORT TURNOVER AND THE APPELLANT SUCCEEDS IN THIS GROUND. 5.3 HENCE, IT IS HELD THAT, CONSIDERATION RECEIVED FOR REFURBISHMENT OF PROJECTORS OF RS.19,85,993/- IN CONVERTIBLE FOREIGN EXCHANGE IS P ART OF EXPORT TURNOVER AND, THEREFORE, GROUND NO.4 TO 4.3 ARE ALSO ALLOWED. I.T.A. NO.5518 & 1804/DEL./2011 (A.Y. : 2007-08 & 06-07) 9 16. AGGRIEVED BY THE ORDER OF CIT(A), DEPARTMENT HA S COME UP IN APPEAL AND IT WAS PLEADED THAT IN VIEW OF PROVISION OF SECTION 10B, T HE CONSIDERATION RECEIVED FOR REFURBISHMENT OF PROJECTORS OF RS.19,85,993/- IN CO NVERTIBLE FORM CANNOT BE HELD TO BE PART OF EXPORT TURN OVER BECAUSE THE REPLACEMENT/RE PAIR OF THE PROJECTOR HAS BEEN CONDUCTED THOUGH THE AMOUNT HAS BEEN RECEIVED IN CO NVERTIBLE FOREIGN EXCHANGE, SAME IS NOT PART OF TOTAL TURNOVER BECAUSE IT CANNOT BE HEL D SAME AS INCOME DERIVED FROM EXPORT TURNOVER. IN THIS CASE EXPORT OF THE MATERIAL HAD ALREADY BEEN DONE AND ATTRIBUTABLE SALE IS NOT DERIVED FROM EXPORT AND AT THE MOST IT IS A SER VICE. RELYING UPON THE JUDGMENT IN THE CASE OF CAMBAY ELECTRIC SUPPLY INDUSTRIAL COMPANY L TD. VS. CIT, 113 I.T.R. 84, CIT VS. STERLING FOODS, 237I.T.R. 579 (SC) AND CIT VS. PAN DIAN CHEMICALS LTD., 262 ITR 278(SC), IT WAS PLEADED FOR REVERSAL OF THE ORDER O F CIT(A) AND RESTORING THAT OF THE ASSESSING OFFICER. 17. LD.AR FOR THE ASSESSEE WHILE RELYING UPON THE B ASIS AND REASONING AS GIVEN BY THE CIT(A) HAS PLEADED THAT CONFIRMATION OF THE IMPUGNE D ORDER ON THIS ISSUE. SINCE, RECEIPTS IN CONVERTIBLE FOREIGN EXCHANGE IS PROFIT OF BUSINESS AND IS PART OF TOTAL TURNOVER, THEREFORE, CIT(A)S ACTION IN THIS REGARDS IS FULLY JUSTIFIED AND HIS ACTION BE FURTHER CONFIRMED. IT WAS ALSO SUBMITTED THAT THERE IS LOT OF DIFFERENCE IN THE PROVISION AS CONTAINED IN SECTION 10B AND U/S 80HHHC OF THE ACT BECAUSE IN VIEW OF DEFINITION OF EXPORT TURNOVER AS CONTAINED IN RELEVANT PROVISIONS UNDER SECTION 10D, THE ASSESSEE IS FULLY ENTITLED TO GET RELIEF AS ALLOWED BY THE CIT( A) AND SO FAR AS CASE LAWS AS RELIED UPON BY THE LD.DR. IS CONCERNED THE SAME DOES NOT APPLY TO THE FACTS OF THE CASE. THEREFORE, IT WAS VEHEMENTLY ARGUED THAT ACTION OF THE CIT(A) MAY BE CONFIRMED. I.T.A. NO.5518 & 1804/DEL./2011 (A.Y. : 2007-08 & 06-07) 10 18. WE HAVE HEARD BOTH THE SIDES, CONSIDERED HE MAT ERIAL ON RECORD AS WELL AS CASE LAWS CITED BY RIVAL SIDES. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE ASSESSING OFFICER AS WELL AS OF THE CIT(A) AND FIND THAT CIT( A) HAS APPROPRIATELY DEALT WITH THE ISSUE CONSIDERING THE MATERIAL ON RECORD AND POINTS RAISED AND FIND A WELL REASONED ORDER IN THIS REGARD AND NO CONTRARY INFIRMITY OR FLAW HA VE BEEN NOTICED OR POINTED OUT IN THE SAID ORDER. THEREFORE, CONCURRING WITH THE FINDING AND CONCLUSION AS DRAWN BY THE CIT(A), WE UPHOLD HIS ORDER AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 19. SINCE THE FACTS INVOLVED AND ISSUE RAISED FOR THE ASSESSMENT YEAR 2006-07 IS SAME AS IN ASSESSMENT YEAR 2007-08 AND BOTH THE SIDES H AVE AGREED AND SUBMITTED THAT NEITHER THERE IS ANY DIFFERENCE IN FACTS NOR ISSUE INVOLVED EXCEPT DIFFERENCE IN AMOUNT, THEREFORE, APPLYING THE DECISION TAKEN BY US IN THE YEAR 2007- 08, WE DISMISS THE APPEAL FOR ASSESSMENT YEAR 2006-07 AS WELL. 20. AS A RESULT, BOTH THE APPEALS OF THE DEPARTMENT GET DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 14.09.2012. SD/- SD/- (J.S. REDDY) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : SEPT. 14, 2012 SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-V, NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT I.T.A. NO.5518 & 1804/DEL./2011 (A.Y. : 2007-08 & 06-07) 11