M/S. GIA EXPORTS, MUMBAI V. ASST. C.I.T., CENTRAL CIRCLE 33, MUMBAI

ITA 5667/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0948 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 28-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 21-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: M B SINGHVI
• Keywords: Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI PRAMOD KUMAR (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) ITA NO. 5667/MUM/2009 ASSESSMENT YEAR-2006-07 M/S. GIA EXPORTS, 70/70A, LAKSHMI PREMISES, 1 ST FLOOR, SHEIKH M. STREET, ZAVERI BAZAR, MUMBAI-400 002 PAN-AAGFG3116R VS. THE ACIT, CENTRAL CIRCLE-33, AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI M.B. SINGHVI RESPONDENT BY: SHRI A.K. NAYAK O R D E R PER SMT. ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 26.8.2009 PASSED BY THE LD. CIT(A)- FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE FIRM IS A MANUFACTURER AND EXPORTER OF GOLD ORNAMENTS. IN THE COURSE OF SCRUTINY PROCEEDINGS, THE NOTE BELOW ANNEXURE A OF FORM NO.56F WAS BROUGHT TO THE NOTICE OF THE A.R. THE NOTE ST ATED THAT THE ASSESSEE HAS NOT REALIZED US$ 17,19,530 I.E. RS.7,67,08,233/- BEFORE 30.09.2006. THE AR WAS ASKED TO SHOW CAUSE WHY THE PROPORTIONATE AMOUNT CO RRESPONDING TO RS.7,67,08,233/- SHOULD BE ALLOWED U/S.10A OF THE I .T. ACT. 3. THE AO HELD AS FOLLOWS: ITA NO.5667/M/09 2 IN THIS REGARD, THE ASSESSEE THROUGH THE AR STATED THAT THE EXPORT PROCEEDS OF US$1719530 HAD NOT RECEIVED BEFORE 30.0 9.2006 AND THAT AN APPLICATION HAD BEEN MADE BY THEM TO THE BANKERS ON 10.10.2006 FOR SEEKING EXTENSION FROM THE RESERVE BANK OF INDIA FO R THIS LATE REALIZATION OF FUNDS. IT WAS FURTHER STATED THAT THE ASSESSEE FIRM HAD NOT RECEIVED ANY FORMAL EXTENSION FROM THE RESERVE BANK OF INDIA (COMPETENT AUTHORITY) AS THEIR BANKERS HAD FAILED TO MAKE AN A PPLICATION TO THE RBI (COMPETENT AUTHORITY) PRESUMING THAT THE AFORESAID PAYMENTS HAD BEEN RECEIVED AND NO EXTENSION WAS REQUIRED. HOWEVER, TILL DATE THE ASSESSEE HAS NOT SUBMITTED ANY AUTHORIZATION FROM THE COMPET ENT AUTHORITY GRANTING EXTENSION OF TIME TO THE ASSESSEE FOR LATE REALIZATION OF EXPORT PROCEEDS OF US$ 1719530. THE ASSESSEES AR HAS A LSO NOT SUBMITTED ANY EVIDENCE THAT THE SAID SALE PROCEEDS HAVE BEEN CREDITED TO A SEPARATE ACCOUNT MAINTAINED FOR THE PURPOSE BY THE ASSESSEE WITH ANY BANK OUTSIDE INDIA WITH THE APPROVAL OF RBI. 4. THE AO FURTHER HELD AS FOLLOWS: THE ASSESSEE HAS NOT COMPILED PROVISIONS OF SEC.10 A(3) AND EXPLANATION 1 AND 2 THERETO BELOW AS REGARDS REALIZATION OF US$ 1719530 CORRESPONDING TO INDIAN RUPEES 7,67,08,233/-. AC CORDINGLY, THE PROFITS CORRESPONDING TO THIS NON-REALIZED AMOUNT SHALL NOT BE ELIGIBLE FOR DEDUCTION U/S.10A OF THE I.T. ACT. THE TOTAL TURN OVER OF THE ASSESSEE BEING RS.36,47,44,050/- AND TOTAL DEDUCTION U/S.10A BEING RS.4,91,40,560/-, THE CORRESPONDING AMOUNT OF DEDUC TION U/S.10A PERTAINING TO THE NON-REALIZED AMOUNT OF RS.7,67,08 ,233/- COMES TO RS.1,03,34,604/-. MEANING THEREBY THAT ONLY AN AM OUNT OF RS.3,88,05,956/- (RS.4,91,40,560 RS.1,03,34,604) WOULD BE ELIGIBLE FOR DEDUCTION U/S.10A OF THE ACT. THE ASSESSEE HAS, T HEREFORE, CLAIMED EXCESS DEDUCTION U/S.10A OF THE ACT AND THEREFORE, PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT ARE INITIATED SEPARATELY F OR FURNISHING INACCURATE PARTICULARS OF HIS INCOME. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A) THE AR SUBMITTED THAT THE ASSESSEE HAS NOT REALIZED THE EXPORT PROCEEDS OF US$ 1790530 BEFORE 30.09.2006. THE A R FURTHER SUBMITTED THAT ASSESSEE MADE APPLICATION TO ITS BANKER FOR EXTENSI ON FROM RESERVE BANK OF INDIA ON 10.10.2006. THE PAYMENTS WERE REALIZED ON 17.10.2006 AND 18.10.2006, BUT THE ASSESSEE HAS NOT RECEIVED ANY P ROPER EXTENSION FROM THE ITA NO.5667/M/09 3 RESERVE BANK OF INDIA (COMPETENT AUTHORITY) SINCE T HE BANK FAILED TO MAKE APPLICATION TO RBI (COMPETENT AUTHORITY) ASSUMING T HAT THE AFORESAID PAYMENTS ARE RECEIVED AND NO EXTENSION IS REQUIRED. HE FURT HER STATED THAT THE ASSESSEE HAS NOT RECEIVED ANY EXTENSION OF RBI ALTHOUGH HE H AS MADE REQUEST TO ITS BANKER FOR EXTENSION AND SINCE THE AMOUNT HAS BEEN REALIZED AFTER THE DUE DATE, THEREFORE THE DEDUCTION U/S.10(A) SHOULD BE ALLOWED TO THE ASSESSEE. 6. THE LD. CIT(A) HELD AS FOLLOWS: I HAVE CAREFULLY CONSIDERED THE REPLY GIVEN BY THE APPELLANT AND PERUSED THE ASSESSMENT ORDER. THIS IS ADMITTED FAC T THAT THE APPELLANT HAS REALIZED US$ 1790530 CORRESPONDING RS.7,67,08,2 33/- AFTER DUE DATE I.E. 30.09.2006 AND NO EXTENSION FROM THE COMPETENT AUTHORITY I.E. RESERVE BANK OF INDIA HAS BEEN FILED EITHER BEFORE THE ASSESSING OFFICER OR IN APPELLATE PROCEEDINGS, THEREFORE THIS IS CLEAR T HAT THE APPELLANT HAS NOT COMPLIED PROVISIONS OF SECTION 10A(3) AND EXPLANATI ON 1 AND 2 OF THERETO. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY NOT AL LOWED DEDUCTION U/S.10(A) IN RESPECT OF AMOUNT OF RS.1,03,34,604/-. THEREFORE THE ACTION OF THE ASSESSING OFFICER IS CONFIRMED. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE U S. WE FIND THAT SECTION 10(3) READS AS FOLLOWS: THIS SECTION APPLIES TO THE UNDERTAKING, IF THE SA LE PROCEEDS OF ARTICLES OR THINGS OR COMPUTER SOFTWARE EXPORTED OUT OF INDIA ARE RECEIVED IN OR BROUGHT INTO, INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE, WITHIN A PERIOD OF SI X MONTHS FROM THE END OF THE PREVIOUS YEAR OR, WITHIN SUCH FURTHE R PERIOD AS THE COMPETENT AUTHORITY MAY ALLOW IN THIS BEHALF. 6. ON READING OF SECTION WE FIND THAT THE TIME LIMI T SPECIFIED IS WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE P REVIOUS YEAR OR WITHIN FURTHER SUCH PERIOD AS THE COMPETENT AUTHOR ITY MAY ALLOW IN THIS BEHALF. THE WORD MAY CLEARLY SPELLS THAT IT I S FOR THE COMPETENT ITA NO.5667/M/09 4 AUTHORITY TO DETERMINE THE TIME WITHIN WHICH CONVER TIBLE FOREIGN EXCHANGE IS TO BE BROUGHT WITHIN INDIA. THEREFORE LIMITATION OF TIME IN SECTION 10A IS NOT APPLICABLE IN THE CASE OF THE AS SESSEE AS THE COMPETENT AUTHORITY I.E. RESERVE BANK OF INDIA HAS NOTIFIED IN THE CIRCULAR NO. 91 DT. 1.4.2003 HAS THAT THE UNITS SIT UATED IN SPECIAL ECONOMIC ZONE, WOULD NOT BE BORNE BY THE TIME REALI ZATION OF EXPORTS. IN OTHER WORDS LIMITATION OF TIME IN SEC. 10A(3) WO ULD NOT BE APPLICABLE IN THE CASE OF UNIT SITUATED IN SPECIAL ECONOMIC ZONE. IN OTHER WORDS AS LONG AS AMOUNTS ARE REALIZED IN CONV ERTIBLE FOREIGN EXCHANGE, THE BENEFIT OF DEDUCTION WILL BE AVAILABL E. THEREFORE WE ALLOW THE ASSESSEES APPEAL. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF JULY, 2010 SD/- SD/- (PRAMOD KUMAR ) ( ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 30 TH JULY, 2010 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR G BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO.5667/M/09 5 DATE INITIALS 1 DRAFT DICTATED ON: 27.7.2010 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 2 8 . 7 .2010 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: _________ ______ 9. DATE OF DISPATCH OF ORDER: _________ ______