ACIT, Davangere V. M/s Shamnur Kallappa & Sons, Davangere

ITA 93/BANG/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5256 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-05-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 28-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 93/BANG/2010 ASSESSMENT YEAR : 2004-05 THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 1, DAVANGERE. : APPELLANT VS. M/S. SHAMNUR KALLAPPA & SONS, CHOWKIPET, DAVANGERE. : RESPONDENT APPELLANT BY : SMT. V.S. SREELEKHA, ADDL. CIT(DR) RESPONDENT BY : MS. SHEETAL, ADVOCATE O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), HUBLI IN ITA NO: 104/CIT(A) HBL/07-08 DATED : 5.11.2009 FOR THE ASSESSMENT YEAR 2004-05 IN THE CASE OF SHAMANUR KAL LAPPA & SONS, DAVANAGERE. 2. THOUGH THE REVENUE HAS RAISED SEVEN GROUNDS IN A N ILLUSTRATIVE AND ELABORATE MANNER, THE SUBSTANCE OF THE ISSUE IS CON FINED TO THAT THE CIT(A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE U/S 80HHC OF THE ACT BY DISTINGUISHING THE RULING OF TH E APEX COURT REPORTED IN 266 ITR 521 ON WHICH THE AO HAD PLACED RELIANCE. ITA NO.93/BANG/10 PAGE 2 OF 5 3. BRIEFLY, THE ISSUE IS THAT THE ASSESSEE FIRM D EALERS IN RICE, SUGAR, PULSES, EXPORTERS AND IMPORTERS HAD CLAIMED DEDUC TION U/S 80HHC FOR A SUM OF RS.19.09 LAKHS. FOR THE REASONS SET-OUT IN HIS IMPUGNED ORDER WHICH IS UNDER DISPUTE, THE AO HAD DISALLOWED THE A SSESSEES CLAIM. 4. AGGRIEVED, THE ASSESSEE TOOK UP THE ISSUE WITH T HE CIT(A) FOR REMEDY. AFTER DULY CONSIDERING THE PLEA PUT-FORTH BY THE ASSESSEE AND ALSO TAKING A CUE FROM THE FINDING OF THE HONBLE TRIBUN AL IN THE ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, THE LD. CIT (A) CONCEDED THE PRAYER OF THE ASSESSEE AND, ACCORDINGL Y, DELETED THE ADDITION MADE BY THE AO ON THIS COUNT. 5. DISILLUSIONED WITH THE FINDING OF THE LD. CIT (A), THE REVENUE HAS COME UP WITH THE PRESENT APPEAL. THE SUBMISSION OF THE REVENUE IS SUMMARIZED AS UNDER: THE CIT (A) ERRED IN LAW AND ON F ACTS OF THE CASE: (I) IN COMING TO A VIEW THAT THE ASSESSEE WOULD BE ENTI TLED TO CLAIM DEDUCTION AS PER S.80HHC (IA) OF THE ACT; (II) IN COMING TO THE CONCLUSION THAT THE EXPORTS MADE B Y THE ASSESSEE COULD BE CHARACTERIZED AS PROTOCOL EXPORTS, AS IT WAS DONE ON THE BASIS OF SOME AGREEMENT OR UNDERSTANDING WITH G OVERNMENT OF INDIA AND WAS AT THE INSTANCES OF GOI; (III) IN DECIDING THAT THE BASIC CONDITIONS STATED IN CIR CULAR NO.562 DT.23.5.90 WERE CONCERNED IN THE INSTANT CASE; - IN HOLDING THAT WHETHER THE GOVERNMENT HAS REALIZED SOME FOREIGN CURRENCIES OR NOT WOULD NOT BE ANY CRITERIA FOR CLAIMING BENEFIT OF THE CIRCULAR; & (IV) THE CIT(A) OUGHT TO HAVE NOTICED THAT THE ASSESSEE WAS NOT ENGAGED IN TRADING IN EXPORT BUT HOLDS ONLY AN EXPO RT LICENCE AND THE STC THROUGH WHICH GOODS WERE STATED TO HAVE BE EN SENT HAD NO TAXABLE PROFIT DURING THE PERIOD. ITA NO.93/BANG/10 PAGE 3 OF 5 5.1. IT WAS, THEREFORE, ARGUED THAT THE IMPUGNED OR DER OF THE LD. CIT (A) DESERVES TO BE ANNULLED AND THAT OF THE AO BE RESTO RED. 5.2. ON THE OTHER HAND, THE LD. A R WAS VERY EMPHA TIC IN HIS STAND THAT THE LD. CIT (A) HAD, AFTER DUE CONSIDER ATION OF THE ISSUE AT LENGTH, ARRIVED AT A FINDING IN A JUDICIOUS MANNER WHICH REQUIRES TO BE SUSTAINED. 6. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS, C RITICALLY PERUSED THE RELEVANT RECORDS AND ALSO DOCUMENTARY EVIDENCE ADVANCED BY THE LD. A R DURING THE COURSE OF HEARING. 6.1. AT THE OUT-SET, WE WOULD LIKE TO REFER TO THE FINDING OF THE HONBLE TRIBUNAL IN ITA NO: 1288/B/2007 DATED: 29.8.2008 IN AN IDENTICAL ISSUE IN THE ASSESSEES OWN CASE FOR THE AY 2003-04. 6.2. WITH DUE REGARDS, WE HAVE PERUSED THE FINDING OF THE HONBLE TRIBUNAL REFERRED SUPRA. THE HONBLE TRIBUNAL HAD IN FACT DELIBERATED A SIMILAR ISSUE IN AN EXHAUSTIVE MANNER AND EXTENSIVE LY QUOTING AND ANALYZING THE PROS AND CONS OF THE RULING OF THE HO NBLE APEX COURT IN THE CASE IPCA LABORATORY LTD. V. DCIT REPORTED IN 266 I TR 521 ON WHICH THE REVENUE HAD PLACED ITS STRONG RELIANCE TO DRIVE HOM E ITS URGE AND ALSO THE PROVISIONS OF S.80HHC AT A GREATER LENGTH AND OBSER VED THAT THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT WAS NOT APPLICABL E TO THE FACTS OF THE ISSUE ON HAND. THE HONBLE TRIBUNAL ALSO EXAMINED THE ISSUE WHETHER THE RECEIPTS OF SALE PROCEEDS IN RUPEES IN RESPECT OF P ROTOCOL EXPORT WERE ITA NO.93/BANG/10 PAGE 4 OF 5 ELIGIBLE FOR DEDUCTION U/S 80HHC OF THE ACT. WHILE ANALYZING THE BOARDS CIRCULAR NO.562 DT: 23.5.1990, THE HONBLE TRIBUNAL HAD OBSERVED THUS 19. FROM A CAREFUL PERUSAL OF THE CIRCULAR, IT IS SEEN THAT THE EXPORTS MADE BY THE ASSESSEE COULD BE CHARACTERIZED AS PRO TOCOL EXPORTS, AS IT WAS DONE ON THE BASIS OF SOME AGREEMENT OR UNDER STANDING WITH GOVERNMENT OF INDIA, AND WAS MADE AT THE INSTANCE O F GOVT. OF INDIA. THE REALIZATIONS HAVE BEEN MADE IN INDIAN CURRENCY. THE BASIC CONDITIONS STATED IN THE CIRCULAR ARE COVERED. THA T THE GOVERNMENT HAS REALIZED SOME FOREIGN CURRENCY OR HAS NOT REALIZED ANY WOULD NOT BE CRITERIA FOR CHARACTERIZATION OF THE TRANSACTION NO R FOR CLAIMING BENEFIT OF THE CIRCULAR. THE CIRCULAR, BEING A BENEFICIAL ONE, HAS TO BE INTERPRETED LIBERALLY, TO PROMOTE THE OBJECTIVE NAM ELY TO PROVIDE BENEFIT TO THE EXPORTERS WHO HAVE CARRIED OUT PROTO COL EXPORTS AND HAVE MADE REALIZATION IN INDIAN CURRENCY. HENCE, W E ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE WOULD BE ELIGIBLE TO AVAIL THE BENEFITS OF THE CIRCULAR. THUS, THE ISSUE PLACED BEFORE US FOR A FINDING BEIN G SIMILAR TO THAT OF THE ISSUE WHICH HAS BEEN DELIBERATED UPON IN AN EXHAUSTIVE MA NNER BY THE HONBLE TRIBUNAL THAT TOO IN THE ASSESSEES OWN CASE FOR THE IMMEDI ATELY PRECEDING ASSESSMENT YEAR, WE HAVE NO HESITATION IN HOLDING THAT THE ASS ESSEE IS ELIGIBLE TO AVAIL THE BENEFITS OF THE BOARDS CIRCULAR AND IN ESSENCE, THE AO WAS NOT JUSTIFIED IN DISALLOWING THE LEGITIMATE CLAIM OF THE ASSESSEE U/ S 80HHC OF THE ACT. IT IS ORDERED ACCORDINGLY. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF JUNE, 2010. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 11 TH JUNE, 2010. DS/- ITA NO.93/BANG/10 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.