M/s. Creative Travels Pvt. Ltd, New Delhi V. ITO, New Delhi

MA 436/DEL/2009

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 4650 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 1998-1999
• Appeal Filed On: 11-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH H DELHI ] BEFORE SHRI RAJPAL YADAV JM & SHRI K. D. RA NJAN, AM MISC. APP. NOS. 435 & 436 (DEL) OF 2009. [ IN I. T. APPEAL NOS. 543 & 544 (DEL) OF 20 05 ] ASSESSMENT YEARS : 199798 & 1998-99. M/S. CREATIVE TRAVEL PVT. LTD. THE INCOME-TAX OFFICER, 27 - 30, CREATIVE PLAZA, VS. W A R D : 3 (3), NANAKPURA, MOTI BAGH, N E W D E L H I. N E W D E L H I. PAN / GIR NO. AAACC 0874 D. ( APPLICANT ) ( RESPONDENT ) ASSESSEE BY : SHRI SALIL AGGARWAL, ADV.; DEPARTMENT BY : MS. VANDANA RAMACHANDRAN, SR. D. R.; O R D E R. PER K. D. RANJAN, AM : THESE MISC. APPLICATIONS ARE DIRECTED AGAINST ITAT ORDER IN ITA. NOS. 543 AND 544 (DEL) OF 2005 FOR ASSESSMENT YEARS 1997-98 AND 1998 -99. THE ASSESSEE HAS SUBMITTED THAT THE TRIBUNAL WHILE DECIDING THE ISSUE PERTAINING TO COMPUTATION OF TOTAL RECEIPTS FOR THE PURPOSE OF DETERMINATION OF DEDUCTION UNDER SECTION 80-HHD OF THE ACT HAD INADVERTENTLY OMITTED TO RECORD ITS FINDINGS IN RESPECT OF GROUND NO. 6 IN ASSESSMENT YEAR 1997-98 AND GROUND NO. 8 IN RESPECT OF ASSESSMENT YEAR 1998-99. THE RELEVANT GROUNDS OF APPEAL ARE REPRODUCED AS UNDER :- 2 MISC. APP. NOS. 435 & 436 (DEL) OF 2009. A.Y. 1997-98 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN DIRECTING THE LD. AO TO RECA LCULATE THE ELIGIBLE DEDUCTION UNDER SECTION 80-HHD OF THE ACT. A.Y. 1998-99 8. THAT ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN SETTING ASIDE THE ISSUE OF R E-COMPUTATION OF THE DEDUCTION UNDER SECTION 80-HHD OF THE ACT. 2. IT HAS BEEN SUBMITTED THAT DURING THE COURSE OF HEARING IT WAS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE THAT FOR THE PURPOSE OF CL AIMING DEDUCTION UNDER SECTION 80-HHD OF THE ACT, TOTAL RECEIPTS SHALL NOT INCLUDE PAYMENTS MADE TO HOTEL AND IN RESPECT OF THOSE PAYMENTS THE ASSESSEE HAD ISSUED 10-CCAE CERTIFICAT E AND IN RESPECT OF THOSE RECEIPTS, HOTELS HAVE CLAIMED DEDUCTION. HOWEVER, ITAT WHILE DECIDI NG THE ISSUE INADVERTENTLY OMITTED TO RECORD ITS FINDINGS IN RESPECT OF COMPUTATION OF TO TAL RECEIPTS OF BUSINESS IN RESPECT OF PAYMENTS MADE TO HOTELS. THEREFORE, THE PAYMENT MA DE TO HOTELS HAS TO BE EXCLUDED TOGETHER WITH POCKET EXPENSES. REFERENCE WAS INVITED TO PAR AGRAPH 21 OF THE ORDER WHEREIN IT HAS BEEN HELD THAT IF THE PAYMENT WHICH DOES NOT FORM P ART OF RECEIPTS IN CONVERTIBLE FOREIGN EXCHANGE FOR THE PURPOSE OF NUMERATOR, THE SAME CAN NOT FORM PART OF RECEIPT OF BUSINESS FOR THE PURPOSE OF DENOMINATOR. THEREFORE, THE POCKET EXPENSES RECEIVED IN ADVANCE, WHICH IS EXCLUDED FROM THE RECEIPTS OF BUSINESS WILL ALSO BE REDUCED FROM THE TOTAL RECEIPTS APPEARING IN DENOMINATOR. ON THE OTHER HAND, THE LD. SR. DR SUPPORTED THE ORDER OF THE TRIBUNAL. 3. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT HAS BEEN CONTENDED BY THE ASSESSEE THAT ASSESSEE HA D MADE PAYMENT TO HOTELS IN RESPECT OF WHICH CERTIFICATE HAS BEEN ISSUED TO HOTELS. THERE FORE, THE AMOUNT WHICH HAS BEEN PAID TO HOTELS WILL NOT FORM PART OF THE RECEIPTS IN RESPEC T OF WHICH SERVICES WERE PROVIDED TO FOREIGN TOURISTS. SECTION 80-HHD(1) OF THE ACT IS AN ENABLI NG SECTION AND SECTION 80-HHD(3) IS MACHINERY PROVISIONS FOR COMPUTING THE PROFITS DERI VED FROM SERVICES PROVIDED TO THE FOREIGN 3 MISC. APP. NOS. 435 & 436 (DEL) OF 2009. TOURISTS. UNDER SECTION 80-HHD(3) FOR THE PURPOSE OF SUB-SECTION (1), THE PROFITS DERIVED FROM SERVICES PROVIDED TO FOREIGN TOURISTS SHALL BE THE AMOUNT, WHICH BEARS TO THE PROFITS OF THE BUSINESS AS COMPUTED UNDER THE HEAD PROFITS AN D GAINS OF BUSINESS OR PROFESSION THE SAME PROPORTION AS THE RECEIPT SPECIFIES IN SUB-SECTION (2) AS REDUCED BY ANY PAYMENT REFERRED TO IN SUB-SECTION (2A) MADE BY THE ASSESSE E BEAR TO THE TOTAL RECEIPTS OF BUSINESS CARRIED ON BY THE ASSESSEE. THEREFORE, IN NUMERATO R THE RECEIPTS SPECIFIED IN SUB-SECTION (2) WILL BE TAKEN AND DENOMINATOR WILL CONSIST OF TOTAL RECEIPTS OF BUSINESS CARRIED ON BY THE ASSESSEE. IF A PAYMENT WHICH DOES NOT FORM PART OF RECEIPTS IN CONVERTIBLE FOREIGN EXCHANGE FOR THE PURPOSE OF NUMERATOR, THE SAME CANNOT FORM PART OF RECEIPT OF BUSINESS FOR THE PURPOSE OF DENOMINATOR. SINCE THE AMOUNTS HAVE BEEN PAID TO HOTELS, THE SAME WOULD NOT CONSTITUTE PART OF TOTAL RECEIPTS FOR THE PURPOSE OF COMPUTATI ON OF DEDUCTION UNDER SECTION 80-HHD OF THE ACT. ACCORDINGLY, THE PAYMENTS MADE TO HOTELS WILL NOT BE PART OF NUMERATOR AS ALSO PART OF THE TOTAL RECEIPTS. HENCE, WE DECIDE GROUND NO. 6 OF ASSESSMENT YEAR 1997-98 AND GROUND NO. 8 OF ASSESSMENT YEAR 1998-99 IN FAVOUR OF ASSES SEE. THE ASSESSING OFFICER IS DIRECTED TO COMPUTE DEDUCTION U/S 80HHD ACCORDINGLY. 4. IN THE RESULT, THE MISC. APPLICATIONS FILED BY T HE ASSESSEE FOR BOTH THE YEARS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON : 14 TH MAY, 2010. SD/- S D/- [ RAJPAL YADAV ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 14 TH MAY, 2010. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPLICANT. 4 MISC. APP. NOS. 435 & 436 (DEL) OF 2009. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.