Delhi High Court
Commissioner Of Income Tax vs M/S Techno Exports on 5 September, 2018
$~49
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 05.09.2018
+ ITA 717/2005
COMMISSIONER OF INCOME TAX ..... Appellant
Through: Mr. Zoheb Hossain, Sr. Standing
Counsel with Mr. Deepak Anand,
Jr. Standing Counsel for the
Revenue.
versus
M/S TECHNO EXPORTS ..... Respondent
Through: None.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE A.K. CHAWLA
MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)
%
1. The following question of law was framed in relation to this appeal
by the Revenue under Section 260A of the Income Tax Act, 1961
(hereinafter 'the Act').
"Whether ITAT was correct in deduction under section
80HHE for the exports made by the assessee for the
previous year relevant to assessment year 1992-93?"
2. Brief facts necessary to decide the case are that in this case the
Assessing Officer ('AO') disallowed the assessee's claim for deduction
under Section 80HHE of the Act in the course of scrutiny of assessment
for Assessment Year (A.Y.) 1996-97. It was argued that the amounts
should have been claimed - if at all, when they became due having
regard to the export made in the previous years which were realised
within a time-frame and for which the limited extension of six months
could be granted. It was also urged that the assessee had not claimed this
deduction at relevant time when it filed the returns.
3. It appears that the assessee had claimed deduction under Section
80HHE of the Act during the course of assessment proceedings and
submitted a certificate of the Chartered Accountant in Form-10CCAF -
as required by Section 80HHE(4) of the Act. This however was not
allowed. The AO did not accept the assessee's contentions with respect
to the deduction claimed; the assessee had stated that the receipt of
foreign exchange was held up on account of clearances, which ultimately
were given by the RBI; only in 1995-96. The foreign exchange received
was towards the export made to the trading concerns/corporations in the
erstwhile Soviet Union which disintegrated sometime in 1990-91.
4. Upon appeal, the CIT granted relief to the assessee, who held as
follows:-
"2.4 I have carefully considered the facts of the case as
per Circulars No.421 dated 12.6.1985 (1985) 156 ITR (ST)
148, Circular No. 563 dated 23.5.1990 and Circular No.
575 dated 31.8.1990 convertible foreign exchange includes
amount received in same convertible rupees from bilateral
account countries (e.g. Russian Rubles) and receipt of
Indian Rupees under Government of India credit. The
appellant received the money from the account in the
previous year 1995-96 relevant to the A.Y. 1996-97 and the
Assessing Officer held that since the appellant is
maintaining accounts on receipt/cash basis and the
consideration for export was received in the previous year
1995-96 it was taxable in A.Y. 1996-97. The learned
Member of the ITAT also took a similar view in the case of
the appellant for A.Y. 1994-95 and I have also agreed with
this view. Thus it is an admitted fact that the consideration
of export was received in the previous year 1995-96
relevant to A.Y. 1996-97 and the same is being taxed in that
year. Since it is sale proceed of export the appellant is also
entitled to deduction u/s 80 HHE as the appellant exported
computer software. The contention of the appellant that
since it has already disclosed the income in A.Y. 1997-9 and
the same has also been assessed by the Assessing Officer u/s
143(1)(a) the same should not be taxed in 1994-95 and
1996-97 has not been accepted by the learned Member of
the Assessing Officer as well as by me.
2.5 As per the provision of Section 80 HHE the deduction
can be allowed only when the consideration is received
within six months of the end of the previous year or within
the period extended by the Commissioner of Income-tax or
Chief Commissioner of Income-tax. This means that the
consideration should be received either during the previous
year for which the income is disclosed of with six months of
the previous year for which income is being disclosed or
within the period extended by the Commissioner or Chief
Commissioner of Income-tax as the case may be. In the
case of the appellant it is and admitted fact that the
appellant is maintaining accounts on receipt/cash basis.
This amount has been taxed in the previous year in which it
has been received. The Assessing Officer has also taxed the
amount accordingly and his action has been confirmed by
me. Since the amount has been received within the previous
year for which income is being taxed and deduction is being
claimed it cannot be said that the amount has not been
received during the previous year during which the income
is disclosed and deduction is claimed and because it
requires an extention by the Commissioner of Income-tax
since the amount was received during the previous year
1995-96 relevant to the A.Y. 1996-97 and it has also been
taxed in that year, in my view, no extension is required as
contemplated u/s 80 HHE (2)."
5. The Revenue's appeal, which is confined to the question of
permissibility of deduction under Section 80HHE of the Act was rejected
by the Tribunal which discussed the appellate order of the Commissioner.
It held that since the amount was taxed in the year it was received, i.e.
1996-97, the assessee's claim that it could be deducted during that year,
was justified. It was also noticed that similar dispute had arisen in the
assessee's case for A.Y. 1994-95 and that the Tribunal had decided in its
favour in ITA 586/Del/98.
6. Learned counsel for the Revenue urged that the CIT(A) and the
ITAT fell into error in granting the deduction for a period subsequent to
the year in which the export proceeds were to be received. It was also
highlighted that besides, the assessee never claimed these deductions in
the first instance and rather during the course of assessment, and quite
justifiably, the AO declined it.
7. This Court is unpersuaded with the Revenue's contentions; firstly,
for the previous year as well the assessee's claim under Section 80HHE
of the Act for similar receipt of export proceeds for earlier periods, was
allowed. Apart from that the fact remains that the amounts were supposed
to be received, but were not received, on account of extraneous political
circumstance, i.e. disintegration of Soviet Union. In these circumstances,
as and when the amounts were received, the assessee did claim deduction
- albeit in the course of assessment proceedings. This occurred at a point
of time when there was no bar in such claims - the restriction was
imposed by an amendment in the Finance Act, 2009 with retrospective
effect from 01.04.2003. Consequently, the assessee was not barred from
claiming the deduction, when the amounts were in fact received by it.
8. In view of the above discussion, the Revenue's appeal has to fail;
the question of law framed is answered against it. The appeal is
accordingly dismissed.
S. RAVINDRA BHAT
(JUDGE)
A. K. CHAWLA
(JUDGE)
SEPTEMBER 05, 2018
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