TMI Blog2013 (3) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under sub-section (1B) of Section 80HHC - in favour of assessee. - Income Tax Appeal No.100/2007 - - - Dated:- 29-1-2013 - Vineet Kothari And V. K. Mathur,JJ. Mr. K. K. Bissa, for the appellant- Revenue. Mr. Vikas Balia, for the respondent-Assesseee. JUDGMENT 1. This appeal has been filed by the appellant-Revenue under Section 260A of the Income Tax Act, 1961 (for short,hereinafter referred to as 'Act') being aggrieved by the order of learned Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur dated 25.08.2006, whereby the learned ITAT deciding the appeals of the Revenue being Appeal No.618/JDPR/2004 for Assessment Year 2002-03 and Appeal No.Appeal No.619/JDPR/2004 for Assessment Year 2002-03 held that the Commissioner of Income Tax (Appeals) was justified in holding that the income surrendered by the assessee during the assessment year on account of increased valuation of closing stock during the course of a survey under Section 133-A of the Act conducted at the business place of the assessee, was also eligible for deduction under Section 80-HHC of the Act as there was no dispute that the assessee had satisfied all the relevant conditions for grant of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eased by the Assessing Authority and particularly, in the absence of any allegation against the assessee that he did not export the goods during the relevant assessment year and did not realize the convertible foreign exchange for such goods, the benefit of deduction under Section 80HHC of the Act cannot be denied to the assessee for the relevant assessment year to the extent of increase of such profit on account of higher valuation of closing stocks. 5. He further submitted that the said closing stock valuation for the relevant assessment year 2002-03 would naturally be taken as opening stock at the same increased figure of the next assessment year and, therefore, the surrender of income by the assessee for this assessment year 2002-03, the year under consideration, by the assessee is bound to be included in profits of business as defined in the provisions of the Act, but that does not render the assessee ineligible to avail the benefit for such deduction under Section 80HHC of the Act. He sought to distinguish the P H judgment in the case of National Legguard Works (supra) relied upon by the learned counsel for the Revenue by submitting that there the findings of facts by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year beginning on the 1st day of April, 2005 and any subsequent year.] (4C). The provisions of this section shall apply to an assessee, (a) for an assessment year beginning after the 31st day of March, 2004, and ending before the 1st day of April, 2005; (b) who owns any undertaking which manufactures or produces goods or merchandise anywhere in India (outside any special economic zone) and sells the same to any undertaking situated in a special economic zone which is eligible for deduction under section 10A and such sale shall be defined to be export out of India for the purposes of this section. (baa) profits of the business means the profits of the business as computed under the head Profits and gains of business or profession as reduced by (1) ninety per cent. of any sum referred to in clauses (iiia), (iiib) [(iiic), (iiid) and (iiie)] of section 28 or of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and 8. In the present case, while the Assessing Authority in the impugned assessment order dated 19.08.2003 has merely disallowed the said benefit of deduction unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch export sales made by the assessee, there was no realization of the convertible foreign exchange by the assessee. Simply because the profits of the assessee during the assessment year is increased on account of such surrender of the income by the assessee, which is nothing but assumptive valuation of the closing stock by the authority concerned during the course of survey as no actual excess closing stock upon physical verification is found, it cannot be said that the respondent assessee has not fulfilled or satisfied the conditions for grant of deduction under Section 80HHC of the Act, which is intended to be provided as an incentive or benefit to the handicraft manufacturers for exporting such items out of India and bring in the valuable foreign exchange for such export of goods on merchandise. The extent of such deduction from the gross total income declared by the assessee is given in the provisions of sub-Section (1B) of Section 80HHC of the Act for the relevant assessment year 2002-03, in the present case, the amount of deduction would be 70% of the profit vide sub-Section (1B) (ii) of the said Section 80 HHC of the Act. 11. With great respects, we are unable to apply th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable only on showing fulfilment of the conditions specified therein and there could be no presumption that surrender made on account of unexplained stocks represented export income. The assessee was unable to give any explanation. There could be no presumption that the additional amount surrendered represented income from exports. Deduction under section 80 HHC of the Act can be claimed only on showing facts which make the assessee eligible for the deduction. The burden to prove these facts was on the assessee and not on the Revenue. The judgment relied upon is on its own facts and not in respect of claim for deduction under section 80HHC of the Act. In any case, from the facts of the present case, the assessee cannot be held to be entitled to claim income surrendered as a result of unexplained stocks as income from exports. Accordingly, we do not find that any substantial question of law arises in the appeal. The appeal is dismissed. 12. In the present case, the findings on the contrary are in favour of respondent-assessee and not in favour of Revenue; and it has been categorically held by the two appellate authorities below that there is no case made out against the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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