TMI Blog1992 (11) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... ed during the course of assessment proceedings on8-3-1991 along with the Auditor's report. When Assessing Officer made the assessment, the required certificate was available with the Assessing Officer and as such it is urged that deduction under section 80HHC may not be denied to the assessee for a mere technical breach. 2.The learned Departmental Representative, on the other hand, contended that Assessing Officer has no discretion in the matter of allowance of deduction under section 80HHC. According to Mr. Singh, as per sub-section (4) of section 80HHC, deduction is permissible only if a certificate from an Accountant is filed along with the return of income. Assessee having failed to file the certificate along with the return of income, deduction has rightly been denied. 3. We have given our careful consideration to the rival contentions. Section 80HHC provides for a deduction in computing the total income of the assessee from the export of goods or merchandise in the case of assessee resident in India and engaged in the business of export out of India of any goods or merchandise to which the said section applies in accordance with and subject to the provisions of that secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did claim a deduction under section 80HHC in the return of income filed for the relevant assessment year. However, audited balance sheet, profit and loss account and auditor's report and a certificate required under section 80HHC(4) had also been filed during the course of assessment proceedings. The main purpose behind incorporating section 80HHC is to encourage exports outsideIndiato earn the foreign exchange for the country and for that purpose the incentive is given to the exporters from income-tax. 6. Circular No. 372 dated8-12-1983issued by the Central Board of Direct Taxes explaining the scope and effect of this provision supports this view. We extract relevant portion of the Circular hereunder :-- " 42.1 With a view to encouraging larger exports of certain goods the Finance Act, 1982, had inserted section 89A in the Income-tax Act with effect from 1-6-1982, for providing tax relief to Indian companies and non-corporate taxpayers resident in India whose export turnover for a year exceeds the export turnover for the immediately preceding year by more than 10 per cent, thereof. 42.2 The Finance Act, 1983, has omitted the aforesaid provision with effect from1-4-1983. Simu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case, considering the purpose behind incorporating sub-section (4) of section 80HHC, we are of the considered view that filing of the certificate along with the return though statutory, belongs to the area of procedure. Thus this condition for grant of exemption cannot be so strictly construed so as to prevent the assessee of his legitimate claim of deduction. Since assessee has filed the certificate as required under section 80HHC(4) before the completion of the assessment, we are of the view that assessee is eligible to deduction on account of exports. We may usefully refer to the decision of the Supreme Court in the case of Mangalore Chemicals Fertilizers Ltd. v. Dy. Commissioner [1991] 21 Tax Gazette 193, where the Hon'ble Supreme Court has held that the stringency and the mandatory nature of a provision of exemption must be justified by the purpose intended to be served. Their Lordships have further held that the conditions may be substantive, mandatory and based on considerations of policy and some others may only belong to the area of procedure. The conditions which belong to area of procedure have got to be liberally construed. Relying on the aforementioned decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable as the signatures of the payees have been obtained on blank vouchers. Our attention was invited to the material portion of the vouchers where the amount received and the account of which the amount has been received, are left blank in each of the vouchers furnished by the assessee. Learned Departmental Representative stoutly contended that the genuineness of the payment has been doubted in so many words by the authorities and as such deduction is not permissible to the assessee on account of alleged designing charges. 13. We have given our careful consideration to the rival contentions. In our view, there is neither sufficient material on record for allowance of the claim nor justification for rejecting the claim outright. Assessee had made the claim on account of designing charges in support of which vouchers have been produced. The nature of these vouchers gives rise to a suspicion that these may not be genuine vouchers. Therefore, further enquiry would have been justified. However, the Assessing Officer has rejected the claim without making proper enquiries in the matter. Provisions of section 40A(3) have been impliedly invoked without confronting the assessee. Though i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure of travelling incurred on Mr. Sharma has been allowed by the Assessing Officer as a deduction and as such payment of commission at 3 per cent to the said concern could not be said to be unreasonable. Shri Agarwal stoutly contested the claim of the revenue that the payment of commission had been made to a sister concern. According to Shri Agarwal, though the partners of Kamala Overseas are related to the assessee, the concern is not a sister concern of the assessee. Shri Agarwal accordingly pleaded for deleting the addition made by the Assessing Officer. 16. Learned departmental representative, on the other hand, contended that the evidence placed by the assessee was not available with the Assessing Officer and as such the same should be ignored for deciding the claim of the assessee. 17. We have given our careful consideration to the rival contentions. As per the certificate given by the assessee in respect of the Paper Book filed before us, the documents placed at pages 22 to 49 had been filed by the assessee before the CIT(A) for the first time. These documents had not been filed before theAssessing Officer. Since theAssessing Officer had no occasion to consider th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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