TMI Blog2000 (1) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) The learned CIT(A) has erred in law and on facts in directing to grant relief under section 80HHC to the assessee." The company M/s. Cham Marine Products Ltd., Porbandar, is a limited company and is engaged in the business of export of marine products. The return of income for the assessment year 1983-84 was filed on 4-3-1983 declaring total income of Rs. 1,54,548 which was revised by the return filed on 3 -12-1983 declaring total income of Rs. 1,18,020. The assessment was finalised under section 143(3) of the Income-tax Act, 1961, on 20-3-1984 and the total income was assessed at Rs. 1,18,200 which was arrived at after considering the assessee's claim of deduction of Rs. 31,392 under section 80HHC of the Act. For the assessment year 1984-85 the return was filed on 26-3-1984 declaring total income of Rs. 1,74,520. The assessment was finalised, under section 143(3) of the Act, on 30-3-1985 and the total income was determined at Rs. 1,84,630 which was arrived at after considering the assessee's claim of deduction of Rs. 4,30,803, under section 80HHC of the Act. On the basis of the letter received from the CIT(A)-VII, Calcutta, dated 20th July, 1987, the Assessing Officer reopen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s including disallowance of deduction under section 80HHC of Rs. 67,780 out of deduction made at Rs. 3,22,811 on the following grounds : "(i) Export of the value of Rs. 7,89,735 has been canalised through Philips on which the said company has also claimed deduction under section 80HHC. (ii) The appellant cannot be considered real exporter and he is only seller of goods to Philips and is only an agent of Philips. However, the Commissioner of Income-tax (Appeals), Rajkot directed the Assessing Officer to allow the claim of deduction under section 80HHC in full." 5. The first ground of appeal is regarding the re-opening of assessments under section 147(b) of the Act. This ground of appeal pertains to assessment years 1983-84 to 1985-86. The learned departmental representative contended that the deduction under section 80HHC has been claimed twice in the above cases. M/s. Pieco Electronics Electricals Ltd., Calcutta (Philips) has made the claim of deduction under section 80HHC on the export made by them on behalf of the assessee. The assessees have also made the claim under section 80HHC on the same amount. The learned departmental representative vehemently argued that the reop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made the original assessment, considered the provisions of sections 9 and 10 of the Indian Income-tax Act, 1922. Any different view taken by him afterwards on the application of these provisions would amount to a change of opinion on material already considered by him. The learned counsel further stated that the letter of CIT(A)-VII, Calcutta, was addressed to the CIT, Rajkot, who called for information from IAC, Jamnagar Range, Jamnagar. Thus, according to him, the notice under section 148 was issued at the instance of CIT, Rajkot. He, thus, contended that the directions of the CIT, Rajkot, cannot be equated with information as contemplated under section 147(b). To support his contention, he relied on the decision of the Hon'ble Bombay High Court in the case of CIT v. Vyjayanthimala Bali [1985] 155 ITR 662 wherein it has been held 'There was clear evidence that the action was initiated in pursuance of directives of the Commissioner, which directives, the ITO was obliged to follow and which directives could not be equated with information as contemplated under section 147(b). The re-assessment proceedings were not valid." 7. We have heard the rival parties. We have also perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances not themselves amounting to 'escaped assessment' but leading to the belief of such escape. Indirect or circumstantial evidence may constitute "information". The information must have come into the possession of the Assessing Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby, or from other enquiry or research into facts or law, but was not in fact obtained, the Assessing Officer will have jurisdiction to 'back assess'. Information may come from external sources or even from the material already on record or may be derived from the discovery of new and important matters or fresh facts. There is no difficulty in cases where subsequent to the original assessment, fresh facts or information come into possession of the officer which shows that income had escaped assessment. It has been held by the courts that a detail available to the Assessing Officer in the papers already filed before him does not become an item of information by its mere availability. But it is transmitted into an item of information whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the letter from CIT(A)-VII, Calcutta cannot be considered as an "information" for the purpose of section 147(b) is without any substance in view of the detailed discussion in the preceding paragraphs. The information received from CIT(A)-VII, Calcutta was an information received from external sources and in view of the Supreme Court decision in R.B. Bansilal Abirchand Firm's case, it constitutes an information for reopening the proceedings under section 147(b) as the information was received from the appellate authority. The learned counsel placed reliance on Supreme Court case in Indian Eastern Newspaper Society which is totally misplaced in view of the facts of the present case. In the present case, the information was received from the internal audit party of the Income-tax Department which is not an authority to pronounce the law. The Hon'ble Supreme Court held that the law may be laid down only by a person or body with authority. The internal audit party of the Income-tax Department is not an authority to lay down the law. In the present case, the information has been received from the appellate authority which he gathered during the course of proceedings before him and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had information to reopen the assessment and the notice issued for assessment was valid." 10. In view of the detailed discussion above, the case of the assessee is fully covered with the various cases relied upon by the department and also the cases discussed in the foregoing paragraphs. The Assessing Officer was having information in his possession and this information came to his possession subsequent to the making of the assessment order in question. On the basis of the information in his possession, he formed a belief that income has escaped assessment. Therefore, he correctly resorted to the provisions of section 147(b) of the Act. We are of the considered opinion that the action of the Assessing Officer is fully justified and the CIT (Appeals) has erroneously treated the re-opening of the assessment as bad in law. The decision of the CIT (Appeals) on this issue is, therefore, reversed and that of the Assessing Officer is restored. 11. The second ground of appeal is regarding the granting of relief under section 80HHC of the Act. This ground of appeal is common to all the assessment years under consideration. According to the department the learned CIT (Appeals) has erron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter written by 'Philips' to M/s. Cham Marine Products Ltd. dated 16-8-1984 which is reproduced below : "That all export incentives such as cash incentives, drawback, etc., available on these exports will be to your account and we undertake to sign any letters and give such documents as may be necessary to enable you to apply for cash incentives, drawbacks etc., in your name. We will be entitled to keep the benefit of REP Licence/Import Licence/Additional Licence." In view of the above specific clause in the agreement, the learned counsel argued that the assessees are entitled for all cash incentives including 80HHC deduction also. The learned counsel also invited our attention to page 2 of the assessment order in the case of M/s. Cham Marine Products (P.) Ltd. for the assessment year 1987-88 passed under section 143(3), read with section 263 of the Act, dated 24-2-1992 where, under the heading 'Deduction under section 80HHC', the Assessing Officer has stated as follow : "Regarding deduction under section 80HHC, it is submitted by the assessee that the assessee-company has not exported any consignment on account of M/s. Philips Co. and not a single amount of service charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the same has been allowed for the subsequent assessment year 1987-88. The learned counsel also invited our attention to the various provisions of section 80HHC and contended that the assessee is an Indian Company. It exported out of India during the relevant years goods or merchandise. Sale proceeds were received by the assessee in convertible foreign exchange. Therefore, the assessee-company is entitled for deduction under section 80HHC. It was vehemently argued by the learned counsel that as per the agreement with M/s. Pieco Electronics Electricals Ltd., mentioned above, the assessee had exported goods outside India and received sale proceeds in convertible foreign exchange. The term 'Export' has not been defined under the Income-tax Act, 1961. However, under the provisions of Customs Act, the term "Export" means taking out of India to a place outside India. According to the learned counsel, the assessee is a registered exporter and considering the terms of agreement and modus operandi of the business, the assessee was not acting as 'Agent'. He relied on the decision of ITAT, Cochin Bench, in the case of Seal Pearl Industries v. ITO in [IT Appeal No. 1220 (Coch.) of 1986] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Philips'. According to the department, the deduction under section 80HHC cannot be allowed twice. As the deduction has been claimed by 'Philips', the department is of the view that the same should not be allowed to the assessees. 14. Now another point for consideration is whether the 'Philips' of Calcutta are the real exporter or the assessees are the real exporters, For claiming the deduction under section 80HHC, two main conditions are necessary to be fulfilled, i.e., (i) Tax Concessions will be available to Indian companies and non-corporate tax payees resident in India who have exported out of India any qualifying goods or merchandise during the relevant accounting year, and (ii) The sale proceeds of the goods or merchandise exported out of India must be receivable by the assessee in convertible foreign exchange. Even if it is presumed that 'Philips' an Indian company has exported out of India qualifying goods but they have not received the sale proceeds of goods exported out of India in convertible foreign exchange, the sale proceeds have been received by the assessees in convertible foreign exchange in their bank accounts. Therefore, the 'Philips' are not entitled for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... helping them to ship their goods outside India. Therefore, the assessees have rightly made the claim under section 80HHC. Para 10 of the agreement is also very relevant to decide this issue and the same reads as follows : "All expenses incurred or to be incurred in connection with the said exports including bank charges, storage, packing charges, clearance, forwarding charges, stamp duty charges, negotiation charges, freight and insurance charges, interest shall be borne by you and we shall not be liable for any cost or expenses incurred in respect of the export of the said shipment either at port of despatch or at the destination and delivery to overseas buyers. We will have no liabilities on any account whatsoever in respect of the shipment by you of the products. We shall also not be liable for sales-tax, purchase tax, octroi or any other dues or taxes or levies that may be leviable on you in respect of the purchases and exports of the said products and also have all claims by the overseas buyers and/or arising on rejection of the goods." On going, through the above condition intimated by 'Philips' to the assessees, there remains no doubt regarding the actual exporters of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side by the learned CIT under the provisions of section 263 of the Act on the basis that certain deductions including the section 80HHC relief have been allowed without verification. On re-assessment in the case of M/s. Cham Marine Products (P.) Ltd. for the above assessment year, the Assessing Officer has allowed the deduction under section 80HHC in his order dated 24-2-1992. In view of the above facts, the department has itself accepted that the assessees are the real exporters and therefore they are entitled for deduction under section 80HHC. The cases under consideration are also fully covered with decision of the Cochin Bench of the ITAT in the case of Seal Pearl Industries as the facts of the present case are similar to the facts of the above case decided by the Cochin Bench. In view of the above discussion, we are of the considered opinion that the assessees are entitled for deduction under section 80HHC. Therefore, the orders of the learned CIT (Appeals) are upheld on this issue. 17. In the result, the appeals for the assessment years 1983-84 and 1984-85 in the case of M/s. Cham Marine Products (P.) Ltd. and the appeal for the assessment year 1985-86 in the case of M/s. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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