TMI Blog2011 (8) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... rise to filing of this appeal may be summed up thus: a) The assessee is engaged, inter alia, in the business of hotelier and runs and maintains several hotels of international standard in India. The assessee is also engaged in the business of export of foods etc. to international airlines at Mumbai and New Delhi. The assessee has separate units at Mumbai and New Delhi which supply food and beverages in sealed containers to international flights leaving India. Such foods and beverages in sealed containers are cleared for transmission to the aircrafts and are also escorted by the Customs Authorities at International Airports. After due clearance from the Customs Authorities, such food and beverages are put on board of the aircrafts going out of India. b) In its assessment for the Assessment Year 1998-99, the relevant previous year being the Financial Year ending on March 31, 1998, the assessee claimed deduction under Section 80HHC of the Act for Rs.5, 25, 71,710/- being the profits made from the sale of such food and beverages to such foreign airlines as according to the assessee such sale amounts to export within the meaning of the Section 80HHC of the Act. In the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 certifying all bonded goods and catering food supplies that were carried in a sealed Hl-Lift of M/s. Oberoi Flight Services, which is escorted by the Customs Preventive Officer on duty, to the Air Crafts of International Airlines catered by them at the tarmac at Chhatrapati Shivaji International Airport, Mumbai, as required under the regulations of the Customs Act, 1963. b) A letter written by the assessee to the General Manager of the Reserve Bank of India to issue a certificate showing that the payments made in Indian rupees to the hotels by Foreign Airlines and diplomats are being treated by Reserve Bank as Convertible Foreign Exchange for the purpose of Foreign Exchange Regulation Act, 1973 and the Rules made thereunder as also the Foreign Exchange Management Act. c) A letter dated 7th November, 2005 written by Assistant General Manager, Foreign Exchange Department, Reserve Bank of India certifying that provisions of the DGFT Circular No.60/97-2002 dated December 24, 1998 regarding treatment of the amounts received in rupees by a hotel company out of repatriable funds would also apply under the FEMA Regulations. 5. While allowing such additional evidence, this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h and in the case before us, the shipping bill required under the said Act for export could not be produced by the assessee. Mr. Shome submits that the documents relied upon by the appellant show that those were merely bills for re-exporting of the imported items which were very much within the warehouse of the customs and as such, such transaction carried on by the assessee did not come within the purview of export . In support of his contention Mr. Shome relied upon the decision of the Supreme Court in the case of Burmah Shell Oil Storage and Distributing Co. of India Ltd. (In C. A. 751 of 57) and Standatd Vaccum Oil Co. (In C. A. No. 10 of 58), Appellants Vs. The Commercial Tax-Officer and others, reported in AIR 1961 SC 315. 10. Mr. Shome, further submits that the assessee, as it appears from record, also charged sales tax on those items of food and beverage from the airlines authority and such conduct itself indicated that the transactions were sale of items within the country. Mr. Shome, therefore, prays for dismissal of the appeal. 11. Therefore, the only question that falls for determination in this appeal is whether the sale of items of food and beverage to the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re received in, or brought into India by the assessee (other than the supporting manufacturer) in convertible foreign exchange within a period of six months from the end of the previous year or, within such further period as the competent authority may allow in this behalf. Explanation: For the purposes of this clause, the expression "competent authority" means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange. (b) This section does not apply to the following goods or merchandise, namely :- (i) Mineral oil; and (ii) Minerals and ores (other than processed minerals and ores specified 1069b in the Twelfth Schedule). Explanation 1 : The sale proceeds referred to in clause (a) shall be deemed to have been received in India where such sale proceeds are credited to a separate account maintained for the purpose by the assessee with any bank outside India with the approval of the Reserve Bank of India. Explanation 2 : For the removal of doubts, it is hereby declared that where any goods or merchandise are transferred by an assessee to a branch, office, wareh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver in respect of trading goods; (b) "Adjusted profits of the business" means the profits of the business as reduced by the profits derived from the business of export out of India of trading goods as computed in the manner provided in clause (b) of subsection (3); (c) "Adjusted total turnover" means the total turnover of the business as reduced by the export turnover in respect of trading goods; (d) "Direct costs" means costs directly attributable to the trading goods exported out of India including the purchase price of such goods; (e) "Indirect costs" means costs, not being direct costs, allocated in the ratio of the export turnover in respect of trading goods to the total turnover; (f) "Trading goods" means goods which are not manufactured or processed by the assessee. (3A) For the purposes of sub-section (1A), profits derived by a supporting manufacturer from the sale of goods or merchandise shall be, - (a) In a case where the business carried on by the supporting manufacturer consists exclusively of sale of goods or merchandise to one or more Export Houses or Trading Houses, the profits of the business; (b) In a case where the business carried on by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion as defined in the Customs Act, 1962 (52 of 1962); (b) "Export turnover" means the sale proceeds received in, or brought into, India by the assessee in convertible foreign exchange in accordance with clause (a) of sub-section (2) of any goods or merchandise to which this section applies and which are exported out of India, but does not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Customs Act, 1962 (52 of 1962); (ba) "Total turnover" shall not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Customs Act, 1962 (52 of 1962) : Provided that in relation to any assessment year commencing on or after the 1st day of April, 1991, the expression "total turnover" shall have effect as if it also excluded any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28; (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) and (iiic) of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving clearance at any customs station as defined in the Customs Act and at the same time, the Reserve Bank of India treats such transaction in lieu of Indian currency as convertible foreign exchange for the purposes of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder, the transaction should be treated as export out of India for the purpose of Section 80HHC of the Act by virtue of the added Explanations (a) and (aa) quoted above. 15. In this connection, we may profitably refer to the decision of the Supreme Court in the case of CIT Vs. Silver and Arts Palace, reported in (2003) 259 ITR 684 where the said Court has approved the decision of the Allahabad High Court in the case of Ram Babu and sons Vs. Union of India, reported in (1996) 222 ITR 606 laying down the proposition of law that if both the conditions mentioned in Explanations (a) and (aa) are complied with in a given situation, the transaction should be treated to be an export out of India for the purpose of Section 80HHC of the Act. 16. As regards the case of Burmah Shell Oil Storage and Distributing Co. of India Ltd (supra), relied upon by Mr. Shome, the contention in the Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons (a) and (aa) added to it. The Supreme Court in that case had no occasion to consider the effect of the Explanations (a) and (aa) indicated above which has been really taken note of by the Apex Court in the case of Silver and Arts Palace (supra) relied upon by Mr. Bajoria. We, thus, find that the decision relied upon by Mr. Shome is of no avail to his client. 19. We, therefore, find no substance in the contention of Mr. Shome that in order to get benefit of Section 80HHC of the Act, the formalities prescribed under the Customs Act are required to be complied with in all respect even if the assessee complies with the condition prescribed both in the Explanations (a) and (aa) at the same time. 20. We similarly do not find any substance in the other contention of Mr. Shome that as the appellant has allegedly realised sale tax on the items, it is precluded from claiming the transaction as one of export out of India. It is now a settled law that in the field of taxation, there is no estoppel for the mistake of an assessee in treating the actual nature of transaction and the taxing authority cannot refuse to give appropriate benefit of deduction of tax merely for the mista ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under as also the Foreign Exchange Management Act, it appears that the Assistant General Manager, Foreign Exchange Department has written a letter dated November 7, 2005. By the said letter the said officer has certified that the provisions of the DGFT Circular No.60/97-2002 dated December 24, 1998 regarding treatment of the amounts received in rupees by a hotel company out of repatriable funds would also apply under the FEMA Regulations. In the absence of any evidence disputing the said assertion of the officer concerned, we hold that the appellant has also complied with the condition mentioned in Explanation (a) added to section 80HHC of the Act. 25. We, thus, find that the appellant has successfully established before this Court by uncontroverted additional evidence that the transaction in question satisfies the conditions indicated in both the Explanations (a) and (aa) of section 80 HHC of the Act in respect of the disputed items at the Chhatrapati Shivaji International Airport, Mumbai, and thus, it is a fit case where the orders passed by the authorities below should be set aside and the Assessing Officer should be directed to consider the claim of deductions under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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