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TMI Blog2012 (9) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... e "Total Turnover" while it is not treated as "Export Turnover" for purposes of computing the allowable deduction under Section 80HHC ? 2. The assessee company claimed relief under Section 80HHC in the return filed for the above said year. It pointed out that a sum of Rs.22,45,433/- which is rupee equivalent to the foreign exchange earned had not been realised before 31.3.1996, but extension of time was granted by the Commissioner of Income Tax till 31.12.1997. While so, out of the above said sum, a sum of Rs. 15,74,033/- was realised. It further pointed out that a sum of Rs. 9,26,324/- was not realised on account of the foreign buyer refusing to pay for the exported goods. Consequently, the assessee sought for deduction of 9,26,324 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned the assessee contended that the said amount would be entitled for consideration in the calculation of 80HHC relief. The first appellate authority pointed out that considering the letter from the Indian Embassy, the Assessing Officer should consider the assessee's claim for allowance of bad debt/business loss accordingly. As far as the sum of Rs. 6,47,709/- was concerned, the Assessing Officer was directed to include the said sum for the purpose of exemption under Section 80HHC in view of the communication dated 15.3.1999 from the Commissioner of Income Tax . Aggrieved by the said order, the assessee went on appeal before the Income Tax Appellate Tribunal, which once again confirmed the reasoning of the Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epresented unrealised foreign exchange on account of the objection raised by the foreign buyer. Hence the said amount of unrealised export turnover cannot be included in the total turnover for the purpose of computing deduction under Section 80HHC. Placing reliance on the decision of the Kerala High Court reported in (2002) 285 ITR 641 ( Commissioner of Income Tax Vs. Abad Fisheries) as well as the decision of the Bombay High Court reported in (2009) 318 ITR 144 (Bom) (Commissioner of Income Tax Vs. Polycott Corporation), learned counsel submitted that the authorities committed a serious error in including the unrealised amount as export turnover for the purpose of working out relief under Section 80HHC . He also referred to the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the business would be the total turnover of the business of the goods to which the section applies. This court pointed out that the sub-section has been created only to see the ratio of the income out of the export to the total income out of the business in respect of those goods to which the section applies. Thus, on a reading of sub-section 1 of Section 80HHC, clause (a) of subsection (2), and clauses (a) and (b) of sub-section (3), this Court held that there remains no doubt that the total turnover of the business would contemplate only the business regarding such goods part of which are exported and the others are not so exported. There is just no scope to include the turnover of the business of the goods which are not contemplate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in the Customs Act. The proviso to the said definition excludes only those sums referred to in clauses (iiia), (iiib), (iiic),(iiid) and (iiie) of Section 28. 10. When we apply this decision to the case on hand, it is evident that the assessee had total turnover of Rs.1,01,20,167. Going by the definition of the "export turnover" meaning thereby the sale proceeds received in or brought into India by the asessee , necessarily the same has to be the assessee's actual receipt of sale proceeds i.e export turnover of Rs.91,20,802/-. Taking the actual foreign exchange received excluding a sum of Rs.9,26,324/- alone would represent the export turnover of the assessee. Going by the reasoning of this court and the definiton of "export tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation (b), has to be in respect of sale proceeds received or brought in India in convertible foreign exchange and in contrast to this the total turnover as observed by this Court has to be in respect of the goods which are exported out of India. In the light of the said discussion, we have no hesitation in confirming the order of the Tribunal. 13. As far as the claim of the assessee of a sum of Rs. 9,26,324 is concerned the assessee took the plea before the Commissioner of Income Tax that the Assessing Officer should have considered the sale proceeds not realised, for the purpose of deduction as bad debt / business loss since the foreign buyer refused to remit the sale proceeds for the exported goods and the Indian Embassy in Par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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