TMI Blog2015 (8) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... have been allowed. It is in accordance with this Circular that the authorised dealer has granted the requisite permission to the assessee. CIT(A) is right upholding the assessees claim of net off of exports and import payments in the absence of permission from the Competent Authority before the due date (one year from the date of export) to bring in the export receipts. Also see case of Henna Jebart [2011 (7) TMI 526 - Allahabad High Court] and J.B. Boda & Co. Pvt. Ltd case [1996 (10) TMI 70 - SUPREME Court] - Decided against revenue. Admitting additional evidence - Held that:- The order of assessment was passed on 11.3.2013, whereas the permission of Union Bank of India, the authorised dealer, allowing net off is dated 13.8.2013. This document could not have been filed before the AO. In such circumstances, the provisions of Rule 46A(1)(b) or (c) will be applicable. Even otherwise, under the provisions of Rule 46A(4), the Commissioner had power to call for evidence necessary for adjudication of the appeal. Accordingly, no fault can be found with the order of CIT(Appeals) on the ground that additional evidence ought not to have been admitted.- Decided against revenue. Applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne year from the date of export) to bring in the export receipts. 2. In the circumstances of the case and in law, whether the assessee is eligible for claim of deduction u/s 10A on netting off exports receipts against import payments in view of the specific provisions provided u/s 10A to bring in the export proceeds within the stipulated time. 3. In the circumstances of the case and in law, whether the CIT(A) was right in admitting the additional evidences and allowing relief to the assessee in view of the provisions of Rule 46A. 3. The assessee is a company engaged in software development. It was having a unit registered under Software Technology Park of India Scheme (STPI), income from which was eligible for deduction u/s. 10A of the Income-tax Act, 1961 [ the Act ] which was worked out by the Assessee as under:- Gross Exports in STPI Unit (US $ 6,00,000) : Rs.269,46,000 Expenditure in STPI Unit : ₹ 21,77,319 Net Income in STPI Unit : Rs.247,68,631 4. The assessee exported software worth US$ 6,00,000 on 29-03-2010 to Evergo Technolog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f time for getting balance amount upto 31-03-2012 as per the letter dated 26- 03-2011. The details of transactions with Evergo Technology, Hongkong over a period 3 financial years were as under: Date of Invoice or Bill Nature of transactions Amount in US $ Net effect in US $ 29.03.2010 Export 6,00,000 Receivable 6,00,000 18.03.2011 Import 9,94,500 Payable 3,94,500 21.03.2011 Export 7,50,000 Receivable 3,55,000 15.06.2011 Import 3,55,500 NIL 8. The assessee had applied for setoff as per Reserve Bank of India instructions and as per the procedure applied through the Authorised Dealer Union Bank of India. There was no denial for request for permission for setoff either by the Union Bank of India or by Reserve Bank of India, at the time of hearing of the case by the Assessing Officer. Subsequently, Union Bank of India through its letter d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .B. Boda Co. Pvt. Ltd. (supra), the Hon'ble Supreme Court observed that two way traffic is unnecessary and the assessee can adjust the receivable against payments. The CIT(A) on a consideration of the above submissions, allowed the claim of the assessee and observed as follows:- I have gone through the facts of the case, contents of the assessment order and written submissions of the assessee. As explained above in detail though the assessee was not received the receipts within the stipulated time of six months but within the time has approached the RBI or Authorised Bank to permit to receive the sale proceeds beyond six months and the RBI has given general permission through it circular dated 29.06.2010 where it is mentioned that Attention of Authorised Dealer Category-1 (AD Category-1) banks is invited to increasing the period of realization and repatriation to India of the amount representing the full export value of goods or software exported, from six months to twelve months from the date of export, subject to review after one year. The issue has since been reviewed and it has been decided, in consultation with the Govt. of India, to extend the above relaxation up t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. DCIT in ITA Nos. 426 427/Bang/2006 for A.Y. 2001-02 2002-03, has been rightly relied upon by the ld. counsel for the assessee before the CIT(A). Besides the above, on 13.8.2013, Union Bank of India allowed the claim of assessee for net off. The said letter is placed at page 59 of assessee's paperbook. In fact, the RBI Exchange Control Department has in its Circular No.91 dated 1.4.2003 laid down the following conditions for netting off:- D. Netting off of export receivables against import payments It has been decided that authorised dealers may allow requests received from exporters for 'netting off' of export receivables against import payments for units located in Special Economic Zones subject to the following: (i) The 'netting off' of export receivables against import payments is in respect of the same Indian entity and the overseas buyer / supplier ( bilateral netting ). The netting may be done as on date of balance sheet of the unit in SEZ. (ii) The details of export of goods is documented in GR(O) forms/DTR as the case may be while details of import of goods / services is recorded through Al/A2 form as the case may be. The relative GR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplementing CET Rural Training Programme 2009-10. The assessee has developed technology for providing online classes to the CET catalyst course. The assessee was accordingly engaged by the State of Karnataka to implement the CET Rural Training Programme. The assessee engaged M/s. Ken Computek Pvt. Ltd. [KCPL] to carry out its obligation under the agreement with the State of Karnataka. KCPL rendered services and raised bills for payment for the services rendered. Assessee paid a sum of ₹ 5,85,25,180 to KCPL. Assessee deducted the tax at source on the said payment to KCPL @ 2% as required u/s. 194C of the Act. According to the AO, the services rendered by KCPL was in the nature of fees for professional or technical services, falling within the ambit of section 194J of the Act, and therefore the assessee ought to have deducted tax at source @ 10% on the payment. The AO therefore invoked the provisions of section 40(a)(ia) of the Act and disallowed a sum of ₹ 4,68,20,140 and added the same to the total income of the assessee. The following were the observations of the AO in this regard:- Thus in accordance with the provisions of section 194J (under Chapter XVII-B), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein it was held that disallowance u/s. 40(a)(ia) cannot be made when there is a short deduction of tax at source and can be made only when there is non-deduction of tax at source. 21. With regard to the cost of UPS which was treated as capital expenditure by the AO, the CIT(Appeals) allowed the claim of the assessee observing as follows:- I have gone through the facts of the case, contents of the assessment order and written submission of the assessee. The assessee has produced a letter issued by Karnataka State Electronics Development Corporation Ltd, the Govt. of Karnataka issued on 16.10.2009 where it is mentioned that as per the agreed terms we hereby inform you that the batteries with UPS to be installed for power back up at rural PU colleges for CET rural training programe 2009-10 and shall be handed over to the respective colleges after the completion of the training programme. Kindly inform the nodal executives regarding the same. The assessee had claimed the batteries that were purchased are to be handed over with UPS to the respective rural PU colleges and batteries are no longer with the assessee and the same may be considered as a revenue expenditure. As the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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