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2016 (3) TMI 175 - ITAT BANGALORE

2016 (3) TMI 175 - ITAT BANGALORE - TMI - Entitlement to claim of deduction u/s 80-HHC - assessment order u/s 143(3) r.w.s. 147 disallowed the claim of the assessee on the ground that the assessee failed to bring export sales realization in convertible foreign exchange within stipulated period - Held that:- In the original assessment when this claim was denied by the AO, after noticing that there was a delay in bring sale proceeds and despite that the assessee made a claim u/s 80-HHC. In the rem .....

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missioner or Commissioner, as the case may be, is the competent authority to extend the period on satisfaction that the assessee was unable to do so for the reasons beyond his control. Therefore, once the assessee made a claim, the AO was required to place the same before the CCIT or CIT, as case may be, and the assessee was required to explain the reason for delay. In the case in hand, AO has not followed the procedure as required to place the matter before the CCIT or CIT, as the case may be, .....

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Per VIJAY PAL RAO, JM : This appeal by the revenue is directed against the order of dated 3/2/2015 of the CIT(A) for the assessment year 1993-94. 2. The revenue has raised the following grounds: 1. The order of the learned CIT(Appeals) insofar as it is prejudicial to the interest of revenue is opposed to law and the facts and circumstances of the case. 2. The CIT(A) erred in directing the AO to compute the allowable deduction u/s 80HHC by adopting ₹ 1,23,58,206/- as the total turnover in p .....

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assessee. 3. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the CIT(Appeals) be reversed in so far as the above mentioned issues are concerned and that of the assessing officer be reversed. 4. The appellant craves leave to add, alter, amend or delete any of the grounds that may b e urged at the time of hearing of the appeal. 3. This is second round of litigation arising from denial of claim of deduction u/s 80-HHC of the IT Act, 1 .....

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ee failed to bring export proceeds within time prescribed under the Act i.e. on or before 30th September 1993. The assessee claimed that the assessee made an application before the CIT for extension of time and therefore, in view of the decision of the Hon ble Allahabad High Court in the case of Azad Tobacco Factory (P) Ltd (supra), the claim of the assessee cannot be denied when the delay in bringing the export sale realization is beyond the control of the assessee. In the remand proceedings, t .....

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o bring on record any evidence to show that the reasons for not bringing export sale proceeds within stipulated time were beyond the control of the assessee. He has further contended that onus is on the assessee to explain reasons for not bringing convertible foreign exchange within stipulated period and therefore, if the reasons for delay are beyond the control of the assessee, time for bringing the same can be extended by the authority. In the absence of any such proposal or such application o .....

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e a claim in the return of income and explained reasons for delay as beyond control of assessee, then it was the duty of the AO to place the matter before the CIT or CCIT for extension of time. Since assessee has failed to place matter before the CIT or CCIT and therefore, denial of deduction u/s 80-HHC is not justified. He has supported the impugned order of the CIT(A). 6. We have considered the rival submissions as well as relevant material on record. The claim of deduction u/s 80-HHC was deni .....

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s the date of application are submitted before the CIT(A) for extension of time in the CA's certificate. As rightly pointed out by the learned counsel for the assessee the application has not been verified by the authorities below. This the very root of the matter, as the assessee would entitled to the entire claim of deduction u/s BOHHC, if the assessee had really made the application for extension of time within the period of six months or even thereafter as held by the Hon ble Allahabad H .....

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de the issue in accordance with law after verification of the record with CIT and taking into consideration the decision of the Hon ble Allahabad High Court in the case of Azad Tobacco Factory (P) Ltd (supra). However, the AO himself has decided the issue that the assessee failed to bring export sale proceeds within the period stipulated by the Act and therefore, not entitled for benefit u/s 80-HHC. 6.3 The CIT(A) while deciding the issue has held in paras.8 to 12 as under: 8. The Hon'ble IT .....

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spect to sale proceeds received in or brought into India as contemplated therein within a period of six months from the end of the previous year or for the purpose of invoking the power of the Chief Commissioner or Commissioner to allow further period in case the assessee is unable to receive in or bring into India the sale proceeds for reasons beyond his control. If such a position is accepted, then there is no scope for making any application for the purpose of having the benefit of further pe .....

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nasmuch as the assessing authority having not been invested with the power granted under sub-section (2)( a) for allowing further period, he neither can refuse nor can deal with the same. Therefore, it is imperative on its part to p Lace the same before the Chief Commissioner or Commissioner, as the case may be. The assessee may also bring the fact to the notice of the Chief Commissioner or Commissioner, but in that event, no time limit can be applied except that the claim is to be made in the r .....

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in the present case the material placed on record from time to time and at the time of earlier proceedings before CIT(A) would go to show that the RBI has extended time for receiving the sale proceeds beyond the stipulated date and such delay was caused on account of the exported goods being rejected by the importer and the appellant had to find out an alternative buyer abroad itself instead of getting the goods back to India. In the end, appellant had received the sale proceeds to the tune of & .....

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tion from the CIT would only defeat the purpose of the Section 80 HHC. In fact the CBDT's memorandum explaining the provisions of Section 80HHC vide finance Act 1990 and 1999 place emphasis on actual receipt of convertible foreign currency as a condition to avail the deduction and the approval of the CIT or RBI as the case may be was to address the hardship if any faced by the tax payers in complying with the said requirement and not to impose a further impediment or a requirement in the for .....

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monies have to be brought into India is a procedural provision. That time can vary by an order of the Chief Commissioner by extending the period within which the money has to be brought in. The primary object of the section is that the sale proceeds realized from the exports of the goods should be brought into India in convertible foreign exchange. It is that primary purpose which should be shown to have been satisfied for the purpose of claiming the benefit granted u/s 80HHC. The period within .....

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deduction by treating the aforesaid amount as total turnover in the place of ₹ 12663139 adopted by the appellant. Appellant gets relief on this issue to the above extent. 6.4 There is no dispute that assessee made the claim of deduction u/s 80-HHC in the return of income and the AO while passing the assessment order u/s 143(3) r.w.s. 147 disallowed the claim of the assessee on the ground that the assessee failed to bring export sales realization in convertible foreign exchange within stipu .....

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