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Commissioner of Income Tax, Bikaner Versus Kamaljeet Singh Ahluwalia

2016 (9) TMI 1036 - RAJASTHAN HIGH COURT

Entitlement to claim of deduction under Section 80HHC - Mandates filing of an audit report - Held that:- Tribunal simply observes that an audit report specifies the amount of rebate allowable at ₹ 6,00,410/- on the basis of the amount received in the country in convertible foreign exchange, but the Tribunal is also silent about any audit report in reference to ₹ 1,07,33,971/- and simply observes that the said claim of ₹ 1,07,33,971/- was claimed as per computation of total inco .....

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llow when sub-clause (4) of Section 80HHC mandates filing of an audit report in support for claiming deduction. - Accordingly, the Tribunal erred in allowing deduction under Section 80HHC - Decided against assessee - D.B. Income Tax Appeal No. 62/2000 - Dated:- 8-9-2016 - Ajay Rastogi And J. K. Ranka, JJ. For the Appellant : R. B. Mathur, K. D. Mathur For the Respondent : Anant Kasliwal JUDGMENT J. K. Ranka, J. 1. This appeal under Section 260-A of the Income Tax Act, is directed against the .....

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the said Section while calculating his income tax liability on his gross turnover?" 3. The brief facts noticed for disposal of this appeal are that the respondent assessee derives income from share of profit from firm and export business. The export business is conducted in the name and style of Lotus International. The assessee claims to have filed return of income on 31.10.1995 declaring total taxable income of ₹ 1,59,029/-, and inter alia also claimed exemption under Section 80HHC .....

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quisite certificate under Section 80HHC was duly attached along with the return of income and thus the claim was rightly made, however, the Assessing Officer passed order under Section 154 rejecting the contention of the assessee by observing that no such certificate was enclosed with the return of income and the fact was also supported on perusal of part-V of the return of income in which the assessee had not mentioned anything about annexing certificate of a Chartered Accountant, and according .....

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comply with the requirement of the provisions of the Act, and requisite report of Chartered Accountant was furnished along with the return of income and that claim of the AO was contrary to the material on record, and further that the audit report furnished even at later point of time is sufficient compliance of the provisions of law. The CIT(A) also called for the records and in particular the return of income and noticed that Part-V of the return is full of cuttings and overwritings and after .....

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to copies of LIC premium and all these enclosures are not attached with the return of income, though it was claimed that these documents were enclosed along with the return. Analysing the contents of Part-V the CIT(A) further noticed that handwriting and the ink are the same and there is no separate entry for report under Section 44AB which is otherwise available along with the return of income. The CIT(A) also observed that though the assessee claimed deduction under Section 80HHC of the Act fo .....

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appeal. Even before the CIT(A) no audit report u/s 80HHC claiming deduction at ₹ 1,07,33,971/- was filed. 7. The assessee further assailed by filing an appeal before the Tribunal, however, the Tribunal vide the order impugned observed that since the assessee is an exporter and as per the computation of income, had claimed deduction under Section 80-HHC to the tune of ₹ 1,07,33,971/- and such claim being allowable, thus held the claim to be allowable and accordingly allowed the same. .....

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nal has gone into in a cursory manner and allowed the claim of the assessee. 9. Learned counsel further contended that there are no two opinions that had there been an audit report, the AO would have certainly allowed the claim but even the CIT(A) called for the record and examined the same personally and after analysing the enclosures, clearly upheld the finding that the return of income was not accompanied by an audit report claiming deduction of ₹ 1,07,33,971/-. That apart, the return o .....

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rtify correctness of claim under Section 80HHC. Learned counsel further contended that the order of Tribunal is wholly perverse. 10. Per contra, learned counsel for the assessee contended that an audit report was annexed with the return of income and in case it was noticed that said audit report was not part of the return of income, the AO was under legal obligation to have issued a notice under Section 139(9) of the Act, to make good the deficiency and in the instant case no such notice was ser .....

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ties and it is held by the judicial pronouncements that it is sufficient compliance of the mandate of law. He also drew attention of this Court to a Circular of the Central Board of Direct Taxes bearing no.689 dated 24.8.1994 read with Circular bearing no.669 dated 25.10.1993 to bring home that even the Board has relaxed the rigour of law by giving administrative relief and such Circulars are binding on the Revenue Authorities and in support has relied on judgments rendered in Seeyan Plywoods v. .....

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n 80HHC of the Act and in particular sub-clause (1) and (4) respectively, which reads ad infra:- 80HHC. Deduction in respect of profits retained for export business.-(1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of .....

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to be allowed to a supporting manufacturer, then the amount of deduction in the case of the assessee shall be reduced by such amount which bears to the total profits derived by the assessee from the export of trading goods, the same proportion as the amount of export turnover specified in the said certificate bears to the total export turnover of the assessee in respect of such trading goods. (1A) xxxx xxxx xxxx xxxx (2)(a) xxxx xxxx xxxx xxxx (b) xxxx xxxx xxxx xxxx Explanation 1.- The sale pr .....

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of an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this section:" 13. The provision clearly envisages that an assessee who is engaged in the business of export out of India of any goods or merchandise and the amount is received in convertible foreign exchange in India within the time prescribed, an assessee becomes entitled to a deduction to the extent of profits .....

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essary: (i) the assessee should be an exporter and convertible foreign exchange is required to be received in the given time in India, and (ii) to claim such deduction, report of a Chartered Accountant is mandatory. 13.1 While the foremost requirement is that the assessee has to be an exporter and the return of income is to be supported by an audit report. The latter is the requirement of furnishing substantive foundation for claiming such allowance and it is the requirement of furnishing proof .....

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ome-Tax [1996] 219 721 (Guj); Commissioner of Income-Tax v. Nagpur Hotel Owners' Association [2001] 247 ITR 201 (S.C.); Commissioner of Income-Tax v. Punjab Financial Corporation [2002] 254 ITR 6 (P&H); Commissioner of Income-Tax v. Berger Paints (India) Ltd. (No.2) [2002] 254 ITR 503 (Cal); Commissioner of Income-Tax v. G. Krishnan Nair [2003] 259 ITR 727 (Ker); Commissioner of Income-Tax v. Magnum Export (P) Ltd. [2003] 262 ITR 10 (Cal); Commissioner of Income-Tax v. Gupta Fabs [2005] .....

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s, we do not find any mention of audit report claiming deduction under Section 80HHC in reference to ₹ 1,07,33,971/-. The CIT(A) has in extenso even quoted the written-submissions of the respondent assessee placed before it, and we notice that the assessee has failed to bring on record the audit report, if any, being filed claiming deduction of ₹ 1,07,33,971/-. The CIT(A), earlier do mention that there is a certificate of one Anil Nagori and Associates, CAs, computing allowable deduc .....

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ssee is unable to place such audit report for our perusal claiming deduction under Section 80HHC. We further enquired from the learned counsel for the assessee as to the dates of the two audit reports, but he was unable to provide such dates to infer prima facie conclusion and the indisputed fact remains that there is an audit report claiming deduction of ₹ 6,00,410/- and there is no audit report claiming deduction of ₹ 1,07,33,971/-. 15. The Tribunal, in our view, has also convenien .....

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iably issued the certificate only to this extent but after the order of the CIT Jaipur controversy in regard to the total amount to be considered for purposes of rebate u/s 80HHC totalled to ₹ 1,07,33,971/-, which was claimed as per the computation of total income while filing the return of income. Under these circumstances, we have no hesitation in allowing the appeal of the appellant in full and directing the AO to allow the benefit u/s 80HHC to the assessee." (emphasis supplied) 16 .....

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