9911796707
TMI Blog1996 (1) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Act, 1961, and was ultra vires the Act. The controversy in this case is about the taxability of the amounts received by the assessee from foreign buyers during the period July 1, 1982, to June 30, 1983 (assessment year 1984-85). The assessee offered for assessment the amounts received as price of the goods sold to foreign buyers as and when the amounts were received in the course of the accounting period and was taxed accordingly. The amounts which were not actually received from the foreign buyers in the course of the accounting period were converted into rupees on the basis of the exchange rate on the last day of the accounting year, i.e., June 30, 1983, and was brought to tax accordingly for the assessment year 1984-85. The Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the High Court, are as under (at page 813) : " The petitioners in this case are a company incorporated under the Companies Act, 1956. The petitioners are exporting iron ore to foreign countries, more particularly to Japan. The petitioners entered into agreements for sale of iron ore with foreign buyers at certain prices. As per the arrangements between the foreign buyers and the petitioners, the foreign buyers opened a letter of credit with a bank in India. As soon as the iron ore is loaded onto the ship, the bill of lading is signed by the master of the ship and the petitioners raise invoices against the foreign buyers for the price of the ore shipped. Thereafter, these documents are presented by the petitioners to their banker in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e paid tax on the actual income they received, from the bank in Indian currency. It is also contended on behalf of the petitioners that, in fact, the petitioners received the money on various dates at the rate of foreign exchange prevailing on the date of receipt of the money. The petitioners have also supplied a chart showing therein as to how, during the said relevant period, they have received the payment in Indian currency on each date as per the value of the rate of foreign exchange prevailing on the date of the receipt. The petitioners, therefore, contended that it is the actual money which they have received during the said period which is liable to be taxed under the Act and not any notional income or income which they have never re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income chargeable under the head ' Salaries ', the last day of the month immediately preceding the month in which the salary is due, or is paid in advance or in arrears ; (b) in respect of income chargeable under the head ' Interest on securities ', the last day of the month immediately preceding the month in which the income is due ; (c) in respect of income chargeable under the heads ' Income from house property ', ' Profits and gains of business or profession ' [not being income referred to in clause (d)] and ' Income from other sources ' (not being income by way of dividends), the last day of the previous year of the assessee ; . . . ." This rule was later amended by insertion of sub-rule (2) which, it is argued, is only clarifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrency in his hand or the assessee is not entitled to receive any foreign currency, then there is no question of conversion of such foreign currency into rupees. It is only the foreign currency which will have to be converted into rupees. But, if the foreign currency received by an assessee has been converted into rupees before the specified date, the question of application of rule 115 does not arise, Rule 115 does not lay down that all foreign currencies received by an assessee will be converted into rupees only on the last day of the accounting period. Rule 115 only fixes the rate of conversion of foreign currency. If there is no foreign currency to convert on the last day of the accounting period, then no question of invoking rule 115 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir bank to the bank of the foreign buyers. The amounts receivable by the assessee were credited in their account by their bank in rupees. The entire sum received by the assessee was offered for assessment and was duly assessed. We fail to see how the Commissioner of Income-tax came to the conclusion that the assessment was erroneous and prejudicial to the interests of the Revenue. In the facts of this case, there cannot be any question of invoking rule 115. The sale proceeds of the goods exported by the assessee were credited to their bank account in Indian rupees. There is no dispute that the amounts which were outstanding and receivable by the assessee on the last day of the accounting year from the foreign buyers had to be converted int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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