TMI Blog2001 (3) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... to Alfalwa on September 29, 1998, vide invoice No. 31 for US $ 9496.76 convertible into Indian currency at Rs. 3,51,380 totalling in Indian currency at Rs. 5,04,211. The question relates to non-receipt of the aforesaid amount in India within six months from the end of the financial year to which the export related and the petitioner moved an application for extension of time. The petitioner, in the first instance, made an application on September 29, 1998, stating that the importer made complaints for the goods exported as regards colour, spots and quality and retained the payments, the assessee made tremendous efforts to recover the amount in time by giving various fax messages and on telephone even offered discount in rates to the importers but the same were unresponded and they delayed in sending the payments. It was also pointed out in the application that party No. 1, Al-ajilal Co. Ltd., did make payment of two containers in July, 1998, out of three containers despatched but party No. 2, Alfalwa, to whom only one container was supplied, never replied to the letters of the assessee. The petitioner further made a request that the dispute cannot be overcome without visiting Riya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia up to March 31, 1999, and that the due foreign currency of 4075 and 9497 dollars has been received on March 14, 1999, and the same has been deposited in the bank on March 30, 1999. In support of this application, a copy of the draft and bank deposit slips were also annexed. In furtherance of this and in response to the information required by the Commissioner, the petitioner further submitted a detailed explanation, vide his letter dated June 27, 1999, in this case making reference to the earlier applications. The efforts made by the petitioner, the essential requirement of obtaining a visa before entering the territory of the UAE for the purpose of a business visit thereto and the ultimate results of the petitioner's efforts which resulted in visa permission on December 3, 1998, and the visit ultimately fructified only in March, 1999. It was specifically stated in the application that the visa enquiry was completed in the month of January/February, 1999, and, thereafter, the petitioner was accorded permission to Visit Riyadh. The assessee visited the UAE in March which was evidenced by the boarding pass of the concerned airlines and that on personal visit the dispute was reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the proceedings for obtaining the visa which could only come to him in February, 1999. It cannot be said that the time taken in giving permission after holding enquiry by the competent authority were dependent on any volition on the part of the petitioner. It was totally dependent on the third party's efforts and the decision-making authority over which the petitioner had no control. He has visited the importers soon after getting the visa and got the quarrels settled. He visited the UAE in March and in fact obtained the payment and brought it into India and deposited it in the bank before March 31, 1999. All these facts have been blissfully ignored by the Commissioner by focusing on the complaint lodged by an importer about the quality of the goods despatched by the petitioner. It is not even the finding of the Commissioner that the goods sent by the petitioner were really not of the specifications nor could he have reached this finding. If it is admitted that the dispute has arisen between the parties, it is not expected or presumed that the complaint made by the buyer is necessarily right or genuine. One cannot start with the presumption that the Indian exporter is always wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... review ordinarily. I am unable to accept this contention. Sub-section (2)(a) of section 80HHC reads as under: "(2)(a) This section applies to all goods or merchandise, other than those specified in clause (b), if the sale proceeds of such goods or merchandise exported out of India are received in, or brought into, India by the assessee other than the supporting manufacturer in convertible foreign exchange, within a period of six months from the end of the previous year or, where the Chief Commissioner or Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Chief Commissioner or Commissioner may allow in this behalf." A perusal of the provision goes to show that what is required for extending the period is that the Commissioner be satisfied that the assessee for reasons beyond his control was unable to bring the sale proceeds in convertible foreign exchange into India of the goods or merchandise exported for the said period of six months or within such period as the Chief Commissioner or Commissioner may allow in this behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if conditions for exercise of such power have been made out. In that process, if an authority ignores the material which has been brought before it for its consideration and reaches his conclusion on non-germane grounds, the order is amenable to be corrected in exercise of powers of this court through judicial review. Reference in this connection is made to the principle tersely stated by the apex court in Barium Chemicals Ltd. v. CLB [1966] 36 Comp Cas 639; AIR 1967 SC 295, 309: "An action, not based on circumstances suggesting an inference of the enumerated kind, will not be valid...No doubt the formation of opinion is subjective but the existence of circumstances relevant to the inference as the sine qua non for action must be demonstrable. If the action is questioned on the ground that no circumstances leading to an inference of the kind contemplated by the section exist, the action might be exposed to interference unless the existence of the circumstances is made out." The above principle was stated in a case where taking of an action was held to be subjected to subjective satisfaction. However, the present case stands on a better footing inasmuch as, the satisfaction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approved by the Supreme Court in L. Hirday Narain v. ITO [1970] 78 ITR 26; AIR 1971 SC 33. In Official Liquidator v. Dharti Dhan P. Ltd. [1977] 47 Comp Cas 420 (SC); AIR 1977 SC 740, Beg C. J. said: "If the conditions in which the power is to be exercised in particular case are also specified by a statute then, on the fulfilment of those conditions, the power conferred becomes annexed with a duty to exercise it in that manner." Apparently, the provision contained in section 80HHC is for the benefit of an assessee and confers upon him a right to claim deductions in respect of his income from export on fulfilment of certain conditions. One such condition is that foreign exchange under such export must be brought within India in convertible Indian currency within six months of the end of the relevant financial year. However, to effectuate this right to claim deduction by fulfilling the prescribed conditions, power was deposited with the Commissioner to extend such period on the condition that he is satisfied about the existence of reasons beyond the control of the assessee resulting in his failure to bring the foreign exchange in Indian currency into India within that time. Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scretion is confined to the question of satisfaction by the Chief Commissioner or Commissioner but not with the power to allow the period of suspension or relaxation. The Commissioner, if satisfied, that the conditions are fulfilled, is bound to allow the period which remained suspended due to the inability of the assessee to receive in or bring into India the sale proceeds for reasons beyond his control. There is no discretion in the matter of allowing the period of suspension if the Chief Commissioner or Commissioner is satisfied that the condition for suspension of the period was fulfilled." Like view was expressed by the Calcutta High Court in Geekay Exim (India) Ltd.'s case [1998] 234 ITR 560. The court said: "In my opinion, the right to deduction under section 80HHC is a right given to the assessee which can easily be available within a period of six months as contemplated therein. But the said right appears to remain suspended if the assessee is unable to have it for reasons beyond his control. In such circumstances, the Commissioner or the Chief Commissioner was bound to exercise the power for allowing a further period to the assessee if he is satisfied that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t entitle the assessee to claim deduction until he brings the amount in India. Nor expiry of such period will defeat his right, if he is able to show existence of reasons beyond his control which caused failure in bringing such amount in India. On the other hand, if in fact the amount has been received in control of the assessee to be brought into India on July 31, he cannot because of the peremptory extension of period, delay its bringing into India for no reason and claim the benefit of extension up to December 31, 2000. Permitting that would be flying in the face of the provision and its object. Therefore, the application of mind on the part of the Commissioner ought to be, once the limit of six months period has expired, to consider whether the assessee could reasonably have brought the said foreign exchange into India earlier than the date he has brought it in India. May be day-to-day computing the period is not envisaged, but after the expiry of six months whether the money has been brought within a reasonable time when it became possible for the assessee to bring the foreign exchange in India. In other words, the relevant consideration may include considering the circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the dock workers union giving the call to strike, by paying exhorbitant wages, was repelled. The plea to construe the expression ejusdem generis to treat the causes beyond the control of the charterer to be of the nature related to some law of nature or man made law, on the basis of illustrative contingencies used in the clause, Viscount Finlay said: "It appears to me that the common feature which these various things enumerated have, is that they constitute causes beyond the control of the charterer, and that these caused detention of the vessel. That seems to me the real substantial feature in common, and if there is a class it is the class of things which will have this effect upon the vessel of detaining it without the charterers being in fault." Seen in the above light, the fact, that the dispute has arisen between the parties on the quality of goods, has been accepted by the Commissioner. Once that conclusion is reached, it cannot but be accepted that the payment has been retained by the consignee in the UAE as leverage against the, petitioner for settlement of the dispute. In that event, it is not in the control of the assessee to secure payment of such disputed tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of year after he had made further application for extension of time until the expected period of settlement, which in the circumstances also proved legitimate and justified. In these circumstances, it is impossible to say that the assessee has not acted with reasonable promptitude in settling the dispute as and when opportunity came to him to settle the said dispute with his buyers, he negotiated with the party by correspondence and on phone and even visited the country of import. In fact, the money has been brought and deposited in March, 1999, and this fact has also not been considered by the Commissioner of Income-tax whether the efforts made by the assessee were continuing and were in right earnest. In these circumstances, I am of the opinion that the impugned order, annexure 4, dated September 17, 1999, having not been founded on existing material and as the discretion has been exercised by ignoring the undisputed material which has been brought on record by the assessee showing that reasons beyond his control existed which prevented him from bring the money into India before March, 1999. Thus conditions requisite of exercise of power by the Commissioner, having been shown t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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