Income Tax Appellate Tribunal - Mumbai
Tara Jewels Export P. Ltd, Mumbai vs Department Of Income Tax on 9 November, 2011
आयकर अपील य अ धकरण "ई" यायपीठ मुंबई म।
IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI ी संजय अरोड़ा, लेखा सद य एवं ी वजय पाल राव, या यक सद य के सम । BEFORE SHRI SANJAY ARORA, AM AND SHRI VIJAY PAL RAO, JM आयकर अपील सं./I.T.A. No. 662/Mum/2012 ( नधारण वष / Assessment Year: 2003-04) Asst. CIT-8(3), Tara Jewels Export Pvt. Ltd.
Room No.217, Aayakar Bhavan, बनाम/ G-44, Gems & Jewellery Complex, M. K. Marg, Mumbai-400 020 Vs. SSPZ, Andheri (E), Mumbai-400 096 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. AAACT 1161 H (अपीलाथ /Appellant) : ( यथ / Respondent) अपीलाथ क ओर से / Appellant by : Shri Ashok Suri यथ क ओर से/Respondent by : Shri B. V. Jhaveri ु वाई क तार ख / सन : 23.01.2014 Date of Hearing घोषणा क तार ख / : 29.01.2014 Date of Pronouncement आदे श / O R D E R Per Sanjay Arora, A. M.:
This is an Appeal by the Revenue directed against the Order by the Commissioner of Income Tax (Appeals)-18, Mumbai ('CIT(A)' for short) dated 09.11.2011, allowing the assessee's appeal contesting its assessment u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 ('the Act' hereinafter) for the assessment year (A.Y.) 2003-04 vide order dated 20.12.2010.2 ITA No.662/Mum/2012 (A.Y. 2003-04)
Asst. CIT vs. Tara Jewels Exports Pvt. Ltd.
2. The only issue arising in this appeal is the validity of the disallowance of the deduction u/s.10A of the Act at Rs.37,82,201/-. The same stood made in view of the fact that a part (i.e., Rs.11.51 crores) of the export proceeds had not been realized within six months from the end of the relevant previous year; in fact, having not been received even by the date of the audit report for the relevant year (29.11.2003), so that the condition of section 10A(3) stood breached. The ld. CIT(A), however, allowed relief to the assessee on the production of a letter from the Reserve Bank of India (RBI), clarifying that no time limit stood prescribed for realization of the export proceeds for export units located in Special Economic Zones (SEZs).
3. Before us, the cases of both the parties were the same, with the assessee relying on Master Circular No. 10/2011-12 (dated 01.07.2011/PB pgs.19-23), which clarifies that no specific time limit has been prescribed in respect of units in SEZs for realization and repartition of the export proceeds.
4. We have heard the parties, and perused the material on record. 4.1 The primary facts of the case are not in dispute. That is, that the assessee is a unit located in SEZ and, two, that neither were the export proceeds realized in convertible foreign exchange within a period of six months nor does it have any authorization from the competent authority allowing it further period of time for repatriating the same to India. Rather, no contention as to the amount having been received even subsequently has been made before the authorities below, so that it is not clear as to when the relevant export proceeds were in fact received, or in fact have at all been received.
4.2 Section 10A(3) of the Act reads as under:
'Special provision in respect of newly established undertakings in free trade zone, etc. 10A. (1) ..............
(2) ...............3 ITA No.662/Mum/2012 (A.Y. 2003-04)
Asst. CIT vs. Tara Jewels Exports Pvt. Ltd.
(3) This section applies to the undertaking, if the sale proceeds of articles or things or computer software exported out of India are received in, or brought into, India by the assessee in convertible foreign exchange, within a period of six months from the end of the previous year or, within such further period as the competent authority may allow in this behalf. Explanation 1.--For the purposes of this sub-section, the expression "competent authority" means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange. Explanation 2.--The sale proceeds referred to in this sub-section shall be deemed to have been received in India where such sale proceeds are credited to a separate account maintained for the purpose by the assessee with any bank outside India with the approval of the Reserve Bank of India.' It is thus clear that the law does not provide an inflexible condition in the matter; leaving it to the competent authority, the RBI, whose decision, besides being binding on the Revenue, would presumably only be with regard to and on an assessment of the facts and circumstances of the case, apart from being consistent with any policy guideline it may have framed in the matter, also having regard to any other law, if any, that may have a bearing or which impinges thereon.
Once, therefore, the RBI has clarified that it has not stipulated any time period for the realization of the sale proceeds for the SEZ units, as the assessee, it can only be considered as having allowed an indefinite time period for the same. Consequently, it cannot be said that the condition of section 10A(3) is not satisfied. The objection of the Revenue is, in our view, not valid.
4.3 We further observe that the Revenue has, per its Ground No.2 assumed before us, also objected on the basis that the RBI Circular being relied upon is only applicable to shipments made on or after 01.04.2003, so that it would not apply for the current year. The objection, if true, is certainly valid inasmuch as the law clearly provides for an extended time only where and as allowed by the competent authority. The objection, as it 4 ITA No.662/Mum/2012 (A.Y. 2003-04) Asst. CIT vs. Tara Jewels Exports Pvt. Ltd.
would appear to us; no arguments qua the same having been made before us, is based on a reading of Circular No.91 dated 01.04.2003 (PB pgs.6-8), which reads as under:
"Attention of authorized dealers is invited to A.P. (DIR Series) Circular No.28 dated March 30, 2001 and subsequent circulars issued extending various facilities to units in Special Economic Zones. It has been decided to extend the following facilities to the units located in the Special Economic Zones (SEZs):
A. Realisation of export proceeds In terms of para 11(c) of AP (DIR Series) Circular No.28 dated March, 30, 2001, units situated in Special Economic Zones have been permitted to realize and repatriate to India the full value of goods or software within a period of twelve months from the date of export. It has now been decided to remove the stipulation of twelve months or extended period thereof for realization of export proceeds. Accordingly, there shall be no prescription of any time limit for realization of exports made by units in SEZs. However, the units in SEZs will continue to follow the GR/PP/SOFTEX export procedure outlined in Part B of Annexure to A.P. (DIR Series) Circular No.12 dated September 9, 2000 as amended from time to time.
B. ............"
We are, however, unable to read the relevant clause 'A' supra in the manner as projected by the Revenue per its Gd.2. All it, to our mind, clarifies is that the extended time period, which prior to 01.04.2003 stood at twelve months (from the date of export), shall henceforth, i.e., w.e.f. 01.04.2003, extend indefinitely - again, from the date of export itself. The Revenue's relevant ground is, thus, equally misconstrued.
Further still, it could be argued that the sale proceeds (or part thereof) may not be realized at all in the fact situation of a particular case, while the assessee shall stand to be accorded tax exemption on the relevant income, which is only for the reason or on the premise that the same is or is to be brought into India in convertible foreign exchange. The argument, though appealing at first blush, is misconceived. This is as where the sale proceeds are not realized, there is no question or possibility of any income. The question of it being subject to tax, quite apart from it being exempt u/s.10A, thus does not arise at 5 ITA No.662/Mum/2012 (A.Y. 2003-04) Asst. CIT vs. Tara Jewels Exports Pvt. Ltd.
all. Accordingly, the non-stipulation of any time frame by the RBI for the realization and repatriation of the export proceeds for the units located in SEZs does not per se lead to any conflict or inconsistency between the same and the provisions of the Act. Tax implication may though arise where the sale proceeds are either received otherwise than in convertible foreign exchange or, though received as so, is not brought into India inasmuch as sec. 10A(3) gets attracted. These aspects, however, do not arise for consideration in the facts of the present case.
5. In view of the foregoing, in our view, the Revenue's case is without merit and, accordingly, we uphold the impugned order. We direct accordingly.
6. In the result, the Revenue's appeal is dismissed.
प रणामतः राज व क अपील खा रज क जाती है ।
Order pronounced in the open court on January 29, 2014 Sd/- Sd/-
(Vijay Pal Rao) (Sanjay Arora)
या यक सद य / Judicial Member लेखा सद य / Accountant Member
मुंबई Mumbai; दनांक Dated : 29.01.2014
व. न.स./Roshani, Sr. PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु त(अपील) / The CIT(A)
4. आयकर आयु त / CIT - concerned
5. वभागीय त न ध, आयकर अपील य अ धकरण, मंब
ु ई / DR, ITAT, Mumbai
6. गाड फाईल / Guard File
आदे शानस
ु ार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt. Registrar)
आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai