Income Tax Appellate Tribunal - Delhi
Sandeep Mani (Huf) vs Dcit, Spl. Range 7 on 3 December, 2002
ORDER
T.N. Chopra, Mumber (Accountant)
1. This appeal is filed by the assessee against the order of CIT (Appeals) date 2.1.1997 for the asstt. year 1992-93.
2. The controversy relates to computation of deduction u/s 80HHC for asstt. year 1992-93. The grievance of the assessee is two fold :-
(i) The CIT (A) has grossly erren in reducting the export turn over by Rs. 17, 22, 800/- received in respect of export made in 1982; and
(ii) The Id. CIT(A) has grossly erred in excluding Rs. 34, 87, 773/- being the interest received through Export Credit Guarantee Corporation of India Limited on the delayed remittance of export made to Nigeria in the financial year 1982-83.
3. Ld counsel for the assessee filed a paper book wherein at page 1 details of claims in respect of exports made in financial year 1982-83 to Nigeria are indicated. From the 10 export bills, one of which is dated 25.8.1982 pertains to asstt. year 1982-83. The remaining 9 bills relate to export bills made to Nigeria during the financial year 1982-83 relevant to asstt. year 1983-84. Total invoice value of the aforesaid bills aggregates to Rs. 65, 68, 981/-. It is pointed out that the remittance from Nigeria was not received for a long time despite efforts made by the assessee in this behalf. Ld. counsel invited our attention to page 2 of the paper book which indicates that the ECGC informed the assessee that out of total amount payable Rs. 66, 36, 329/- a sum of Rs. 2, 67, 410/- has already been paid and the balance amount of Rs. 63, 68, 919/- is being remitted to the assessee by cheque. On pages 3 to 12 of the paper book, particulars of 10 export bills regarding exports made to Nigeria have been given. At pages 13 & 14 assessee has given computation of deduction u/s 80HHC counted to Rs. 17, 44, 130/-. Assessee, however, in the return in income filed claimed deduction u/s 80HHC amounted to Rs. 42, 55, 402/-.
4. While making the assessment, the AO computed deduction u/s 80HHC amounted to Rs. 11, 17, 976/- and allowed the same. CIT (A) vide para 5 to 7 of the impugned appellate order upheld the computation of deduction as made by the AO.
5. Aggrieved, the assessee is in appeal before us.
6. We have heard the Id. representatives on both and are inclined to uphold the action of the tax authorities below in the matter of computation of deduction u/s 80HHC. Before we discuss the facts and issues in this appeals, it would be relevant to indicate that section 80HHC has been first inserted into the statute by the Finance Act, 1983 w.e.f. 1.4.1983. The section as applicable for asstt. year 1983-84 provided the while computing taxable income the following amounts would be allowed by way of deduction u/s 80HHC:-
(a) an amount equal to one per cent of the export turnover of such goods or merchandise during the previous year; and
(b) an amount equal to five per cent of the amount by which the export turnover of such goods or merchandise during the previous year exceeds the export turnover of such goods or merchandise during the immediately preceding previous year.
The deduction mentioned u/s (b) above is not allowed unless tax-payer had during the immediately previous year, exported out of India goods/merchandise to which the section applies. Now, in the instant case, our of 10 export bills, on bill pertaining to export made on 25.3.1982 relates to asstt. year 1982-83 for which no deduction u/s 80HHC is available to the assessee. Regarding the balance 9 bills, the CIT (A) has pointed out, and this fact is not disputed before us, that the assessee has availed of benefit us 80HHC for asstt. year 1983-84 in respect of the exports made in the financial year relevant to asstt. year 1982-83. As pointed out by the Id. representative for the assessee., there were certain difficulties in the matter of remittance of export proceeds by the Nigerian party which had imported the goods from the assessee. Therefore, against the invoice value of Rs. 65, 68, 981/- the assessee received Rs. 66, 36, 329/- which was inclusive of interest for deleyed payment. Now, the facts are undisputed that the assessee has availed of the benefit of u/s 80HHC in respect of the exports made for asstt. year 1983-84 which was incidentally the first year in which the benefit was allowed by the legislature. Obviously, after availing the benefit once for asstt. year 1983-84. the assessee cannot claim the benefit once for asstt. year 1992-93 merely on the ground that the remittance have actually been received during this year. Now in so far as the amount or Rs. 17, 22, 809/- is concerned, this cannot, in our opinion cannot be considered as export turnover relating to asstt. year 1992-93. Export have been made in asstt. year 1983-1984 and there is no occasion for the assessee to claim that any amount received in asstt. year 1992-93 would be treated as export turnover for asstt. year 1992-93. The assessee has placed at page 4 of the paper book profit and loss account which indicates total sales at Rs. 42, 12, 675/- and further amount of Rs. 17, 92, 024/- has been credited to the P&L account on account of difference in foreign exchange. Out of this other amount of Rs. 17, 92, 024/- a sum of Rs. 69, 215/- relates to the asstt. year 1992-93 itself and the balance amount of Rs. 17, 22, 810/- related to export to Nigeria made in 1982 which remained unpaid for. The amount of Rs. 69, 215/- pertains to the exports made during the asstt. year 1982-83 itself and, therefore, his would form part of the export turn over. However, the balance amount of Rs. 17, 22, 810/- which pertains to export made in the year 1982 cannot be treated as export turnover for the asstt. year under appeal. Section 80HHC as is relevant for the asstt. year 1992-93 under appeal is intended for allowing deduction for the exports made during the year and the export turnover of the year necessarily would mean the export of goods during the year. Section 80 HHC(2)(a) provides that the sale procured of the case are to be brought into India 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. Now, in the instant case, neither have the exports been made during the period relevant for asstt. year 1992-93 nor have the export proceeds being brought into India within the specified period as provided under the statute. The amount of Rs. 17, 22, 809/- connote therefore, in our opinion, be treated as export turnover for the asstt. year 1992-93.
7. We may at this stage refer to the Explanation (baa) appended below sub-section (4)(b) of section 80HHC which defines "profits of the business" as under :-
"Profits of the business means the profits of the business as computed under the head "Profit and gains of business or profession" as reduced by (1) ninety per cent of any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28 or of any receipts by ay of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and (2) the profits of any branch, office, warehouse or any other establishment of the assessee situated outside India"
From the aforesaid provision, it is clear that the amount of Rs. 17, 22, 809/- is to be treated as "any other receipt" for the proposes of computation of deduction u/s 80HHC. The contention of the Id. counsel on the issue is, therefore, rejected.
8. Ld. counsel has referred to certain decisions in support of his contentions. We have gone through these decisions and find that these decisions have been rendered in entirely different situations and do not help the assessee. A few such cases relied upon by the Id. counsel are being discussed hereunder.
8.1 In the case of Smt. Sujata Grover v. DCIT 74 TTJ (Del) 347, the basic issue arose pertaining to the scope and nature of powers conferred on the commissioner u/s 263. The Tribunal held that the order of the AO on the issue of deduction u/s 80 HHC have not been considered and decided by the CIT (A) same got merged with the order of the CIT (A) and the CIT could not have revised the order on another aspect of deduction u/s 80HHC. Regarding the foreign exchange fluctuation gain, CIT in the aforesaid case had directed the AO to include the foreign exchange fluctuation gain as part of the export turnover. There was, therefore, no occasion for the CIT (A) to interfere with the finding u/s 263. The decision, therefore, does not support the assessee's case.
8.2 In Mohindra Impex v. ACIT 121 Taxman page 326, foreign exchange remittance have been received within the extended time as per the provisions of section 80HHC. The assessee has thus complied with the statutory requirement of remission within six months or the time as allowed by the competent authority. In the instant case, this essential requirement is lacking and the decision, therefore, would not help the assessee.
8.3 The Id. counsel next cited the decision of the Ahmedabad Bench of the Tribunal in Mayank Electro Ltd. v. ITO 71 TTJ 612. This decision has been rendered in the context of 80LA and would not apply for the purposes of section 80HHC.
8.4 Apart from the aforesaid decisions, other decisions referred by the Id. counsel, they have been perused by us and are clearly distinguishable on facts.
9. We would, therefore, uphold the finding of the CIT (A) that the amount of Rs. 17, 22, 809/- would not form part of export turnover for the purposes of computation of deduction u/s 80HHC.
10. Regarding the second point involving interest of Rs. 34, 87, 773/- we see no merit in the contentions of the Id. counsel and are inclined to uphold the direction of the CIT (A) on the issue. It is significant to note here that the computation of deduction as made in prescribed form No. 10-CCAC by the auditor in accordance with the section 80HHC (4)(a) has treated the interest of Rs. 34, 87, 773/- as deductible from profit of business. Reference, in this connection, is made to page 22 of the paper book filed by the assessee. We have already reproduced Explanation (baa) above which specifically provides that "profits of the business" are to be arrived at after excluding 90% of export benefits as well as any receipts by way of brokerage, commission, interest etc. So interest is thus specifically excluded under Explanation (ba). We see no ambiguity in the stature. It appears to us that it was in view of the specific provision that the auditor in the audit report has himself excluded the aforesaid interest from the profits of business. We would accordingly uphold the view of the Id. CIT (A) on the issue.
11. In the result, the appeal of the assessee is dismissed.