2015 (6) TMI 1025 - HC - Income Tax

Deduction under section 80HHC - whether Tribunal was justified in law in allowing deduction to the assessee under section 80HHC of the Income-tax Act, 1961 on that position of the export sale proceeds which was not brought or received by it in India in convertible foreign exchange within the period stipulated under section 80HHC(2) of the Income-tax Act and even no extension of time was granted by the competent authority (Reserve Bank of India)? - Held that - As seen, under the said section deduction in respect of the profit can be made if the amount is received 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 . The assessee, through its banker, by letter dated October 30, 2001 had applied to the Reserve Bank of India for extension of time till December 1, 2001. The Reserve Bank of India in its reply dated December 28, 2001 advised that as the date, that is, December 1, 2001, till which extension was sought for, had already expired, the assessee should apply for further extension. Incidentally the amount was received on November 26, 2001. The question is whether the letter dated December 28, 2001 by the Reserve Bank of India can be treated to be an order allowing extension of time. Since allow means permission, a positive act, and as in a case of grant of permission it should be in an unambiguous language and in explicit terms, the letter of the Reserve Bank of India requesting the assessee to apply for further extension cannot be taken as an approval in any manner whatsoever. The finding of the Tribunal that deduction to the exporter should not be denied merely on the hyper technical view cannot be accepted. Therefore, the question is answered in the negative and in favour of the Revenue and against the assessee.

Issues:
1. Interpretation of section 80HHC of the Income-tax Act, 1961 regarding deduction eligibility for export sale proceeds not received in India within the stipulated period.
2. Application of extension for receiving foreign exchange beyond the specified period.
3. Disallowance of deduction under section 80HHC by the Assessing Officer.
4. Dismissal of appeal by the Commissioner of Income-tax (Appeals).
5. Tribunal's decision to allow the deduction under section 80HHC for the assessee.
6. Justification of the Tribunal's decision in allowing the claim of the petitioner.
7. Analysis of the Reserve Bank of India's letter regarding extension of time for receiving foreign exchange.

Analysis:
1. The case involved the interpretation of section 80HHC of the Income-tax Act, 1961, focusing on whether the Tribunal was justified in allowing a deduction to the assessee for export sale proceeds not received in India within the stipulated period. The Assessing Officer disallowed the deduction under section 80HHC as the foreign currency payments were received beyond the due date specified under the Act.

2. The assessee had applied for an extension of time for receiving foreign exchange beyond the prescribed period. The Reserve Bank of India's response to the extension request was crucial in determining the eligibility for the deduction. The letter from the Reserve Bank of India advised the assessee to apply for further extension after the initial deadline had passed.

3. The Assessing Officer disallowed the deduction under section 80HHC, leading to the assessee appealing before the Commissioner of Income-tax (Appeals). The Commissioner upheld the decision, stating that specific approval for the extension was not granted by the Reserve Bank of India.

4. Subsequently, the assessee appealed before the Income-tax Appellate Tribunal, which carefully considered the facts and previous orders. The Tribunal noted that the amount in question was received within the extended period sought from the Reserve Bank of India, despite the technical view taken by the Assessing Officer.

5. The Tribunal's decision to allow the deduction under section 80HHC for the assessee was based on the fact that the assessee had applied for an extension of time, and there was no denial by the Reserve Bank of India for such extension. The Tribunal emphasized that the deduction should not be denied based on a hyper-technical view when the extension had been applied for.

6. The core issue revolved around whether the Tribunal was justified in allowing the claim of the petitioner under section 80HHC. The Tribunal's decision was based on the interpretation of the provisions of the Act and the actions taken by the assessee in applying for an extension.

7. The Reserve Bank of India's letter played a significant role in the case, as it advised the assessee to apply for further extension after the initial deadline had passed. The Tribunal's analysis of the Reserve Bank of India's communication was crucial in determining the eligibility for the deduction under section 80HHC. Ultimately, the Tribunal's decision to allow the deduction was based on a holistic view of the situation and the actions taken by the assessee in seeking an extension.

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