2015 (3) TMI 54 - AT - Income Tax

Revision u/s 143(3) r.w.s. 263 - CIT(A) granting deduction u/s 10A to the payments brought into India in foreign exchange after 6 months from the date of export though RBI - Held that - Since the appeal passed u/s 263 has been decided already by the Tribunal in assessee's own case 2015 (2) TMI 570 - ITAT HYDERABAD wherein it has been held that the CIT does not have jurisdiction to initiate proceedings u/s 263 of the I.T. Act as proceeds have been brought into India within extended time stipulated by RBI. Further, as seen from the record, the assessee has received the amount within the permitted period by the competent authority. Accordingly, the order of the AO is not prejudicial to the interests of the Revenue nor is erroneous. As the present appeal passed by the AO u/s 143(3) r.w.s. 263 become infructuous and hence appeal of the Revenue is dismissed.

Summary

Issues:
1. Interpretation of Section 10A of the Income Tax Act regarding the time limit for receiving inward foreign remittances.
2. Validity of RBI circular allowing export earnings to be repatriated within one year.
3. Jurisdiction of the CIT to initiate proceedings under Section 263 of the Income Tax Act.

Analysis:
1. The appeal involved a dispute regarding the interpretation of Section 10A of the Income Tax Act concerning the time limit for receiving inward foreign remittances. The CIT set aside the assessment order, directing the AO to recompute the deduction under Section 10A as the assessee did not receive foreign exchange within the stipulated time. The AO recalculated the deduction, excluding the amount not received within six months, leading to a reduced export turnover for the assessee.

2. The assessee argued that the RBI circular allowed export earnings to be repatriated within one year, even though the amount was not received within six months. The CIT(A) relied on a decision by the ITAT Bangalore Bench, stating that if export earnings are repatriated within one year as per the circular, they should not be excluded for Section 10A purposes. The CIT(A) directed the AO to verify the circular's applicability and follow the ITAT decision if valid. The Revenue appealed, questioning the validity of applying the RBI circular under the Income Tax Act.

3. The Tribunal noted that the issue had already been decided in a previous appeal against the order passed under Section 263. As the Tribunal had held that the CIT lacked jurisdiction to initiate proceedings under Section 263, the present appeal against the order passed under Section 143(3) read with 263 was deemed infructuous. Consequently, the appeal filed by the Revenue was dismissed, affirming the decision of the lower authorities.