1993 (3) TMI 195 - AT - Income Tax

Summary

Issues:
- Interpretation of whether the sale to UNICEF Office in New Delhi qualifies for 80HHC deduction under section 80HHC of the Income Tax Act.

Analysis:
The Appellate Tribunal ITAT Pune heard the revenue's appeal against the CIT(Appeals) order concerning the treatment of the sale to UNICEF Office in New Delhi for 80HHC deduction. The revenue argued that the sale does not qualify for the deduction as it is not out of India and the necessary conditions have not been met. The Tribunal considered arguments from both sides and reviewed relevant documents, including the United Nations (Privileges and Immunities) Act, 1947, to determine if the UNICEF office in New Delhi can be considered a foreign territory for the purpose of granting the deduction.

The Tribunal analyzed the provisions of the UNICEF Act and concluded that the protection provided to the UNICEF office in New Delhi under the Act does not equate to the goods sold by the assessee being considered as exported out of India. The Tribunal emphasized that the office premises of UNICEF in New Delhi cannot be deemed a foreign territory for export purposes, as the goods sold were not physically taken out of India. The Tribunal also examined the conditions under section 80HHC for claiming deductions related to export business, highlighting the requirement for goods to be exported out of India for the provisions to apply.

The Tribunal reviewed the documentation provided by the assessee, including invoices, certificates, and correspondence, to support the claim that the sale to UNICEF in New Delhi should qualify as an export for 80HHC deduction. However, it was noted that despite the transactions being conducted in US dollars, the actual receipt by the assessee was in Indian currency, indicating that the goods did not physically leave India. The Tribunal emphasized that the legal protections under the UNICEF Act do not transform the sales into export turnover, as the goods remained within the territory of India.

In considering the arguments presented by both parties, the Tribunal held that the sale to UNICEF in New Delhi does not meet the criteria for export turnover under section 80HHC. The Tribunal rejected the CIT (Appeals) decision and allowed the revenue's appeal, concluding that the sale did not qualify for the 80HHC deduction as it was not an export out of India. The Tribunal highlighted the distinction between export incentives under different sections of the Income Tax Act and emphasized that the political boundaries of India do not equate to territorial boundaries, impacting the eligibility for export-related deductions.