2004 (10) TMI 25 - HC - Income Tax

Application made by the petitioner on November 10, 1998 seeking extension under section 80HHC(2)(a) for realisation of outstanding export proceeds - explanation given by the assessee for the delayed receipt of proceeds for exports was Asian currency crisis in South-East Asian countries and devaluation of Hongkong dollar. - Commissioner seems to have overstretched the matter by observing that the assessee ought to have established with evidence that he was unable to bring the convertible foreign exchange for the reasons beyond control. - matter requires consideration by the Commissioner of Income-tax - Commissioner of Income-taxis directed to reconsider the petitioner s application

Summary

Issues:
Extension under section 80HHC(2)(a) for realisation of outstanding export proceeds.

Analysis:

The High Court of BOMBAY heard the case where the petitioner sought an extension under section 80HHC(2)(a) for realisation of outstanding export proceeds. The court noted that payments for exports were received on various delayed dates due to reasons beyond the petitioner's control, such as the Asian currency crisis and devaluation of the Hongkong dollar. The Commissioner of Income-tax had required the petitioner to provide evidence that the delay was unavoidable, which the petitioner explained was due to external factors. The court found that the Commissioner had overstretched the matter and directed the Commissioner of Income-tax, Mumbai City XVI, Mumbai to reconsider the petitioner's application in accordance with the law.

The court considered the explanation provided by the assessee for the delayed receipt of export proceeds and found it reasonable, attributing the delay to external economic factors. The court emphasized that the reasons for delayed payment were beyond the control of the assessee, specifically citing the Asian currency crisis in South-East Asian countries and the devaluation of the Hongkong dollar. The court held that the Commissioner's requirement for the assessee to establish with evidence the inability to bring convertible foreign exchange was unwarranted in this case.

The High Court set aside the impugned order dated February 5, 2004, and directed the Commissioner of Income-tax, Mumbai City XVI, Mumbai to reconsider the petitioner's application dated November 10, 1998 seeking extension under section 80HHC(2)(a) in light of the circumstances explained by the assessee. The court disposed of the rule accordingly, mentioning that no costs were to be incurred. The judgment provided relief to the petitioner by acknowledging the uncontrollable external factors that led to the delayed receipt of export proceeds.