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2012 (2) TMI 348 - HC - Income TaxDeemed export - whether sale of goods in India to UNICEF, which is a UNO, can be construed as export out of India - deduction u/s 80HHC assessee contended it to be deemed export in view of its expression in Import and Export policy of the Government of India - export was made to UNICEF, therefore, no need for the goods to cross the boundary of India to constitute export out of India - Held that - Term export out of India has not been defined in the Act. However, simple meaning of it would entail the transfer of goods out of the territory of India. Further, concept of deemed export prevalent in another legislation or policy cannot be imported into the Income-tax Act, 1961 unless the said Act specifically says so. Section 80HHC stipulates twin conditions of goods to be exported out of India, and sale proceeds to be received in convertible foreign exchange. Satisfaction of one condition in the absence of other condition being satisfied would not entitle the assessee to claim the deduction u/s 80-HHC. Section 80-HHC speaks only of export out of India, irrespective of who the purchaser or consignee is, be it a private party or an organization such as UNICEF. Therefore, deduction u/s 80HHC not allowed Decided in favor of revenue.
Issues:
Interpretation of Section 80-HHC for deduction eligibility based on sales to UNICEF in India. Detailed Analysis: 1. Core Issue: The main issue revolves around determining whether the sale of goods to UNICEF in India qualifies as an export out of India under Section 80-HHC of the Income-tax Act, 1961. The critical question is whether the goods physically moved out of India, considering they were EPI posters in Hindi, Urdu, and Gurmukhi, sold to UNICEF in India for an aid program. 2. Facts and Assessments: The assessee, a private limited company, claimed a deduction under Section 80-HHC for sales to UNICEF, arguing that the payment was received in convertible foreign exchange. However, the assessing officer found that the goods were not physically exported out of India, as they were utilized in India under the aid program. The assessing officer rejected the claim, leading to subsequent appeals. 3. Tribunal's Decision: The Tribunal upheld the lower authorities' view that for deduction under Section 80-HHC, two conditions must be met: goods must be exported out of India, and sale proceeds should be received in convertible foreign exchange. The Tribunal emphasized that both conditions are cumulative and independent, not alternatives. It concluded that the goods not crossing India's territorial boundary meant the sale to UNICEF did not qualify as an export out of India. 4. Legal Interpretation: The High Court analyzed the term "export out of India" in detail, emphasizing the physical movement of goods out of India as a necessary condition. It dismissed the argument to import the concept of "deemed export" from other policies, stating that such provisions cannot be applied unless explicitly mentioned in the Income-tax Act. The court also clarified that the identity of the purchaser, UNICEF in this case, does not exempt the requirement for goods to physically leave India for export eligibility. 5. Judgment: Ultimately, the High Court answered questions 1 and 2 in favor of the revenue, affirming that the sale of goods to UNICEF in India did not constitute an export out of India under Section 80-HHC. As a result, the assessee was not entitled to the deduction claimed. The third question remained unanswered due to the resolution of the first two questions. This detailed analysis highlights the legal intricacies and interpretations involved in determining the eligibility for deductions under Section 80-HHC concerning sales to UNICEF in India, as examined in the referenced legal judgment.
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