2021 (7) TMI 950 - AT - Income Tax

Computation of deduction u/s 10A - Belated receipt of foreign remittances on account of export sales to be included in the export turnover for the purposes of computing deduction - HELD THAT - The criteria required by the statute is that the sale proceeds are to be received in convertible foreign exchange in India for being eligible to be considered for the purposes of claiming deduction under section 10 A. In the present facts of the case, we note that, there is no dispute whatsoever regarding receipt of the sale proceeds in convertible foreign exchange were received by assessee, though belatedly. The only reason for not considering the alleged amount while computing deduction under section 10A of the Act was that, such amount was received belatedly beyond the period of six (6) months mentioned in the statute, and application for extension of time for receiving such foreign remittances have been filed with the authorized bankers and the applications were not been rejected. The facts of the case in hand is similar to the aforesaid case of Wipro Ltd. 2015 (10) TMI 826 - KARNATAKA HIGH COURT - Thus following it we hold that notwithstanding the fact that there is no express order granting approval by the authorized bankers extending the time limit of six (6) months for receipt of foreign remittances on account of export sales, the assessee is entitled to the benefit of deduction under section 10A of the Act and consequently direct AO that such amounts, though realized belatedly, shall be included in the export turnover for the purposes of computing deduction under section 10A of the Act - Decided in favour of assessee.

Summary

Issues:
1. Correct application of deduction under section 10A of the Income Tax Act for assessment years 2008-09 and 2009-10.

Issue 1: Correct application of deduction under section 10A of the Income Tax Act for assessment years 2008-09 and 2009-10

The appeals arose from orders passed by the CIT (A) for assessment years 2008-09 and 2009-10. The AR argued that the issue in the appeal for 2008-09 was wrongly listed as it did not arise from a specific order. The AR contended that there was a mistake in the appreciation of facts for both years, leading to incorrect decisions. The issue revolved around the exclusion of certain amounts from export turnover due to non-receipt within the prescribed time, affecting the deduction under section 10A. The AR cited legal precedents to support the inclusion of belatedly realized amounts in the export turnover for deduction purposes. In contrast, the CIT.DR relied on a different legal precedent to argue against granting benefits without appropriate authority approval for belated proceeds. The Tribunal analyzed the arguments and legal precedents cited by both sides.

The Tribunal noted the decision of the Hon'ble Karnataka High Court in the case of Wipro Ltd., emphasizing that the receipt of foreign exchange within the prescribed time was crucial for claiming the deduction under section 10A. However, the Court also highlighted that if the authority did not reject an extension request and the proceeds were eventually received, the assessee could still be entitled to the deduction. The Tribunal also considered the decision of the jurisdictional High Court, which emphasized that once the sale proceeds were received in India, even if late, and the competent authority approved the extension, the assessee should be entitled to the benefit. Based on these legal principles, the Tribunal concluded that the belatedly realized amounts should be included in the export turnover for computing the deduction under section 10A. As a result, the grounds raised by the assessee were allowed, and the appeals were decided in favor of the assessee.

In conclusion, the Tribunal's decision focused on the correct interpretation and application of section 10A of the Income Tax Act for the assessment years 2008-09 and 2009-10, ensuring that belatedly realized amounts were considered for deduction purposes based on legal precedents and statutory requirements.

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