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TMI Blog2013 (7) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. Disallowance debited to profit and loss account on account of donation - Held that:- No infirmity in the finding of the CIT(A) as nothing has been brought on record then how these expenses/deduction are allowable. Against assessee. Allowance of expenditure on stamp duty - Held that:- No infirmity in the finding of the CIT(A), who allowed the issue in favour of the assessee by ascertaining the factual matrix of the case and considered various case laws relied upon by the AR before him. In favour of assessee - ITA No.6427/Mum/2008, ITA No.6502/Mum/2008, ITA No.5283/Mum/2010, ITA No.4487/Mum/2011 - - - Dated:- 30-4-2013 - Shri R. K. Gupta, JM And Shri P. M. Jagtap, AM,JJ. For the Petitioner : Mr. Vijay Mehta For the Respondent : Mr. Prann Kumar Mr. V. V. Shastri ORDER Per Bench: These four appeals have been preferred by the assessee and department against the order leaned CIT(A), Mumbai relating to the assessment years 2005-06, 2006-07 2007-08, respectively. 2. Since common issues are involved in all the cases, therefore, for the sake of convenience, all these cases have been heard and disposed of by this consolidated order. 3. For asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10A(3) the sale proceeds should have come to India within 6 months or within such further period as the competent authority may allow. He further referred to explanation 1 2 us. IOA(3). Explanation 1 states that the competent authority is the RBI or any such authority authorized under law. As per explanation 2, the sale proceeds shall be deemed have received in India where such sale proceeds are credited to a separate account maintained for this purpose by the assessee with any bank outside India with the approval of RBI. It was further contended that the export proceeds have been realised in time and the permission of the RBI has been obtained wherever applicable. He explained that sale proceeds of Rs.6,13,18,000 is relating to export made to Ransat PLC on 2.4.2004 from the STPI unit. The assessee was also importing certain petrochemicals from this party and exporting items like ceramics, bone china and software developed for International market. So there was both export and import with this party and money was to be paid and received from them. The assessee made an application to the RBI on 29.3.2005 seeking set off of the export receivable against import payments. The permis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um of Rs.9,61,32,037/-. The AO has not mentioned about the balance amount of Rs.3,48,14,037/-. He has not allowed deduction u/s 10A in respect of this amount but has not specifically disallowed such claim as in case of the other items. It appears to be a case of a mistake. The AO is directed to allow deduction u/s 10A respect of this amount of the 3,48,14,034/-. 3.7 Regarding the other amount of Rs 6,13,18,0001- I have gone through the submission and the material brought to record. This has two distinct components. So far as the sum of Rs 51,29,00,000/- receivable from M/s Ransat PLC is concerned, there is no dispute that this amount has not been received in conversible foreign exchange in India. So the conditions prescribed u/s 10A(3) are not fulfilled. The appellant has sought remedy under explanation 1 and 2 under section 10A(3). The first explanation specifies the competent authority who can further extend the time to bring in foreign exchange to India beyond six months. This authority is RBI or any such authority created by law. There is no dispute on this. The second explanation states that sale proceeds put in a separate bank account maintained abroad for this purpose will b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3). It is therefore qualified to get deduction u/s 10A. The AO is according directed to allow deduction u/s 10A in respect of this amount of 1,28,00,000. This ground of appeal is partly allowed." 7. Now, both the assessee and department are in appeals here before the Tribunal. 8. The assessee in its appeal is objecting in not allowing deduction of Rs.5,12,90,000/- and the department in its appeal is objecting in allowing deduction of Rs.3,48,14,034/- and Rs.1,00,28,000/-. 9. The contention raised before the learned CIT(A) were reiterated here before the Tribunal by the learned AR. It was further submitted that the learned CIT(A) has disallowed the claim of the assessee by observing that the receipts receivable on account of export made by the assessee, which was adjusted against the payable amount on account of purchase which was payable in foreign currency, was not adjustable against each other and since the assessee has not received any convertible foreign exchange, therefore, the same was rightly rejected by the AO and accordingly the action of the AO was confirmed by the learned CIT(A) to that extent, which is totally wrong as the payments receivable by the assessee wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rve Bank of India was expressed in foreign exchange and in effect the retention of the fee due to the appellant for the services rendered was in U.S. dollars. This was receipt of income in convertible foreign exchange. A formal remittance to the foreign reinsurers first and thereafter to receipt of the commission from the foreign reinsurer was unnecessary. Moreover, the Central Board had by circular dated December, 20, 1995, clarified the real scope and impact of section 80-O stating that the receipt of brokerage by a reinsurance agent in India from the gross premia before remittance to his foreign principal would also be entitled to the deduction under section 80-O of the Act. This was binding on the Board. BY THE COURT: "A "two-way traffic" is unnecessary. To insist on a formal remittance to the foreign reinsurers first and thereafter to receive the commission from the foreign reinsurer, will be an empty formality and a meaningless ritual, on the facts of this case. Decision of the Delhi High Court reversed." In the present case also, similar situation is involved as the assessee exported some material and against which the amount was receivable. The assessee has also purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t deduction under Section 10A of the Act. Accordingly, we confirm the finding of the learned CIT(A) in this respect also. 16. Ground No.1 in the appeal of the assessee is allowed, however, ground raised by the department in its appeal is dismissed. 17. The next ground in the appeal of the assessee is against confirming the disallowance of Rs.3,25,186/-, debited to profit and loss account on account of donation. 18. The AO did not allow the deduction as the assessee could not explain the justification for the claim. Learned CIT(A) also confirmed the action of the AO as there was no evidence to suggest that the amounts were spent for the purpose of business and was necessary for business expediency. 19. After considering the order of the CIT(A), and the submission of the assessee, we found no infirmity in the finding of the CIT(A) as nothing has been brought on record then how these expenses/deduction are allowable. Accordingly, we confirm the order of the CIT(A) in this respect. 20. Grounds No.3 4 in the appeal of the assessee have not been pressed, therefore, they are dismissed as not pressed. 21. There is one more ground in the appeal of the department for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein the RBI has clarified that the stipulation of twelve months or extended period thereof for realization of export proceeds is no longer applicable for units located in Special Economic Zones (SEZs). The CIT(A) has also noted that the assessee has received the amount within the extended period and, therefore, eligible for deduction. We are satisfied with the finding of the learned CIT(A) and nothing has been brought to cotrovert the finding of the learned CIT(A), except arguing on behalf of the department that under Section10A of the Act, period of limitation by which the foreign convertible currency has to be received has been provided. The CIT(A) has discussed this aspect also and found that the competent authority has extended the period and, therefore, the amount is qualified for deduction, which was received in extended period. Accordingly, We confirm the finding of the learned CIT(A). 27. The next issue in the appeal of the department for the assessment year 2006-07, is in respect of directing the AO to allow the expenditure on stamp duty of Rs.28,42,714/-. 28. Similar issue was involved for assessment year 2005-06, where we have confirmed the findings of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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