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TMI Blog2002 (12) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... , on the facts and in the circumstances of the case and in the absence of a certificate from the Export House being filed along with the return, the assessee is entitled to the deduction under section 80HHC with regard to the foreign sales made? (2) Whether, on the facts and in the circumstances of the case and on an interpretation of sub-section (4A) of section 80HHC read with State Level Committee v. Morgardshammar India Ltd. [1996] 101 STC 1 (SC) and Dr. Mrs. Renuka Datla v. CIT [1999] 240 ITR 463 (AP), is not the provision mandatory and does not non-compliance of the provision result in disallowance of the deduction? (3) Whether, on the facts and in the circumstances of the case and in the light of the Supreme Court decision in Keshav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Works [2000] 245 ITR 13 (Ker). Learned counsel appearing for the res pondents, Shri P. Balachandran, relied on the decision of this court in CIT v. Malayalam Plantations Ltd. [1976] 103 ITR 835; CIT v. Shivanand Electronics [1994] 209 ITR 63 (Bom); Peerless General Finance and Investment Co. Ltd. v. Dy. CIT [1999] 236 ITR 671 (Cal) and CIT v. Hemsons Industries [2001] 251 ITR 693 (AP). Before going into the rival contentions, it will be beneficial to refer to the relevant statutory provisions, first. The relevant portion of section 80HHC reads as follows: "(1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the sale of goods or merchandise to the Export House or Trading House in respect of which the certificate has been issued by the Export House or Trading House..... (4A) The deduction under sub-section (1A) shall not be admissible unless the supporting manufacturer furnishes in the prescribed form along with his return of income,- (a) the report of an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed on the basis of the profits of the supporting manufacturer in respect of his sale of goods or merchandise to the Export House or Trading House and (b) a certificate from the Export House or Trading House containing such particulars as may be prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing it is only directory in nature. Learned senior standing counsel for the Revenue, relying on the decision in CIT v. Dhanalakshmi Weaving Works [2000] 245 ITR 13 (Ker), submitted that the requirement under sub-section (4A) of section 80HHC should be read as mandatory. That was a case involving interpretation of section 201(1A) of the Income-tax Act, which provides that if there is a failure to deduct the tax as contemplated under section 201(1A) read with section 194, the said person shall be liable to pay interest for the amount deductible at the rate mentioned therein to the Revenue. The said provision casts an obligation on the person who pays the interest to another to deduct the tax on such amount. It does not deal with any time lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of U.P. v. Babu Ram Upadhya, AIR 1961 SC 751, this court held that rules made under a statute must be treated, for all purposes of construction or obligations, exactly as if they were in that Act and are to the same effect as if they are contained in the Act and are to be judicially noticed for all purposes of construction or obligations." The stand of the assessee that the relevant provision is directory is supported by the decision of the Andhra Pradesh High Court in CIT v. Hemsons Industries [2001] 251 ITR 693. It was held in that decision that the requirement of filing an audit report under section 80HHC along with the return of income is not mandatory. It was held that if the assessee files an audit report before the assessment is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and to give incentive to develop export business. Though, normally a strict construction is advocated with reference to taxing provisions, the apex court has held that when exemptions are made with a beneficent object such as to give incentive to co-operative movement or for encouraging investment in new machinery or plant, such provisions have to be liberally construed. In view of the above legal position, we are inclined to hold that the requirement of filing the declaration along with the return of income contemplated under sub-section (4A) of section 80HHC is only directory. The filing of the declaration to claim the benefit is no doubt, mandatory. But, the time of filing the declaration is directory in nature and it can be filed at a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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