9911796707
TMI Blog2000 (12) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... une of Rs. 2,06,03,389 under s. 80HHC(1) in lieu of the export of sports goods and household utensils worth Rs. 40,27,66,975.45 out of India. In terms of that section, the petitioner was entitled to claim deduction on the sale proceeds of the exported goods in convertible foreign exchange within a period of six months from the end of previous year commencing from 1st April, 1995, in contemplation of the delay in realisation of the proceeds of export sales by 30th Sept., 1996. It submitted an application under s. 80HHC(2)(a) before respondent No. 1, seeking extention of item upto 31st March, 1997. The relevant portion of that application is extracted below : " ...... The detail of these bills along with the reasons for delay in the realisation is given below: ------------------------------------------------------------------------------------------ Bill Dated Party name Amount Reasons No. Rs. ------------------------------------------------------------------------------------------ 1442 20-10-95 M/s Petgoods 50,86,851 Goods in respect of this invoice Mfg. & Imports, were despatched with the terms USA. "Documents against payment". The buyer has somehow taken the deli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication dated September 27, 1996. In that application it was specifically mentioned that one of the buyers, namely, Mitra Sports, U.K., had remitted the amount due, but others have not done so far. The same was accepted by respondent No. 1, but this time also he granted extension up to June 30, 1997, instead of September 30, 1997. On June 28, 1997, the petitioner submitted the application annexure P-4 for extension of time under section 80HHC(2)(a) up to December 31, 1997, by making the following statement : "Out of the three bills mentioned in our earlier letter, it has now become clear that the payment in respect of one bill No. 1475, dated 19-12(sic) issued to Royal Distributors, California, USA, for Rs. 4,88,724 will not be realised. We have even written to the Reserve Bank of India through bankers for permission to write off this amount. Copy of the letter is enclosed at page 1. No extension is, therefore, required in respect of invoice. The position regarding the other two pending export bills is given below : ---------------------------------------------------------------------------------------------- Bill Dated Party name Amount Reasons No. Rs. ----------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnational Pvt. Ltd., Tens Australia, did not remit the amount. Therefore, vide letter (annexure P-7), dated August 29, 1997, it made a request to respondent No. 1 to grant extension up to December 31, 1997. Respondent No. 1 acceded to the petitioner's request but extended time only up to November 30, 1997. Vide application annexure P-9, dated December 1, 1997, the petitioner prayed for further extension of time by stating that the buyer, namely, Mayor International Pvt. Ltd., had given assurance for remitting the amount due. This application was accompanied by a copy of the e-mail received from the buyer, Mayor International Pvt. Ltd., showing that the payment was likely to be remitted in the near future. In response to the said application, the Income-tax Officer (Technical), Jalandhar, informed the petitioner vide letter annexure P-10, dated March 17, 1998, that respondent No. 1 had granted ex post facto extension up to December 31, 1997, with a rider that no further extension will be allowed. Two days before the receipt of the said letter, the petitioner received 10,150 Australian dollars equivalent to Rs. 2,60,347 from Mayor International Pvt. Ltd. and by citing the same a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a period of six months when the extension was refused. But, in the present case, as stated above, extensions have already been allowed from time to time for a period of fifteen months. It is also mentioned here that the assessment year involved is 1996-97, and according to the Income-tax Act, 1961, the assessment has to be finalised during the 1998-99 financial year. The assessee has been applying for extension time and again and he has already been allowed sufficient time. 12. In the case( of D. B. Exports (India) v. CIT [1998] 231 ITR 836, it has been held by the Punjab and Haryana High Court that the assessment cannot be kept pending for an indefinite period. While respectfully following the decision of the jurisdictional High Court I am satisfied that this is not a fit case for further extension of period, and the assessee's petition is accordingly rejected." In the meanwhile, respondent No. 2 issued notice dated August 4, 1998, under section 143(2) of the Act for finalisation of assessment and vide annexure P-16, dated December 10, 1998, he completed the assessment by making an addition of Rs. 1,78,612 to the declared income of the petitioner. The petitioner has challen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on applies to all goods or merchandise, other than those specified in clause (b), if the sale proceeds of such goods or merchandise exported out of India are received in or brought into India by the assessee other than the supporting manufacturer in convertible foreign exchange, within a period of six months from the end of the previous year or, where the Chief Commissioner or Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Chief Commissioner or Commissioner may allow in this behalf." An analysis of the provisions quoted above shows that under sub-section (1) of section 80HHC an assessee engaged in the business of export out of India of goods or merchandise to which the provisions of that section apply is entitled to deduction of profits derived from the export of such goods or merchandise in computing his total income. Clause (a) of sub-section (2) of section 80HHC lays down that the assessee is entitled to claim deduction of the profits derived by him from the export of specified goods out of India, if the sale proceeds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rought into India by the assessee in convertible foreign exchange within the period of two years from the end of the assessment year and he shows that the amount could not be brought or received earlier on account of reasons beyond his control, then the Chief Commissioner or the Commissioner, as the case may be, is obliged to grant extension of time. The discretion conferred upon the Chief Commissioner or the Commissioner under section 80HHC(2)(a) is not unbridled or unguided. Rather it is limited to the consideration of the plea of the assessee that the sale proceeds could not be brought into or received in India within six months due to reasons not attributable to him and once the assessee satisfies the Chief Commissioner or the Commissioner that the sale proceeds could not be brought within the stipulated period, due to reasons beyond his control, the extension contemplated by section 80HHC(2)(a) has to be granted as a matter of course, unless there are other cogent reasons for not doing so. This interpretation of sub-section (2)(a) of section 80HHC is consistent with the object sought to be achieved by incorporating section 80HHC, i.e., to encourage export of goods and merchand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., Australia, much before the expiry of the time limit for completing the assessment has not been controverted by the respondents, but this aspect has been totally ignored by respondent No. 1 while declining the petitioner's request for extension. Moreover, while deciding the petitioner's applications for extension of time, respondent No. 1 did not apply his mind to the crucial aspect of the matter, i.e., whether the reasons assigned by the petitioner for its being unable to bring the amount of sale proceeds in India, were beyond its control. Therefore, we have no hesitation to hold that the order dated December 22, 1998, is vitiated by an error of law apparent from the face of the record. We are further of the view that the impugned order is liable to be invalidated on the ground that the rejection of the petitioner's prayer for extension of time up to July 31, 1998, is vitiated by arbitrariness. The respondents have not disputed that various extensions were given by respondent No. 1 by accepting the petitioner's plea that it had not been able to receive the amount of the sale proceeds due to reasons beyond its control. In the backdrop of these facts, there was no justificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt had also not elapsed. Thus, there was no valid reason to decline extension to the petitioner. In view of the above conclusion, we do not consider it necessary to deal with the argument of Shri B. S. Gupta that section 80HHC(2)(a) does not contemplate submission of an application by an assessee for extension of time and the competent authority is bound to grant extension as a matter of course. For the same reason, we do not deem it necessary to comment upon the proposition laid down in the Azad Tobacco Factory (P.) Ltd. v. CIT [1997] 225 ITR 1002 (All) and Geekay Exim (India) Ltd. v. CIT [1998] 234 ITR 560 (Cal), on which reliance has been placed by learned counsel for the petitioner, and leave this point to be decided in some other case. For the reasons mentioned above, the writ petition is allowed. The order annexure P-17 is declared illegal and quashed with the direction to respondent No. 1 to pass an order extending the period stipulated in section 80HHC(2)(a) up to September 30, 1998. The petitioner shall get all consequential benefits. We also direct that if the assessment has been completed in the meantime, adversely affecting the rights of the petitioner, then it shal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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