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TMI Blog2020 (5) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... brought into India long after the end of the previous year relevant to the assessment year 1994-95 and such belated receipt had not been authorized by the Commissioner/Chief Commissioner. The fact remains that the appellant s application before the Commissioner was never taken up for consideration and disposal. Ends of justice will be served if the matter is remanded to the learned Tribunal for fresh consideration taking into account the subsequent development including the order of the RBI stated to have been passed on June 11, 2005 and also in light of the observations made in this judgment. In the result, the appeal succeeds. The order under appeal is set aside. The matter is remanded to the learned Tribunal for fresh consideration - ITA 32 OF 2003 - - - Dated:- 15-5-2020 - HON BLE CHIEF JUSTICE THOTTATHIL B. RADHAKRISHNAN AND HON BLE JUSTICE ARIJIT BANERJEE For the Appellant: Mr. J.P. Khaitan, Sr. Advocate Ms. Swapna Das, Advocate Mr. Agnibesh Sengupta, Advocate Mr. Siddharth Das, Advocate For the Respondent: Mr. Debasish Chowdhury, Advocate Arijit Banerjee, J. : 1) This Income Tax Appeal is directed against an order dated 26 th November, 2002 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one go. The RBI permitted the Allahabad Bank to accept the balance amount in one installment. 6) As on the dates when the two half yearly installments and then the entire balance amount were paid by the Indonesian company, dollar was dearer vis- vis Indian rupee compared to what it was as on the date of raising of invoice by the assessee. Due to such exchange rate fluctuations, Allahabad Bank received an excess sum in Indian rupee amounting to ₹ 1,13,77,292/-. This amount was passed on by Allahabad Bank to the assessee during the previous year relevant to the assessment year 1996-97. The assessee treated the said amount as part of its export turn over for the purpose of computing deduction under Section 80-HHC of the Income Tax Act (In short the said Act ), for the assessment year 1996-97. 7) On 15th March, 1999 the assessee filed an application under sub-section (2) (a) of Section 80-HHC of the said Act before the Commissioner of Income Tax, West Bengal, requesting for permission in terms of the said provision to enable the assessee to claim the said amount of ₹ 1,13,77,292/- as export turn over for the assessment years 1993-94 and 1994-95 as an alternative to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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, within such further period as the competent authority may allow in this behalf. Explanation .- For the purposes of this clause, the expression competent authority means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange. 12) Clause (b) of the Explanation to Section 80-HHC defines export turnover as follows: (b) export turnover means the sale proceeds [received in, or brought into, India] by the assessee in convertible foreign exchange [in accordance with clause (a) of sub-section (2)] of any goods or merchandise to which this section applies and which are exported out of India, but does not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT that the assessee cannot avail of relief under Section 80-HHC because the goods were not exported during the previous year relevant to the assessment year 1996-97. The Tribunal agreed with the CIT that the question of bringing in foreign exchange within the extended period did not arise because the export was concluded not during the previous year 1995-96 relevant to the assessment year 1996-97 but in an earlier year, i.e., by January, 1994. The Tribunal also rejected the alternative contention of the assessee that the amount in question should be treated as export turnover for the years of export viz. assessment years 1993-94 and 1994-95, by observing that if the amount did not clarify as export turnover in one year, it could not be treated as export turnover in any other year since the conditions remained the same in all the years. 16) Appearing for the appellant/assessee, Mr. J.P. Khaitan, learned Senior Advocate submitted that the time frame specified in sub-section (2)(a) of Section 80-HHC for receiving in India or bringing into India the foreign exchange could be extended by the Commissioner/Chief Commissioner prior to June 1, 1999 if sufficient reason was shown by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, the factum of receipt of the sale proceeds after six months of the year of export or longer cannot constitute any ground to exclude such proceeds from the purview of Section 80-HHC. In support of his submission that the said sum of ₹ 1,13,77,292/- is part and parcel of the assessee s export turnover irrespective of the year of realisation, Mr. Khaitan relied on the following decisions: a) (2011) 330 ITR 57 (Cal), Raghunath Exports (P) Ltd. v. Commissioner of Income - Tax b) (2006) 282 ITR 144 (Guj), Commissioner of Income-Tax v. Amba Impex c) (2010) 362 ITR 455 (Bom), Commissioner of Income-Tax v. Amber Exports (India) 19) Learned Senior Counsel finally submitted that the authorities below excluded the sum of ₹ 1,13,77,292/- from export turnover on the ground that the export was made not during the previous year 1995-96 relevant to the assessment year 1996-97 and not on the ground that the assessee did not have permission for bringing in the sale proceeds after the expiry of six months from the end of the previous year of expiry. The fact that the assessee had made an application before the Commissioner for such permission is noted in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king, if Allahabad Bank had made payment to the assessee in dollars, the assessee would have got the same amount in Indian rupees as it received in this case as the amount would have remained the same after conversion. If the bank thereafter received dollar payment from the foreign party and there was fluctuation in the exchange rate, the profit resulting from such fluctuation would have been income of the bank and in that case, the income could not be said to have been related to the exports made by the assessee, although, the income was generated out of the same exports. He submitted that the reason for giving this example is to emphasize the fact that after receipt of the full amount by the assessee in respect of the export in question, the matter relating to that particular export stood closed and any income arising thereafter could not reopen the issue of that export. The income arising after such receipt would, therefore, be income of the business and could not, by any stretch of imagination, be said to be part of the export turnover. 23) As regards the decisions relied upon by learned Counsel for the appellant, Mr. Chowdhury, learned Advocate, submitted that the said deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... realization is inextricably linked to the export made by the assessee. Had the export not been made, the foreign exchange would not have come into India and no question of realization or excess realization in terms of Indian rupees would have arisen. Hence, in principle, such excess realization should be treated as part of the export turnover of the assessee. In this connection, it may be noted that a coordinate Bench of this Court, in the case of Raghunath Export (P) Ltd. v. Commissioner of Income-Tax supra held as follows: We have considered the contentions of the learned advocates for the parties and checked the records. It is not disputed that tea was exported and payment was received in foreign currency and it is also admitted that when realization of the export was made there has been fluctuation of foreign currency, as such, there was a surplus realization in terms of Indian currency. The question is whether the aforesaid surplus realization of ₹ 10,61,326 can be treated to be a part of export turnover or not. In our view, going by the definition of the export turnover, the aforesaid amount was realized in connection with the export followed by payment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to be received in convertible foreign exchange within a period of six months from the end of the previous year or, within such further priod as the competent authority may allow in this behalf. Thus, a plain reading of the provision makes it clear that once the competent authority has extended the time, in a case where it is necessary, or, where the sale proceeds have been received within a period of six months from the end of the previous year, such sale proceeds are directly relatable to the exports made and no further inquiry is necessary. Therefore, the entire controversy as to whether such receipt amounts to any other receipt stipulated in Explanation (baa)(1) need not be taken up for consideration. Once the Legislature has provided for treating a receipt within a period of six months after the end of the previous year, or within further extended period, as sale proceeds relatable exports, it would not be open to the Revenue to raise such controversy. The Legislature in its wisdom has taken into consideration the fact that in the case of exports made, sale proceeds are not necessarily realisable immediately within the accounting period in which exports have been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular export. Afterall, the object of incorporating Section 80-HHC in the said Act is clearly to grant incentive to the exporters who earn valuable foreign exchange for our country. The exemption contemplated under the said section for the purpose of calculating total income, is obviously to encourage exports resulting in flow of foreign exchange into the country. Such a piece of legislation, in our opinion, must be interpreted as liberally as possible in favour of the exporter/assessee. It is trite law that if a particular taxing provision is liable to two interpretations, one favouring the assessee and the other favouring the department, the former interpretation ought to be accepted. The CIT and the learned Tribunal rejected the assessee s claim on the basis that export was concluded not during the previous year 1995-96 relevant to the assessment year 1996-97 and, therefore, the question of bringing in foreign exchange within the extended period did not arise. We are unable to agree with this view. On a meaningful reading of the relevant provisions of the said Act, we are of the opinion that income arising from export taking place not necessarily in the previous year relevant to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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