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TMI Blog2021 (1) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... unt maintained for the said purpose by the assessee with any bank outside India with the approval of the Reserve Bank of India. Appellant as submitted that under section 155 (11A), the prior approval of the Reserve Bank of India is not required. The amended provision of Section 155(11A) came into effect from 13.07.2006.When the subject matter of the appeal is pertaining to the assessment year 2004-05, the provisions of the amended section, which came into effect on 13.07.2006, has no application for the present case. Therefore, the appellant cannot take shelter under the amended provision of Section 155(11A). Application seeking approval from the RBI only in the year 2007 - Since the appellant had sought for the approval from the RBI only in the year 2007, the said correspondence shall not be helpful to the appellant in any manner whatsoever for the reason that the subject matter of the appeal is pertaining to the assessment year 2004-05. Explanations 1 and 2 to section 10B(3) are applicable to the case on hand. The materials available on record would clearly establish that the appellant had not obtained prior approval from the RBI as contemplated under Explanations 1 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 4.25,32,628/-. The Assessing Officer restricted the deduction to ₹ 9,25,865/- on the ground that out of the total export turnover of ₹ 4.25,32,628/-, the foreign exchange realized was only ₹ 2,10,35,760/- by refusing to take into consideration of the payment of ₹ 2,14,96,917/-, which was adjusted towards the imports of certain raw materials made by the assessee for the manufacture of the very same goods which were exported. 2.2 According to the appellant-assessee, the word 'sale proceeds' occurring in section 10B(3) cannot be construed to be only as the total value of the goods exported but would need to be interpreted as net sale proceeds when the competent authority, viz., the Reserve Bank of India, permits such realization of foreign exchange of net sale value. 2.3 The appellant contended that the statutory authority failed to take into consideration the fact that when the competent authority under section 10B(3), viz., the Reserve Bank of India, permits realization of net sale value as against the realization of the total value of the goods exported as compliance with its provision and other related statutory provisions dealing with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent that the income under the agreement is generated in India or that the amount is one not received in convertible foreign exchange. We are of the view that the income is received in India in convertible foreign exchange, in a lawful and permissible manner through the premier institution concerned with the subject-matter -- the Reserve Bank of India. In this view, we hold that the proceedings of the Central Board of Direct Taxes dated 11.3.1986, declining to approve the agreements of the appellant with M/s Sedgwick offshore Resources Ltd. London for the purposes of section 80-0 of the Income-tax Act, are improper and illegal. We declare so. we direct the respondent to process the agreements in the light of the principles laid down by us herein above. The appeal is allowed. There shall be no order as to costs.? Further, the Hon'ble Supreme Court held that an assessee acting as agent of foreign reinsurer, collecting premia from the ceding Insurance Company in India and remitting the same to the foreign insurer in foreign exchange, with the permission of the RBI, after retaining the brokerage in foreign exchange, the brokerage income retained by assessee is receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the foreign reinsurer, will be an empty formality and a meaningless ritual, on the facts of this case. On a perusal of the nature of the transaction and in particular the statement of remittance filed in the Reserve Bank of India regarding the transaction, we are unable to uphold the view of the respondent that the income under the agreement is generated in India or that the amount is one not received in convertible foreign exchange. We are of the view that the income is received in India in convertible foreign exchange, in a lawful and permissible manner through the premier institution concerned with the subject-matter the Reserve Bank of India. In this view, we hold that the proceedings of the Central Board of Direct Taxes dated 11-3-1986, declining to approve the agreements of the appellant with Sedgwick Offshore Resources Ltd., London, for the purposes of section 80O of the Income-tax Act, are improper and illegal. We declare so. We direct the respondent to process the agreements in the light of the principles laid down by us hereinabove. The appeal is allowed. There shall be no order as to costs 9.. The Tribunal did not commit any error in finding that the principle of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07, the said correspondence shall not be helpful to the appellant in any manner whatsoever for the reason that the subject amtter of teh appeal is pertaining to the assessment year 2004-05. Even the Hon'ble Supreme Court in the judgment reported in (1997) 223 ITR 0271 (cited supra) held that the assessee should get prior permission from the RBI. 12. In the Judgment reported in (2012) 21 taxmann.com 314 (cited supra), the Allahabad High Court held that Explanations 1 and 2 to section 10B(3) of the Act is not attracted to the subject matter of the appeals therein. The Hon'ble Supreme Court in the Judgment reported in 1997) 223 ITR 0271 (cited supra) clearly held that prior approval is mandatory. Hence, Explanations 1 and 2 to section 10B(3) are applicable to the case on hand. 13. The materials available on record would clearly establish that the appellant had not obtained prior approval from the RBI as contemplated under Explanations 1 and 2 to section 10B(3) of the Act. That apart, Form 56G would reflect that the Foreign Inward Remittances with regard to the sale proceeds have not been brought in foreign currency during the previous year and within six months ..... X X X X Extracts X X X X X X X X Extracts X X X X
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