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TMI Blog2008 (2) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee was asked to file documentary evidence showing customs clearance in respect of counter sales made to the foreign tourists. The assessee failed to produce such evidence. Accordingly, the AO was of the view that counter sales made to the foreign tourists could not be considered as export out of India and consequently, the assessee was (not) entitled to deduction under s. 80HHC in respect of such sales. The Hon'ble Supreme Court judgment was held to be distinguishable on facts. The claim of the assessee under s. 80HHC was reduced to Rs. 14,685. 3. The matter was carried in appeal before the learned CIT(A) before whom it was contended that all the relevant details regarding counter sales to the foreign tourists were given before the AO i.e. the name, address of the foreign tourists, full description of the items sold i.e. quantity, purity and the rate, etc. Besides this, further details were given such as country to which goods were to be taken along with passport Nos. of the tourists. The signature of the customer was also obtained on the bill issued by the assessee. The consideration was received in foreign exchange against which encashment certificate was given whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods actually from the territory of India. The object of the legislature has been considered by the Hon'ble Allahabad High Court in the case of Ram Babu Sons vs. Union of India wherein it has been clearly observed that if the transaction does not involve clearance at customs station then such transaction shall not be treated as export out of India. Relating the Hon'ble Supreme Court judgment, relied upon by the learned counsel for the assessee, it was submitted that the said decision is distinguishable on facts inasmuch as there was a clear finding that the transaction involved customs clearance. 7. Rival submissions of the parties have been considered carefully. The issue for our adjudication is whether counter sale to foreign tourists made by the assessee amounts to export out of India for the purpose of claiming deduction under s. 80HHC of the Act. Right from the commencement of such provision, there had been a dispute between the Department and the exporters on this issue. The stand of the exporters had been that once the counter sale was effected to the foreign tourists in convertible foreign exchange and the declaration was obtained from such tourists to the effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch sale transaction must involve clearance at any customs station as defined in Customs Act. 9. The above amendment was challenged before the Hon'ble Allahabad High Court in the case of Ram Babu Sons vs. Union of India contending that such provisions were not constitutionally valid. The Court noted that the amendment was made to plug the loophole in the Act since there was possibility that goods after the purchase may not be exported at all and yet the benefit may be claimed. The Court upheld the validity by observing as under: "Sec. 80HHC was made to give certain benefits to exporters. However, Expln. (aa) was inserted by the Finance (No. 2) Act of 1991, w.e.f. 1st April, 1986. An exception was carved out from the main provision of s. 80HHC, In our opinion, Expln. (aa) was to plug a loophole in the Act since there was possibility that the goods after purchase may not be exported at all and yet the benefit may be claimed. In our opinion, Expln. (aa) is constitutionally valid as it was made to plug a loophole in s. 80HHC, It is settled law that in fiscal statutes greater latitude is given to the legislature and the legislature has an option to pick and choose the item which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the bill and encashment certificate are produced before us. The declaration/endorsement on the bill reads as under: "I, Martha Tover De Harnandez, have voluntarily, willingly and after fully satisfying myself of the quality, quantity, purity, standard, design and specification(s) of the article(s) of gold ornament(s), purchased the said articles of gold ornament(s) mentioned in this bill with a full and complete understanding of the contents of this bill, explanations or clarifications. Having fully understood and agreed to the contents of this bill including the rates. terms and conditions mentioned on the accompanying guarantee certificate. I have of my own free and voluntary will and accord, purchased the above article(s) of gold ornament (s) in perfect and acceptable condition and in token thereof. I have appended my Signature hereinbelow." The encashment certificate contains the following note for the benefit of the tourists: 'This certificate should be preserved by the holder to facilitate reconversion of the rupee balance (out of the amount stated at C) if any, into foreign currency at the time of departure from India and/or payment of passage/freight cost in rupees ..... X X X X Extracts X X X X X X X X Extracts X X X X
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