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Income Tax Appellate Tribunal, F BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL "F" BENCH, MUMBAI SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No. 3007/MUM/2022 (Assessment Year: 2017-18) Uni Design Jewellery Pvt. Ltd., Plot No. 4-5-6, Uni Design, SEEPZ, Andheri (East), Mumbai - 400096 [PAN: AAAUCU0572G] ……………… Appellant Deputy Commissioner of Income Tax. Vs Central Circle – 1(2), Mumbai, 906, 9th Floor, Pratishtha Bhavan, Old CGO Building, M.K. Road, Mumbai - 400020 ……………. Respondent Appearances For the Appellant/Assessee : Shri Vijay Mehta For the Respondent/Department : Ms. Vranda U Matkarni Date of conclusion of hearing : 18.01.2023 Date of pronouncement of order : 28.02.2023 O R D E R Per Bench: 1. This is a batch of 3 appeals filed by an Assessee pertaining to Assessment Year 2016-17, 2017-18 and 2018-19. Since the appeals involve some common ground, the same were heard together and are being disposed of by way of common order. We would first take appeal for the Assessment Year 2016-17. ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19 2. The Assessee has raised following grounds in appeal for the Assessment Year 2016 -17: “Ground No. 1 On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the decision made by the Ld.AO of not considering the claims made through revised computation of income filed in course of assessment proceedings. It is prayed that reliance placed by the AO/ CIT(A) on decision of M/s. Goetze (India) Limited vs CIT (284 ITR 383) is misplaced. Ground 2: The Hon'ble CIT(A) erred in confirming the decision of the Ld. A.O. of not granting deduction for donation made which are eligible for 100% deduction u/s. 80G of the Act. Also, the CIT(A) erred in confirming the action of A.O. in not granting deduction for payments made to Zavri Mangalji Yamalshi Dispensary of Rs.7,00,000 inspite being eligible for deduction u/s 35AC of the Act. Ground 3: The Hon'ble CIT(A) erred in confirming the decision of Ld. A.O. of considering provision for current tax as Rs.2,82,41,000 instead of Rs.2,88,51,681 which was correct figure while computing book profits u/s 115JB of the Act. Ground 4: The Hon'ble CIT(A) erred in confirming the action of the Ld. A.O. of not granting set-off of brought forward losses and unabsorbed depreciation totaling to Rs.5,92,38,205 inspite the assessee being eligible for set-off of these losses.” 3. The relevant facts, as emanating from record, are that the Appellant, an Indian private limited company, engaged in the business of manufacturing and exporting jewellery, filed return of income for the Assessment Year 2016–17 on 30/11/2016 declaring total income of INR 1,24,54,960/-. The case of the Appellant was selected for scrutiny. During the assessment proceedings, the Appellant, vide letter dated 4/12/2018 filed revised computation of income making following
ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19 disclosures/claims:
(1) The Appellant offered disallowance of interest of INR 2,482/- under Section 201(1A)/206C(7) of the Act;
(2) It was pointed out that the Appellant had claimed deduction under section 10 AA of the Act twice resulting in understatement of income by INR 4,85,20,381/-
(3) The Appellant disclose that deduction of INR 2,21,57,654/- was claimed by the Appellant as per schedule 3 of the statement of income whereas the aforesaid amount had already been netted off from the disallowance made under section 43B of the Act. This resulted in understatement of income. (4) The Appellant had claimed deduction in respect of amount paid to Prime Minister National relief fund under section 80 G of the Act at the rate of 50% instead of hundred percent which has resulted in overstatement of income by INR 11,501/-.
(5) The Appellant had claimed deduction in respect of payments of INR 7,00,000/- made to Zaveri Mangalji Yamalshi Dispensary at the rate of 50% under Section 80G of the Act instead of claiming deduction respect of the same at the rate of 100% under Section 35AC of the Act, which resulted in overstatement of income by an 3,50,000/-.
(6) The Appellant claimed set off in respect of the brought forward losses and unabsorbed depreciation pertaining to Assessment Year 2014-15 which was not claimed in the return of income and as a result of which the income of the Appellant was overstated by INR 5,93,38,205/-.
(7) The Appellant claimed that the book profits of the Appellant were overstated by INR 6,10,681/- as the provision for current added while computing book profits was inadvertently taken as INR 2,88,51,681/- instead of INR 2,82,41,000/- 4. The Assessing Officer revised the total income of the Appellant 3
ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19 by taking into account the disclosures/revise claim made by the Appellant resulting in increased of the taxable income. However, the Assessing Officer rejected the 3 claims made by the Appellant which would have resulted in reduction of taxable income of the Appellant holding that the Appellant could make revised claimed before the Assessing Officer only by way of filing the revised return of income by placing reliance upon the judgment of the Hon’ble Supreme Court in the case of M/s Goetze (India) Ltd Vs. CIT (284 capital ITR 383 ).
Being aggrieved, the Appellant carried the issue in appeal before the CIT(A) or decline to grant any relief. While dismissing the appeal, the CIT(A) observed that the CIT(A) could have admitted additional grounds/evidence only if he was satisfied that the grounds raised was bonafide and the same could not have been raised earlier for a good reason or on account of change of circumstances. According to the CIT(A) the Appellant had failed to satisfy the aforesaid factors, and therefore, the CIT(A) confirmed the order passed by the Assessing Officer vide order dated 01/11/2022. 6. Now the Appellant is before us in appeal against the above order of CIT(A) on the grounds reproduced in paragraph 2 above.
We have heard both the sides and perused the material on record. The Hon’ble Bombay High Court has, in the case of CIT Vs. Pruthvi Brokers and Shareholders Private Limited: [2019] 349 ITR 336 (Bom) cited by the Learned Authorised Representative of the Appellant, held that an assessee is entitled to raise additional Grounds not merely in terms of legal submissions but also additional claims not made in the return 4
ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19 filed. Further, the appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstance or law, but also with additional grounds which were available when the return was filed. In other words, the jurisdiction of the appellate authorities to consider a fresh or new ground/claim is not restricted to cases where such a ground did not exist when the return was filed and the assessment order was made. The jurisdiction of the appellate authorities to entertain a claim not made before the Assessing Officer was not negated by Hon’ble Supreme Court in the case of Goetze India Ltd (supra). However, the exercise of jurisdiction would have be done as per the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. [1998] 229 ITR 383 (SC) wherein it has been held as under: “5. Under Section 254 of the Income-tax Act, 1961, the Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is, thus, expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross- objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. 6. In the case of Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688, this Court, while dealing with the powers of the AAC, 5
ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19 observed that an appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the AAC in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the ITO. This Court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The AAC must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The AAC should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to appeals before the Tribunal also. 7. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner (Appeals) takes too narrow a view of the powers of the Tribunal - vide, e.g., CIT v. Anand Prasad [1981] 128 ITR 388/ 5 Taxman 308 (Delhi), CIT v. Karamchand Premchand (P.) Ltd. [1969] 74 ITR 254 (Guj.) and CIT v. Cellulose Products of India Ltd. [1985] 151 ITR 499/[1984] 19 Taxman 278 (Guj.) (FB). Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. 8. While holding as above, the Hon’ble Supreme Court Act had taken into consideration the judgment of Hon’ble Supreme Court in the case of Jute Corpn. of India Ltd. vs. CIT: [1991] 187 ITR 688 which was relied upon by the CIT(A) were declined to grant any relief to the Appellant.
We note that the CIT(A) has concluded that the Appellant has failed to provide any reason as to what prevented the Appellant from filing the revised return before issuance of scrutiny notice under section 143(2) of the Act. By filing the revised
ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19 computation during assessment proceedings the Appellant has only made an attempt to hide misdeeds by offering certain income. In our view, the observations made by the CIT(A) don’t take into account the fact that the Appellant had explained that inadvertently mistakes were made while filing the original return of income. There is nothing on record to show that the Appellant did not act in the bonafide manner. The observations made by the CIT(A) in the nature of conjecture and surmise and are, therefore, rejected. As rightly pointed out by the Learned Authorised Representative for the Appellant the Assessing Officer accepted the revised claims which were beneficial to the Revenue an enhanced the income while declining to grant relief in respect revised claims which would have resulted in benefit to the Appellant on account of reduction of taxable income. The approach adopted by the Assessing Officer and the CIT(A) cannot be countenanced given the facts and circumstances of the present case. Accordingly, we admit the revise claims made by the Appellant in respect of (a) deduction of INR 700,000/- under Section 35AC (while simultaneously withdrawing deduction of INR 3,50,000/- claimed under Section 80G of the Act), (b) reduction of book profits by INR 6,10,681/- by adding the correct amount of provisions for current tax to the net profits as per Profit & Loss Account and (c) the claim of set-off of brought forward losses and unabsorbed depreciation of INR 5,92,38,205/-. It is not the case of Revenue that the facts relevant to the adjudication of the aforesaid claims are not on record. Therefore, the Assessing Officer is directed to adjust/recompute the taxable income of the Appellant after verification of the aforesaid revised claims made by the Appellant. Accordingly, Ground Nos. 1 to 4 raised by the Appellant in the present appeal are allowed. 7
ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19 10. In the result, the present appeal preferred by the Assessee is allowed. 11. The Appellant has raised the following grounds in appeal for the Assessment Year 2018–19. “Ground No. 1: On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the action of the Ld.AO by not considering export sale realized after limitation of time as export turnover and consequently computing deduction u/s. 10AA at Rs. 2,57,23,087 instead of deduction u/s. 10AA of Rs. 2,65,88,081 as per Form 56F. The appellant prays that export sale realized after limitation of time be considered as export turnover and deduction u/s. 10AA as per Form 56F be computed. The appellant craves, leave to add, amend, alter, omit any of the grounds of appeal before or during the hearing of the appeal, if so advised.”
The relevant facts in brief are that the Appellant filed its original return of income for Assessment Year 2018–19 on 30/11/2018 declaring total income of INR 86,20,200/- after claiming deduction of INR 1,52,20,873/- under Section 10A of the Act. The case of the Appellant was selected for scrutiny. The Assessing Officer completed the assessment under Section 143(3) of the Act vide Assessment Order dated 23/04/2021. While framing the Assessing Officer restricted the amount for deduction claimed by the Appellant under Section 10AA of the Act to INR 2,57,23,087/- since the Assessing Officer was of the view that the deduction under Section 10AA Act could be allowed only in respect of the export proceeded realized within a period of 6 months from the end of relevant previous year.
ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19 13. The appeal preferred before CIT(A) against the Assessment Order did not yield the desired results for the Appellant as the CIT(A) confirmed the order passed by the Assessing Officer and dismissed the appeal vide common order dated 25.10.2022. 14. Being aggrieved, the Appellant has preferred the present appeal.
The Learned Authorised Representative for the Appellant submitted that Section 10AA of the Act does not prescribe any specific time limit for realization of export proceeds as compared to some of the sections providing deduction in respect of exports such as Section 10A, 10B, 80HHC, 80HHE and 80HHF. He submitted that that identical issue stands decided in favour of the assessee by the decision of Delhi bench of the Tribunal in the case of BT e-Serv (India) Private Limited Vs. ITO : [2017] 60 ITR (T) 618 (Delhi-Trib). He relied upon paragraph 24 to 26 of the aforesaid decision of the Tribunal wherein it was held as under: “24. Ground Nos. 14 to 22 are with respect to disallowance of deduction of Rs. 16639234/- u/s 10AA of the Act on the basis that export proceeds have not been realized within a period of six months from the end of the previous year. Ld Assessing Officer was of the view that as the assessee is a unit established under SEZ, therefore, if the proceeds have not been received in convertible exchange on or before 30th September 2010 then, the deduction u/s 10AA cannot be granted. Assessee submitted that there is no specific provision u/s 10AA requiring the realization of export proceeds within a prescribed time limit. Further, assessee relied on the master circular on export of goods and services issued by the RBI under FEMA. The ld Assessing Officer rejected the contention of the assessee for the reason that according to section 10AA(8) which makes applicable sub- section 5 and 6 of section 10A to this section i.e. 10 AA of the act, and according to form No. 56F, the realization of export proceeds is required to be shown. In that form assessee has shown that full consideration in convertible foreign exchange 9
ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19 for exports made by the undertaking was brought into in India within a period of 6 months from the end of the previous year. The auditor has also certified the above fact as correct. Therefore, the ld Assessing Officer considered the export turnover at Rs. 190912493/- instead of Rs. 265997897/- and computed the deduction at Rs. 42306994/. The ld DRP on objection by the assessee confirmed the action of ld Assessing Officer. Therefore, assessee is in appeal before us. 25. The ld AR reiterated the same argument as advanced before the lower authorities and ld DR vehemently relied upon the orders of lower authorities. 26. We have carefully considered the rival contentions. According to section 10 AA of the act the profits derived from the export of articles or things or services (including computer software) shall be the amount which bears to the profits of the business of the undertaking, being the Unit, the same proportion as the export turnover in respect of such articles or things or services bears to the total turnover of the business carried on by the undertaking. Explanation 1(i) For the purposes of this section, defines "export turnover", it means the consideration in respect of export by the undertaking, being the Unit of articles or things or services received in, or brought into, India by the assessee but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things outside India or expenses, if any, incurred in foreign exchange in rendering of services (including computer software) outside India. Explanation 1 (ii) defines export as "export in relation to the Special Economic Zones" taking goods or providing services out of India from a Special Economic Zone by land, sea, air, or by any other mode, whether physical or otherwise. Therefore primarily there should be export and consideration for export should be brought in to India. The Ld. assessing officer as well as the Ld. DRP has disallowed the claim of the assessee on the sum of Rs. 75085404/. The above sum comprises of a sum of Rs. 480000000/-being foreign currency received of the export amount received by the assessee on 04/02/2011 and 24/2/2011. A sum of Rs. 27085404/- is unbilled revenue of the assessee. The unbilled revenue is like work in progress in case of ITES industries. The explanation 1 (ii) defines export means taking goods or providing services out of India from SEZ by land, sea, or by any other mode whether physical or otherwise. Regarding the unbilled revenue the assessee has not exported the goods and therefore such sum do not fall in the definition of export and therefore it cannot fall into the definition of export turnover. Hence, according to us the deduction under section ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19 10 AA of the income tax act cannot be allowed on this sum as it does not qualify the definition of export and export turnover. Even otherwise assessee has not given any details of receipt of foreign exchange and therefore the consideration in respect of that is either received in or brought into India by the assessee. Hence, we confirm the finding of the lower authorities regarding disallowance of deduction under section 10 AA of the income tax act on this sum. With respect to the other sum of Rs. 4.80 crores The assessee has given foreign inward remittance certificates and such sum has also been received in India on 04/02/2011 and 24/2/2011. The provisions of section 10AA does not provide any time-limit of bringing such consideration into India like section 10A(3) which provides for receipt of consideration or sale proceeds in India in convertible foreign exchange within a period of 6 months from the end of the previous year, or within such further period as the competent authority may allow in this behalf. Further the contention of the revenue that provision of sub-section (5) and (6) of section 10A shall apply by virtue of the provision of section 10AA(8) of the Act. The provision of section 10A(5) speaks about the audit of the accounts and submission of report of an accountant in specified Performa. In this case same has been complied with by the assessee. Further section 10A(6) speaks about the restrictions of other deduction during the holiday period, which is not the dispute in this case. In view of this it is apparent that there is no time-limit prescribed for bringing the consideration of export into India. Admittedly, the consideration has been received in India, albeit Subsequent to filing of the return by the assessee. However, merely because the consideration has been received after 6 months from the close of the financial year the deduction cannot be denied to the assessee on the sum. In view of this we direct the Ld. assessing officer to consider a sum of Rs. 4.80 crores as export turnover of the assessee and accordingly grant deduction to the assessee under section 10 AA of the income tax act. Accordingly, Ground No. 14 to 22 of the appeal of the assessee are partly allowed.” (Emphasis Supplied)
Per contra, Learned Department Representative submitted that since the deduction under Section 10AA was granted to promote exports, the intention of the legislature was that the export proceeds should be realized with reasonable time. Section 10AA(8) of the Act made reference to Section 10A(5) of the Act which provided for furnishing of report from auditor is ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19 in specified form (Form 56A). In Form 56A the auditor had specified that the export proceeds in respect of which deduction under Section 10AA has been claimed by the Appellant were not recognized within a period of 6 months from the end of relevant previous year, and therefore, the Assessing Officer took the cut-off of six months from the end of the relevant previous year and denied deduction under Section 10AA of the Act in respect of export proceeds not realized within the aforesaid period of 6 months. Supporting the order passed by the Assessing Officer, the Learned Departmental Representative relied upon the order passed by the CIT(A). He submitted that qualify as export turnover the consideration in respect of exports should be brought into India. However in paragraph 6.2, the CIT(A) has returned a specific finding that the Appellant has nowhere in the submission explained or prove that the export proceeds were realized and brought into India.
In rejoinder, the Learned Authorised Representative for the Appellant submitted that the findings returned by the CIT(A) is factually incorrect referring to the relevant portion of certain submissions reproduced by the CIT(A) in paragraph 5 of the order impugned (at page 6 of 10), he submitted that export proceeds relating to sales made during the Previous Year 2017- 18 was submitted during the course of assessment proceedings and were also filed before the CIT(A) as Annexure -3 to the written submissions. He submitted that a copy of the aforesaid annexure has also been placed before the Tribunal.
We have considered the rival submissions and perused the material on record.
ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19
We find that the solitary issue raised in the present appeal stands decided in favour of the Appellant/Assessee by the decision of Delhi bench of the Tribunal bench in the case of BT e-Serv (India) Private Limited (Supra) wherein it was held as under:
“24. Ground Nos. 14 to 22 are with respect to disallowance of deduction of Rs. 16639234/- u/s 10AA of the Act on the basis that export proceeds have not been realized within a period of six months from the end of the previous year. Ld Assessing Officer was of the view that as the assessee is a unit established under SEZ, therefore, if the proceeds have not been received in convertible exchange on or before 30th September 2010 then, the deduction u/s 10AA cannot be granted. Assessee submitted that there is no specific provision u/s 10AA requiring the realization of export proceeds within a prescribed time limit. Further, assessee relied on the master circular on export of goods and services issued by the RBI under FEMA. The ld Assessing Officer rejected the contention of the assessee for the reason that according to section 10AA(8) which makes applicable sub- section 5 and 6 of section 10A to this section i.e. 10 AA of the act, and according to form No. 56F, the realization of export proceeds is required to be shown. In that form assessee has shown that full consideration in convertible foreign exchange for exports made by the undertaking was brought into in India within a period of 6 months from the end of the previous year. The auditor has also certified the above fact as correct. Therefore, the ld Assessing Officer considered the export turnover at Rs. 190912493/- instead of Rs. 265997897/- and computed the deduction at Rs. 42306994/. The ld DRP on objection by the assessee confirmed the action of ld Assessing Officer. Therefore, assessee is in appeal before us. 25. The ld AR reiterated the same argument as advanced before the lower authorities and ld DR vehemently relied upon the orders of lower authorities. 26. We have carefully considered the rival contentions. According to section 10 AA of the act the profits derived from the export of articles or things or services (including computer software) shall be the amount which bears to the profits of the business of the undertaking, being the Unit, the same proportion as the export turnover in respect of such ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19 articles or things or services bears to the total turnover of the business carried on by the undertaking. Explanation 1(i) For the purposes of this section, defines "export turnover", it means the consideration in respect of export by the undertaking, being the Unit of articles or things or services received in, or brought into, India by the assessee but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things outside India or expenses, if any, incurred in foreign exchange in rendering of services (including computer software) outside India. Explanation 1 (ii) defines export as "export in relation to the Special Economic Zones" taking goods or providing services out of India from a Special Economic Zone by land, sea, air, or by any other mode, whether physical or otherwise. Therefore primarily there should be export and consideration for export should be brought in to India. The Ld. assessing officer as well as the Ld. DRP has disallowed the claim of the assessee on the sum of Rs. 75085404/. The above sum comprises of a sum of Rs. 480000000/-being foreign currency received of the export amount received by the assessee on 04/02/2011 and 24/2/2011. A sum of Rs. 27085404/- is unbilled revenue of the assessee. The unbilled revenue is like work in progress in case of ITES industries. The explanation 1 (ii) defines export means taking goods or providing services out of India from SEZ by land, sea, or by any other mode whether physical or otherwise. Regarding the unbilled revenue the assessee has not exported the goods and therefore such sum do not fall in the definition of export and therefore it cannot fall into the definition of export turnover. Hence, according to us the deduction under section 10 AA of the income tax act cannot be allowed on this sum as it does not qualify the definition of export and export turnover. Even otherwise assessee has not given any details of receipt of foreign exchange and therefore the consideration in respect of that is either received in or brought into India by the assessee. Hence, we confirm the finding of the lower authorities regarding disallowance of deduction under section 10 AA of the income tax act on this sum. With respect to the other sum of Rs. 4.80 crores The assessee has given foreign inward remittance certificates and such sum has also been received in India on 04/02/2011 and 24/2/2011. The provisions of section 10AA does not provide any time-limit of bringing such consideration into India like section 10A(3) which provides for receipt of consideration or sale proceeds in India in convertible foreign exchange within a period of 6 months from the end of the previous year, or within such further period as the competent authority may allow in this behalf. Further the contention of the revenue that provision of sub-section (5) and (6) of section 10A shall apply by virtue of the provision of section 10AA(8) of the Act. 14
ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19 The provision of section 10A(5) speaks about the audit of the accounts and submission of report of an accountant in specified Performa. In this case same has been complied with by the assessee. Further section 10A(6) speaks about the restrictions of other deduction during the holiday period, which is not the dispute in this case. In view of this it is apparent that there is no time-limit prescribed for bringing the consideration of export into India. Admittedly, the consideration has been received in India, albeit Subsequent to filing of the return by the assessee. However, merely because the consideration has been received after 6 months from the close of the financial year the deduction cannot be denied to the assessee on the sum. In view of this we direct the Ld. assessing officer to consider a sum of Rs. 4.80 crores as export turnover of the assessee and accordingly grant deduction to the assessee under section 10 AA of the income tax act. Accordingly, Ground No. 14 to 22 of the appeal of the assessee are partly allowed.” (Emphasis Supplied)
We are in agreement with the above decision of the Tribunal since Section 10AA does not prescribe any time limit for realization of export proceeds, the benefit of Section 10AA cannot be denied to an Assessee merely because the export proceeds were realized after the expiry of 6 months from the end of relevant previous year in which export sales were made. In our view, in case an assessee is able to show that the consideration in respect of exports was received in India or brought into India, the deduction under Section 10AA of the Act should be allowed. In the present case the Appellant had filed the details of realization of export sales with the Assessing Officer and the CIT(A). Therefore, we direct the Assessing Officer to allow deduction to the Appellant under Section 10AA of the Act by taking into account the export sales realized by the Appellant. Accordingly, the order passed by the Assessing Officer and the CIT(A) are set aside. Ground No. 1 raised in the appeal is allowed.
ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19 In result the present appeal by the Assessee is allowed. 21. The Appellant has raised the following grounds in appeal for the assessment year 2017–18. “Ground No. 1: On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the disallowance made by the Ld.AO by not considering export sale realized after limitation of time as export turnover and consequently restricting deduction u/s 10AA of the Act by Rs. 24,17,656 by computing deduction u/s 10AA at Rs. 2,04,51,697. The appellant prays that export sale realized after limitation of time be considered as export turnover and deduction u/s 10AA as claimed by the appellant be granted.” The appellant craves, leave to add, amend, alter, omit any of the grounds of appeal before or during the hearing of the appeal, if so advised.”
The relevant facts in brief are that the Appellant filed its original return of income for the Assessment Year 2017–18 on 30/11/2017 declaring total income of INR 3,72,49,950/- after claiming deduction of INR 2,28,69,351/- under Section 10A of the Act. The case of the Appellant was selected for scrutiny. The Assessing Officer completed the assessment under Section 143(3) of the Act vide Assessment Order dated 23/04/2021. While framing the Assessing Officer restricted the amount for deduction claimed by the Appellant under Section 10AA of the Act to INR 2,04,51,697/- since the Assessing Officer was of the view that the deduction under Section 10AA of the Act could be allowed only in respect of the export proceeded realized within a period of 6 months from the end of relevant previous year.
The appeal preferred before CIT(A) against the Assessment
ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19 Order was dismissed by the CIT(A) along with appeal for the Assessment Year 2018-19 vide common order dated 25.10.2022. 24. Being aggrieved, the Appellant has preferred the present appeal. The above ground raised by the Appellant in appeal for the Assessment Year 2017–18, is identical to ground raised in appeal for the Assessment Year 2018–19. Accordingly, our finding/adjudication in relation to ground raised in appeal for the Assessment Year 2018-19 shall apply mutatis mutandis the ground raised in the present appeal. Therefore, adopting the reasoning given by allowing the appeal for the Assessment Year 2018–19, we allow Ground No. 1 raised in the present appeal. The Assessing Officer is directed to allow deduction to the Appellant under Section 10AA of the Act by taking into account the export sales realized by the Appellant. Accordingly, the order passed by the Assessing Officer and the CIT(A) are set aside.
In result, the present appeal by the Assessee is allowed.
Thus, all the three appeals preferred by the Assessee are allowed. Order pronounced on 28.02.2023. (S. Rifaur Rahman) Judicial Member म ुंबई Mumbai; दिन ुंक Dated : 28.02.2023 Alindra, PS
ITA. No.3006-3008/Mum/2022 Assessment Year: 2016-17 to 2018-19
आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त(अपील) / The CIT(A)- 4. आयकर आय क्त / CIT 5. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file.
आिेश न स र/ BY ORDER, सत्य दपि प्रदि //// उप/सह यक पुंजीक र /(Dy./Asstt.