COMMISSIONER OF INCOME TAX CENTRAL-I vs. MEGHMANI DYES & INTERMEDIATES LTD

Feeling aggrieved and dissatisfied with the impugned judgement and order passed by learned Income Tax Appellate Tribunal (hereinafter referred to as “the ITAT”) passed in ITA No.1384/Ahd/2004 for A.Y. 2000-2001, the revenue has preferred present Tax Appeal.

While admitting the present Tax Appeal, the Division Bench has framed the following substantial question of law:- “Whether on the facts and circumstances of the case, filing of application for extension of time before the competent authority will be sufficient for fulfilling the requirement of Section 80HHC(2)(a) of the Act?”

The assessee, who is manufacturer and exporter of dyes and intermediates, filed return of income for A.Y. 2000- 2001 assessing total income AT Rs.5,51,89,772, which was processed under section 143(1)(a) of the Income Tax Act, 1961 (hereinafter referred to as “the Act” )

The assessee claimed deduction under section 80HHC amounting to Rs.5,48,49,110/- with respect to sale proceeds of the convertible foreign exchange which was came to be allowed by the AO and AO arrived at the conclusion that the total taxable income is Rs.3,40,662/-.

That thereafter, AO initiated proceedings under section 154 of the IT Act and the AO was of the opinion that the convertible foreign exchange to the tune of Rs.1,38,32,422/- was not received within the stipulated period granted by the Reserve Bank of India. According to AO as per O/TAXAP/1366/2008 JUDGMENT section 80HHC of the IT Act, sale proceeds received or brought in India in convertible foreign exchange within the prescribed time or within the extended time limit shall only be considered for determining “export turnover” at the time of allowing deduction. After giving opportunity to the assessee, AO rectified his earlier order with respect to claim under section 80HHC of the IT Act and held revised total income at Rs.32,31,030/-.

Feeling aggrieved by and dissatisfied with the order passed by the AO under section 154 of the IT Act, assessee preferred appeal before the Commissioner (Appeals).

At the outset it is required to be noted that when the AO passed order under section 154 of the IT Act, the assessee had submitted application for extension before Reserve Bank of India, however the same was pending. At the time of hearing before the CIT(A), Reserve Bank of India granted extension upto 31/3/2002 and therefore, CIT(A) allowed the said appeal and cancelled the order passed by the AO under section 154 of the IT Act and directed to allow deduction under section 80HHC of the IT Act after including invoices amount in the export turnover of the assessee for which even Reserve Bank of India granted extension.

The order passed passed by the CIT(A) came to be confirmed by the learned ITAT.

Feeling aggrieved and dissatisfied with the order passed by the ITAT confirming the order passed by the CIT(A), revenue has preferred present appeal. O/TAXAP/1366/2008 JUDGMENT

Having heard Mr.Bhatt, learned counsel appearing on behalf of the appellant – revenue and Mr.S.N. Soparkar, learned counsel appearing on behalf of the respondent – assessee and considering the fact that as such subsequently Reserve Bank of India did granted extension in favour of the assessee upto 31/3/2002, as rightly held by the CIT(A), the assessee was entitled to deduction under section 80HHC of the IT Act on the entire amount claimed before the AO which was allowed by the AO i.e. Rs.5,48,49,110/-. Therefore, when the extension was granted by the Reserve Bank of India upto 31/3/2002, it can be said that the requirements under section 80HHC of the IT Act are complied with.

Under the circumstances, the impugned judgement and orders passed by the CIT(A) as well as ITAT are not required to be interfered with by this Court. We see no error in the order passed by the CIT(A) confirmed by the ITAT. Under the circumstances, present appeal deserves to be dismissed and is accordingly dismissed. However, it is observed that in the present case, as Reserve Bank of India did granted extension upto 31/3/2002, during the pendency of the appeal before the CIT(A), the question which is framed while admitting the present appeal that filing of the application for extension of time before the competent authority will be sufficient for fulfilling the requirement under section 80HHC (2)(a) of the IT Act, is not answered and the said question is kept open. (M.R.SHAH, J.) O/TAXAP/1366/2008 JUDGMENT (R.P.DHOLARIA,J.) Rafik.