M/S.US TECHNOLOGY INTERNATIONAL P. LTD,TRIVANDRUM vs. THE ACIT,CIR-1(1), TRIVANDRUM

Aggrieved by the order of the assessment completed u/s 143 r.w.s. 263 of the I.T.Act, the assessee preferred an appeal to the first appellate authority. The CIT(A) rejected the appeal of the assessee without adjudicating the issue on merits. The relevant finding of the CIT(A) reads as follows:-

Aggrieved by the CIT(A)’s order, the assessee has filed this appeal raising the following grounds:-

1 The learned CIT(A) erred in not considering the unbilled revenue of INR 17,0975,535 as export turnover for computation of deduction under section 10B of the Act and consequently, upholding the disallowance of INR 4,062,940 from the deduction under Section 10B pertaining to unbilled revenue.

2 On facts and in circumstances of the case, the learned CIT(A) has erred in upholding the disallowance made by the AO on the ground that the export proceeds relating to unbilled revenue have not been realized within the time stipulated in the Act, despite the Appellant having realized the same within the time period prescribed by the competent authority as stipulated under Section 10B(3) of the Act read with Explanation 1 thereto.

3 The learned CIT(A) failed to consider that as per Section 10B(3) of the Act and Explanation thereto, export proceeds are to be repatriated to India, within a period of 6 months from the end of the previous year, or within such further period which the competent authority may allow in this behalf. The learned

4 The learned CIT(A) erred in disregarding the fact that the date of export, in the case of software exports, is deemed to be the date of invoice as per Regulation 9 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 as issued by the RBI. The learned CIT(A) failed to consider that the Appellant had repatriated the export proceeds within 12 months from the date of invoice and well within the time as stipulated in section 10B(3) of the Act. The Appellant craves leave to add to or alter, by deletion, substitution, modification or otherwise, the above grounds of appeal, either before or during the hearing of the appeal.”

1 The assessee has also filed additional ground, which reads as follows:- “The Appellant submits that the additional grounds are independent and without prejudice to the grounds of appeal raised in the appeal filed on 06 April 2018. 3. Erroneous non consideration of the principle that parity to be maintained between export turnover and total turnover Without prejudice to the other grounds of appeal, the Assessing Officer failed to consider the principle of parity issue as upheld by the Hon'ble Supreme court in CIT v BCL Technologies Ltd (2018) 93 taxmann.com 33 (SC) and failed to consider that what does not constitute as export in the current financial year 2005-06, as the invoices were made in the subsequent financial year 2006-07, cannot form part of the total turnover while computing the deduction under section 10B of the Act.”

2 The learned AR representing the assessee relied on the grounds raised. It was further submitted by the learned AR that the additional ground raised is a pure question of law, which does not require fresh examination of facts. It was submitted that the issue raised in the additional ground is ITA No.109/Coch/2018. 5 covered in favour of the assessee by the recent judgment of the Hon’ble Apex Court in the case of CIT v. HCL Technologies Ltd. [(2018) 93 taxmann.com 33 (SC)]. The learned Departmental Representative present relied on the finding of the Income-tax authorities.

We have heard the rival submissions and perused the material on record. We are of the view that the CIT(A) has erred in not adjudicating the issue raised before him on merits. The ITAT while confirming the juri ictional of the Administrative CIT in passing the order u/s 263 of the I.T.Act, had clarified that the issue raised on merits was left open and the Assessing Officer shall decide the same de hors the observations made by the administrative Commissioner in revisionary order passed u/s 263 of the I.T.Act. The relevant finding of the ITAT reads as follows:- “9. The Administrative Commissioner has directed the assessing officer to redo the assessment after examining the materials on record. This direction of the Administrative Commissioner is in no way prejudice the interest of the assessee. We make it clear that the assessing officer shall examine the material on record independently without being influenced by any of the observations made by the Administrative Commissioner in the impugned order or by this Tribunal in this order and shall decide the issue afresh in accordance with law after giving a reasonable opportunity to the assessee.”

1 In view of the above order of the ITAT, we are of the view that there was no specific direction by the Administrative CIT while passing his order u/s 263 of the I.T.Act. Therefore, the issue on merits ought to have been adjudicated by the A.O. as ITA No.109/Coch/2018. 6 well as CIT(A) de hors the observation of the Administrative CIT.

2 Moreover, we find that the additional ground raised is a pure legal issue which does not require fresh examination of facts. The additional ground raised is important and goes to the root of the issue. In the interest of justice and substantial cause the additional ground is admitted and taken on record. Since the CIT(A) had not decided the issue on merits and also the assessee has filed additional grounds before the Tribunal, which we have already admitted, we are of the view that the matter needs to be examined by the CIT(A) afresh. It is ordered accordingly.

In the result, the appeal filed by the assessee is allowed for statistical purposes.