M/S TECNOTREE CONVERGENCE LTD.,,GURGAON vs. ACIT, HARIDWAR

Identical type of mistake has been pointed out by assessee in a Y 2009- 10 also. The Ld.A.R submitted that the tribunal has decided an identical issue in AY 2009-10 by following the decision rendered in AY 2008-09. He submitted that it is not the case of assessee or tax authorities that assessee did not realise at all the export proceeds. What was pointed out by the AO was that the export proceeds were not realised within the time prescribed in section 10 A of the Act. Accordingly, following our decision rendered in a Y 2008-09, we hold that there is mistake apparent from record in AY 2009-10 also on this issue, as there is incorrect appreciation of facts.” 2.3 Based on the above observations Ground No.1 raised by assessee is adjudicated as under. For sake of convenience we are reproducing ground No. 1 which is raised in both the assessment years are as under: ITA No.2830/Bang/2013 “1. That the CIT(A) has erred on facts and in law in upholding the order of the Assessing Officer restricting deduction u/s 1OA of the Income Tax Page 3 of 9 ITA No.2830 & 2831/Del/2013 Act, 1961 to Rs.11,l8,59,936/- as against Rs.19,91,40,406/- as claimed by the Appellant. 1.1 On facts and law, the CIT(A) erred in upholding the order of the Assessing Officer reducing Rs.18,53,87,711/- from export sales on the ground of non-realization for the purposes of computing deduction u/s 10A. 1.2 That the CIT(A) has failed to appreciate that it is settled law that if no communication is received to a request made to a statutory authority or its nominee, the request is deemed to be allowed. The CIT(A) has erred in not realizing that even if no explicit approvals were received from the RBI/ Authorized Dealer, it has to be read as implicit approval since no communication has been forthcoming. In light of the implicit approval, the CT(A) has erred in upholding the exclusion from export proceeds on the ground of non-realization.

That the CIT(A) has erred on facts and in law in upholding the order of the Assessing Officer disallowing deduction of Rs.17,28,83,855/- u/s 10A of the Income Tax Act, 1961. 1.1 On facts and in law, the CIT(A) erred in upholding the order of the Assessing Officer reducing Rs.26,05,82,985/- from export sales oil ground of non-realization for the purposes of computing deduction u/s 10A. 1.2 That the CIT(A) has failed to appreciate the fact that the Appellant had already filed applications for extension of time for realizing export sales of Rs.20,23,79,275. 1.3 That the CIT(A) has failed to appreciate that export proceeds of Rs. 5,82,03,710/- were duly received by the Appellant and it was permitted to receive the same by RBI/ Authorized Dealer which should be read as implicit approval of extension of time for collection of export proceeds for the purposes of deduction u/s 10A. 1.4 That the C1T(A) has failed to appreciate that it is settled law that if no communication is received to a request made to a statutory authority Page 4 of 9 ITA No.2830 & 2831/Del/2013 or its nominee, the request is deemed to be allowed. The CIT(A) has erred in not realizing that even if no explicit approvals were received from the RBI/Authorized Dealer, it has to be read as implicit approval since no communication has been forthcoming. Iii light of the implicit approval , the CIT(A) has erred in upholding the exclusion from export proceeds on the ground of non- realization. Brief facts relating to the above issue are as under: 2. The Assessee is engaged in the business of developing software products and had filed its return of income during the year under consideration. At assessee claimed exemption under 10 A of the Act on total export turnover pertaining to the relevant assessment years. During the assessment proceedings the Ld.AO observed that, out of export sales, certain amounts were not received in foreign exchange within the prescribed time. The Ld.AO excluded such sum from the export turnover for the purposes of computing deduction under section 10A of the Act. The Ld.AR referred to para 3.6 at page 19 of the assessment order for assessment year 2008-09 and para 3.21 at page 22 of the assessment order for assessment year 2009-10. 2.1 The Ld.AR submitted that, this amount was excluded from the export turnover only on the ground that they were not received within the time limit specified under the Act. At the outset, he submitted that, admittedly there is no dispute that the amounts were not realised. The issue was only that the amounts were received after the due date specified under the Act, and the assessee has submitted application for extension of time before expiring of six months. The Ld.AR placed reliance on the decision of Hon’ble Karnataka High Court in case of Wipro Ltd. vs DCIT reported in (2016) 382 ITR 179. He also placed reliance on the decision of Page 5 of 9 & 2831/Del/2013 coordinate bench in assessee’s own case for assessment year 2010-11 and 2011-12 passed in by order dated 03/07/2019, more specifically placed in the paper book pertaining to case laws filed before us at the time of hearing. It was submitted that, this Tribunal in a similar situation the Tribunal directed the Ld.AO to consider the said amount though realised belatedly to be included in the export turnover for the purposes of computing deduction under section 10 A of the Act.

On the contrary, the Ld.CIT.DR relied on the decision of Hon’ble Karnataka High Court in case of CIT vs Tyco Electronics Corporation India (P) Ltd. reported in (2012) 22 Taxmann.com 267. She submitted that, unless the appropriate authority grants extension, as the receipt of such belated sale proceeds, no benefit could be extended to the assessee in respect of the same for computing deduction under section 10 A of the Act.

We have perused submissions advanced by both sides in light of records placed before us. 3.1 Hon’ble Karnataka High Court on and identical issue observed as under is in the case of Wipro Ltd., (Supra) “146. The facts are not in dispute. The assessee is a status holder exporter. The export has been done strictly in accordance with law. Foreign exchange remittances should have been received within six months from and of the financial year. It has not been received. Therefore, an application is filed seeking for extension of time to the Reserve Bank of India. Even to this day the Reserve Bank of India has not rejected the said request. On the contrary, after the period of 6 months, foreign exchange remittances are received and credited to the assessee's account through the Reserve Bank of India. It is in this context mer1y because the written approval of extension is not passed by the Reserve Bank of India, whether the assessee couid be denied the benefit of Section 10A. The Tribunal on consideration of the entire material on record, taking note of Page 6 of 9 ITA No.2830 & 2831/Del/2013 the statutory provisions and the object underlying this provision, has come to the conclusion that notwithstanding the fact there is no express order granting approval by the Reserve Bank of India, as it has not been rejected and foreign exchange is received and remitted through the proper channel, the assesse is entitled to the benefit of Section 10A. In the facts of the case, we do not find any error committed by the Tribunal. Therefore, the said substantial question is answered in favour of the assessee and against the revenue. 3.2 We have also perused the decision of jurisdictional High Court relied by the Ld.CIT.DR very carefully. Hon’ble jurisdictional High Court in para (9a) observed and held as under: “9a. The statute does not prescribe any time limit within which the application is to be made for such an extension of time and the period within which the competent authority as to pass an order. The object behind this provision appears to be that once the sale proceeds are received in India though late and the authority vested with the power to extend the time, exercises that this creation, the assessee should be entitled to the benefit. In that view of the matter, the tribunal was justified in setting aside the order of the appellate Commissioner as well as the assessing officer and in extending the said benefit. It is in consonance with the express words used in the statute. Therefore, we do not find any substance in the said contention. Therefore, the 1st substantial question of law is answered in favour of the assessee and against the revenue.” 3.3 We note that the above observation by Hon’ble jurisdictional High Court is in no way against the assessee. The criteria required by the statute is that the sale proceeds are to be received in convertible foreign exchange in India for being eligible to be considered for the purposes of claiming deduction under section 10 A of the Act. In the present facts of the case, we note that, there is no dispute whatsoever regarding receipt of the sale proceeds in convertible foreign exchange were received by assessee, though belatedly. The only reason for not considering the alleged amount while computing deduction under section 10A of the Act was that, such amount was received belatedly beyond the period of six (6) months mentioned Page 7 of 9 & 2831/Del/2013 in the statute, and application for extension of time for receiving such foreign remittances have been filed with the authorized bankers and the applications were not been rejected. 3.4 The facts of the case in hand is similar to the aforesaid case of Wipro Ltd., (supra). Respectfully following the aforesaid decision of the Hon’ble Karnataka High Court in the case of Wipro Ltd., (supra), we hold that notwithstanding the fact that there is no express order granting approval by the authorized bankers extending the time limit of six (6) months for receipt of foreign remittances on account of export sales, the assessee is entitled to the benefit of deduction under section 10A of the Act and consequently direct the Ld.AO, that such amounts, though realized belatedly, shall be included in the export turnover for the purposes of computing deduction under section 10A of the Act. Accordingly these grounds raised

Date of dispatch of Order. No 13. Draft dictation sheets are Sr.PS attached