THE COMMISSIONER OF INCOME TAX-II vs. M.S. INTERNATIONAL LTD

$-14 to 17 * IN THE HIGH COURT OF DELHI AT NEW DELHI ' R eserved on:.3ltt' August, 2012 % Date of Decision: 28th September, 2012 + tT[t394t2009 COMMISSIONER OF INCOME TAX .... Appellant VERSUS N4/S. M.S. INTERNATIONAL LTD. .... Respondent + ITA2t0t2007 + ITAt47t2007 COMMISSIONER OF INCOME TAX .... Appellant VERSUS M.S. SHOES EAST LTD. .... Respondent + tTA575t2007 COMMISSIONER OF INCOME TAX .... Appellant VERSUS PEARL INTERCONTINENTAL LTD. .... Respondent Present: Mr. Kamal Sawhney, Sr. Standing Counsel for Revenue in ITA Nos.999/2006,21012007 , 57 512007 and 14712007 . Mr. Sanjeev Sabharwal, Sr. Standing Counsel with Mr. Puneet Gupta, Jr. Standing Counsel with Ms. Gayatri Verma, Adv. in ITA No.139412009. Mr. Pavan Sachdeva, respondent in person in all matters. ITA Nos. 139412009, 210 12007, 57 5 /2007 & | 47 12007 Page I of2 Signing Date:07.09.2024 17:11:16 Certify that the digital and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified

CORAM: MR. JUSTICE S. RAVINDRA BHAT MR. JUSTICE R.V. EASWAR I . Whether Reporters of local papers may be allowed to see the judgment? 2. To be refened to the Reporters or not? 3. Whether the judgment should be reported in the Digest? R.V. EASWAR, J.: For order see ITA No.999/2009. SEPTEMBERZ8,2012 hs [U".--, (R.v.EASWAR) JT]DGE (S. RAVINDRA BHAT) JUDGE ITA Nos. 1394 12009, 210/2007, 57 5 12007 & | 47 12007 Page2 of2

'T.,t 'l $^i13 to 17 * IN TIIE HIGII COURT OF DELHI AT NEW DELHI Reserved on:.30't' August, 2012 % Date of Decision: 2Bt" Septentber, 2012 + 1TA99912006 + tTAL394l2009 COMMISSIONER OF INCOME TAX ... Appellant VERSUS M/S. M.S. INTERNATIONAL LTD. .... Respondent + ITA2L0|2007 + ITAI47|2007 COMMISSIONER OF INCOME TAX .... Appellant VERSUS M.S. SHOES EAST LTD. .... Respondent + ITA575/2007 COMMISSIONER OF INCOME TAX .... Appellant ' ; VERSUS PEARL INTERCONTINENTAL LTD. .... Respondent . Present: Mr. Kamal Sawhney, Sr. Standing Counsel for Revenue in ITA Nos. 999/20 06, 2I0 /2007, 57 5 /2007 md 1 47 /2007 . Mr. Sanjeev Sabharwal, Sr. Standing Counsel with Mr. Puneet Gupta, Jr. Standing Counsel with Ms. Gayatri Vetnta, Adv. in ITA No.139412009. Mr'. Pavan Sachdeva, respondent in person in all matters. tTA 999|2006,2|012007, s7512007, |394|2009 &. |4712007 Page I of15

I, CORAM: MR. JUSTICE S. RAVINDRA BHAT MR. JUSTICE R.V. EASWAR 1. Whether Reportdrs of local papers may be allowed to see the judgrnent? 2. To be referred to the Repofters or not? y 3. Whether the judgment should be reported in the Digest? Y R.V. EASWAR,.I.: Since all the appeals involve a conrmon issued and were heard together, they are'disposed of by a common judgment. The appeals have been filed by the CIT under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). The ITA Nos.99912006, 139412009,21012007 and 57512007, though thdy relate to three different assessees, involve a common question, namely, whether the assessee was rightly held by the Income Tax Appellate Tribunal (hereinafter refened to as 'the Tribunal') to be entitled to the deduction under Section 80HHC of the Act. ITA No.74712007 involves the question of penalty imposed on the assessee under Section 271(l)(c) of the Act and the question of law is whether the Tribunal was right in cancelling the penalty. This appeal is consequential to the fate of ITA No.210/2007. 2. The ITA No.999/2006 is talcen as the lead matter. The appeal relates to the assessment year 1993-94. The respondent-assessee is a public limited company by name M.S. International Ltd., (heleinafter referred to as 'MSIL' or 'the assessee'). The brief facts giving rise to the appeal rnay be noted. The assessee was incorporated on 06.06.1991. Its business was to manufacture and export synthetic rubber sole sheets. In respect of the assessment year 1993-94, relevant to the previous year ended on 31.03.1993, which is practically first year of its operation, it filed a return of income on 30.12.1993 declaring a total income of 72,5701-. In the return, the assessee claimed deduction of 76,48,92,5491- under Section 80HHC. Included in this was a deduction of {6,05,43 ,6271- in respect of export of synthetic rubber sole sheets to lWs. IT A 999 | 200 6, 2t 0 I 2007, s7 s I 2007, 139 4 / 2009 & 1 47 12007 Page 2 of 15 ':'

:' n Taj Al Khateej General Trading .Company of Dubai Qrereinafter referred to as 'Taj' of 'TAKGT'). It would appear that there was a search under Section I32 of the Act of the assessee group of companies on 29.06.1994 on the basis of information that the assessee is indulging in over pricing its exports and in order to honour the export commitment substandard goods were being purchased from the domestic rnarket and "exported; and in league with the importer, money taken out of India through hawala route was being brought in as export proceeds. It is not clear from the assessment order as to whether, and if so, what were the documents or materials seized during the search, but suffice to note that in the coruse of the assessment proceedings the assessing officer communicated with the Directorate of Revenue Intelligence (DRI) in response to which a letter dated 01.12.1995 was received. Along with the letter, a statement dated 28.12.1994 was also received by the assessing officer, which was that of one Sheikh Suad Bin Abdullah Rashid Ai Nuaimi, President of the Economic Dgpartrnent, PO Box No.870, Ajmen, U.A.E. The letter is reproduced in the assessrnent order and therefore is not reproduced here. Suffice to note that the Sheikh stated that he was a partner of Taj and that he has never heard of MSIL fi'om whom his firm was supposed to have imporled synthetic rubber sole sheets, that he has never met or heard of Pavan Sachdeva, one of the Directors of MSIL and that the order said to have placed by Taj with MSIL by letter'dated 18.01.1993 for 10 consignments of 53077 rubber sheets for a total cost of US $ 10,615,380 was not actually a letter written by Taj, that the letter did not contain any specifications which was quite unusual for an order of import, that he has seen a list of 155 shipping consigrunents sent by MSIL between 16.03.1993 and 11.03.1994 for a total FOB value of .US $ 10,615,392, that he was not aware of any such shipping consignment imported by Taj into Dubai and flrat the name of Taj has been misused in the documents. On the basis of this letter, the assessing officer wrote to MSIL and sought its explanation. The assessee by letter clated 27 .11.1995 submitted that the export orders received from Taj were submitted in original with the application for license submitted to the Directorate rT A 999 12006, 2r0 12007, 57 5 | 2007, 13 9 412009 &. | 47 /2007 Page 3 of 15

t I General of Foreign Trade (DGFT), tirat the synthetic rubber sole sheets wele in fact exported to Taj and'the entire sale proceeds were realised through Bank of Baroda from the banker of Taj in Dubai. 3. The assessing offrcer was not satisfied with the assessee's reply. It would appear that the assessee had also submitted replies to the DRI vide its letters dated 23.08.1995 and 01.12.1995. The assessee also submitted a letter to the assessing officer on 04.03.1996 attaching a photocopy of another staternent of the Sheildr ih which the Sheildr had withdrawn his earlier statement dated 28.12.1994. The 'assessing officer was not prepared to accept the retraction of the Sheikh for the reasons that it was undated, that'it was not swom to before an Oath Commissioner, that the origilal was not available, that the statement was not collected tluough any govelrment agency, etc. In its earlier letter dated 27.1I.I995, the assessee had stated to the assessing officer that the Sheikh was upset with the assessee's refusal to give certain amount of discount and that was the reason for his giving a statement on 28.12.1994 denying the imports. All these submissions of the assessee were brushed aside by the assessing offrcer for the reasons stated above and also because he suspected that the second statement, retracting his earlier statemdnt, was issued at the behest of the assessee. It would also appear that the Assessing Officer had conducted some inquiries through the enforcement directorate regarding the genuineness of Taj in Dubai and the letter issued by the Sheikh on 28.72.1994. According to the information received by letter dated 08.01.1996 from the Consulate General of India, Dubai the following was the position: - i) IWs. Taj Al Khaleej General Trading Co. Dubai was not existing at the time of verification i.e. June 1994. ii) However during the period namely Jan. 1993 a firm in the name of Taj Al Khaleej General Trading Co. was existing in Dubai. rT A 999 12006, 2 1 0 1 2007, 57 5 12007, r39 412009 &- 1 47 12007 Page 4 of 15

iii) The Prop. of the firm was Sheikh Suad Bin Abdullah Rashid Al Nuairni. iv) When contacted Sh. Sheikh Suad Bin Abdullah Rashid Al Nuaimi confirmed the issuance of the letter dated 28.12'94. v) Sheikh Nuaimi informed that the contents of the letter dated 28.12.94 ar.e correct and that he issued the same as per the advice tendered by his legal ' consultant. 4. In the light of the aforesaid facts the assessing officer held that there were no exports made by the assessee to Taj and no deduction under Section 80HHC was allowable. He accordingly denied the. deduction. However, the amount of <6,05,43,6271- was treated as income of the assessee under the head "income from other sources" since the money had actually been received by the assessee. Thus the total income of the assessee was computed at {6,05,46,1971- which consisted of the returned income of72,5701- and the addition of {6,05,43,6271- as "income from other sources". 5. The assessee appealed to the CIT (Appeals) who heard both the assessee as well as assessing officer and passed an order on 79.03.1997. Before the CIT (Appeals) the assessee adduced additional evidence under Rule 46A of the Income Tax Rules, 1962 to show remittances received from Taj through banking channels, for purchase of raw material and manufacture of goods as also evidence to show that the goods were shipped to Dubai. The additional evidence was admitted by the CIT (Appeals) who eventuaily held that since the assessment was made on the basis of a single statement of the Sheikh who had retracted the statement and since the second statement of the Sheikh filed by MSIL was not tested by cross-examination, the case was required to be remanded to the assessing officer to be examined and framed afresh. He accordingly remitted the matter to the assessing officer. rT A 999 / 200 6, 21 0 12007, s7 5 /2007, r39 4 1 2009 & 1 47 12007 Page 5 of 15 tr It

l1' <14,4001- from which goods of the value of {11 to 12 crores carurot be manufactffed. In coming to this conclusion, the assessing officer has ignored the evidence adduced by the assessee that it was getting the work done ttu'ough job work underlaken by its sister concerns. (ii) Since the assessee was getting the job done thlough sister concerns, the fact that it possessed machinery of only <2,72,2491- was irrelevant' ' (iiD The assessee did not claim at any point that the entire goods.were rnanufactured by it. (iv) Neither the assessee nor the assessing officer could succeed in producing the Sheikh for finther examination on his statements. However, the assessee has been able to lead suffrcient documentary evidence to show that the exports were genuine. This included the following: - "1. Original Bank Certificate from ANZ Grindlays Bank, Dubai, tlAE showing bills received by the bank and drawn on M'5. Taj Al Klyaleej General Trading Coy. By the assessee after betng paid by the bank. 2. Export orders confirmed by M.S. Tai Al Khaleej- 3. Original statentent showing.credit limitfor M.S. Tai Al Khaleei by "Export Credit Gaurantee Corporation of India" a Govt. of India Undertaking. 4. Particulars of exports duly endorsed by Customs authorities in the "Duty Entitlement Exemption Certificate" (DEEC Book). 5. Bank certificate for export realization. 6. Exchange control declarationfrom RBI. 7. Exchange control declarationfrom RBI. B. Attested Custonts shipping bill certifuing exports." 1T A 9 99 12006, 210 12007, 57 5 12007, r39 412009 &. 1 47 / 2007 Page 7 of l5 ,ta'. I

(v) The assessee was also able to addube the following further documents in support of its claim before the CIT (Appeals): - "(1) Courier receipt of communication dispatched by TAKGT tO ITO. (2) Applicationfor VISA of Pawan Sachdeva' (3) A letter from TAKGT to the Consulate General, Indian Embassy, Dubai. (4) Letter from TAKGT to MS Internationhl Ltd., Delhi giving details. of order placed by them' (5) Invoice No.92R-912 dated 17.9.92 of IUI/s Fuji Chemicals Development Do. (sic') Ltd., TolEo for import of 16.8 MT of Synthetic Rubber. (6) Bill of lading No.A6-65245A dated 28-9-92 issued bv , EvergreenJapanCorporation. (7) Bill of entry for Home consumption No.243l/92-93 dated 29.10.92. (S) BiIl No.lI402 dt. g.ILg2 of A[/s. N-G. Bhanushali & Co. clearing agents regarding clearing of goods from Bonfiay Port. (9) Goods r.eceipt (GR) copy No'5889 and 5B9I dated 7.11.92 of Ms Haryana Golden Transport for dispatch of goods from Bombay to Delhi. . (10) Transport bill No.HGT/DLH/392 dt. 16.11'92 and HGT/DLI-I/389 dt. I6.I1.92 of A,I/s Haryana Golden Transport. (11) Octroi Receipts. (12) Invoice No.MI/IO dated 16.10.92 drm,vn in favour of Iutr/s Vikhuda Overseas Corporation for export of 3800 Synthetic rubber Sheets., GR. No.AB 479852. Q3) BilI of lading dated 23.12.92 issued by Mitsui O.S.K. Lines ltd. against invoice No.M 1/10' tT A 99 9 12006, 2 | 0 12007, 57 5 12007, 139 412009 & 1 47 12007 Page 8 of 15 ..,'..r

(14) Customs shipping Bill No.5974 dated 17.12.92. Q5) Invoice No.MI/68 dated 21.1.93 for export of 1400 Synthetic Rubber Sheets. GRNo.AB 395116. (16) Bill of 'lading No.APLU 004411973 dated 29'3.93 issued by American President Lines Ltd. (17) Customs Shipping Bill No.9452 dated 22.1.93. (15) Duty Exmption Entitlentent Certificate Book. Issued and maintained by Deptt. of Revenue (Customs), Govt. of India Bearing Serial No.05 5526,' containing particulars of DEEC' value of the imports Licence fl.20 crores (Advance Licence), Assessee's Commitment to export goods of that value, particulars of exports made." (vD 'In addition to the above flre assessee also produced evidence to show that the remittances for the export sale were received from Dubai-tluough banking charrnels which has been overlooked by the assessing officer. ("ii) The income tax authorities have_ignored the fact that the assessee had exported similar goods to other foreign buyers which have not been doubted by them. Further, the Sheikh had stated that Taj was not only importing from MSIL but also fi'om its sister concerns. 9. With regard to the statements of the Sheikh, the Tribunal found that in the first statement dated 28.12.1994, he had denied making any purchases from MSIL. Tliis was sought to be explained by the assessee before the Tribunal on the ground that it was given at the behest of h4/s. Gujarat Apar Polymer Ltd., a business rival which had complained to the Ministry of Commerce on the basis of which inquiries were initiated by the government and this had put pressrue on the Sheikh who wanted to dissociate himself from the assessee. It was only when the difficulties were removed that the IT A. 999 /2006, 2t0 12007, s7 5 | 2007, r39 4 12009 & | 47 12007 Page 9 of 15

Sheikh came forward to make a statement retracting his earlier statement. The Tribunal has noted the assessee's submission in para 1 1 of its order as follows: - *ll. According to the assessee, the statement dated 28.12.94 by the Sheikh denying the purihases from the assessee was made on the basis of a complaint lodged by the hostile business rival of the assessee company, namely A[/s. Gujarat Apar Polymers ltd. with the Minister of Commerce and on the strength of that complaint enquiries utere initiated by the Government and, therefore, under pressure the Sheikh made that statement to avoid serious trouble. However, when these contplications were remoyed, the Sheikh agreed to make statement to bring out the true facts denying his previous statentent stating the circwnstances under which that statement was ntade and fully accepting the export sales made to him by the assessee conxpany. Along with his statement an annexure was also appended detailing the documentary evidence to support the factum of imports made by the firm of the Sheikh from the assessee company. The assessee also claints that the copy of this statement was also directly fo*ud by the Sheikh to the AO and also enclosing the entire docuntentary evidence forwarded it by sending another copy through courier to the AO. The Sheitch also filed an ffidavit, which has been authenticated by Ministry of Foreign Affairs Sharjah as well as by Dubai Chamber of Commerce and Industry. In this ffidavit. Sheikh Rasheed has clearly admitted that all the orders sent by the assessee and its other cornpanies were placed by TAKGT and that the ossessee and is other group companies have not all misused the name of TAKGT company. In this very ffidavit, the Sheikh further slated that all the orders were placed by the representative of his company, TAKGT, in Dubai and that he was aware of all the imports of every kind done by TAKGT from the assessee's group. Further, in the ffidavit, the sheikh explained that the statentent dated 28.12.94 was made by hint on the decett practiced by the representatives of lt[/s. Guiarat Apart Polymer Ltd. and its lawyer and that the statement does not have any authenticity at all. The Sheikh further admitted that the telephone number and the P.O. number given on the order form placedwith M.S. group were being used by TAI(GT. Further that no dues against any bills were to be paid and that all tlrc payntents have already been made from his accounts in A & Z Gribndlays Bank, Deira, Dubai' There was a coy of another declaration from Sheikh Rasheed which was dated and also authenticated by Dubai Chamber of Conmterce and Industry, which repeats the same story to the ffict that the orders rT A 999 / 200 6, 21 0 12007, 57 s 12007, | 39 4 I 2009 & | 47 12007 Page 10 of 15 4. II

-T, placed with M.S. Group were genuine. It nxeans that the Sheilch in his -subsequent declaration and the ffidavit, the genuineness of which has also 'been accepted and communicated to the Additional Director General Foreign Trade by the Consul.ate General of Indta in their letter dated 12.5.97 placed at, pages 58 & 59 of the pqper book of the essessee, ntentioned that the letter dated 28.12.94 was not registered, whereas, his subsequent ffidavits were registered and in the ffidavit dated 13.1.97 his signature have been legalized by Dubai chamber of Comrnerce and Industr"y, which has also been enclosed by UAJ Ministry of foreign Affairs and as the ffidavit dt. 13.1.97 has been Iegalized by Dubai Chamber of Commerce and Industry, which has also been enclosed by UAI Ministry of foreign Affairs and as the ffidavit dt. I 3. I .97 has beert legalized it may have to be considered as authentic." tr 10. With reference to the aforesaid submissions of the assessee, the Tribunal opined as follows: - ,,we are of the opinion that in case the Ao was relying upon the statement of the Sheikh dated 28.12.94 the opportunity should also have been afforded to the assessee to cross examine the Sheikh and in the absence of sante no reliance could also be placed on such Statement. Further, the second statement made by the Sheikh, fully retracting from the earlier statement made by him also of course cannot be safely relied upon because the AO is deprived front the opportunity of cross examining the sheikh as he did not choose to "ipear for this purpose. As regards the ffidavit of the Sheikh in support of his retraction f'om the statement made earlier dated ' 2t.12.94, admitting the export purchases madefi"om the assessee and the payments being made through banking channels as clainrcd by the orrirrrr, the Consulate General of India's ffice in the letter to additional Director of Foreign Trade has confirmed the genuineness of the ffidavit of the Sheikh, onwhichthe signature of the Sheikhwerb Ibgattzid the ffidavit was registered by the Dubai Chamber of Commerce & Industry and has also been endorsed by the UAE Ministry of Foreign Affairs. In these facts it ntay not be safe to rely - upon the unauthenticated statement made by the Sheikh, but, at the same time is would also not be fair on the part of tax authorities re the ffidavit, for contradicting which neither is been made nor any iutdrntu has been brought the departntent. Fact remains that when rr A ggg 12006, 210 | 2007, 57 5 / 2007, 139 4 I 2009 &. | 47 12007 Page l1 of15

-T'r the assessee front the documentary evidence is able to prove the export sales made by ft rc the Sheikh's company TAKGT, Dubai, and having received the amount of {6,05,43,627/- as remittance for the sante, through banking channel of Dubai in the Indian Bank the export sales made by the assessee pdnnot be disbelieved on the solitary statenxent of the Sheikh made earlier on 28.12.9.4, when the sanxe v'as subsequently retracted by the Sheikh himself in a duly authenticated ffidavit." 11. After exarnining the documentary evidence placed by the assessee the Tribuiral held'that there was no basis to disbelieve the entire documentary evidence rnerely because of the statement of the Sheikh made on28.12.I994. The Tribunal finally held that the tax authorities were not justified in treating the export sale rnade by the assessee to Taj, Dubai as non-genuine and in refusing the deduction claimed under Section 80HHC. The Tribunal also deleted the addition of the amount of <6,05,43,627I- as "income from other sourcas". lZ. Similar orders were padsed in the case of MSIL for the assessment year 1994- 95. In the case of M.S. Shoes East Ltd. and the case of Pearl Intercontinental Ltd. also the Tribunal took the same view; It may be noted that in these cases also the assessees had claimed the deduction under Section 80HHC in respect of the exports made to Taj which were disbelieved. The export proceeds'were assessed as "income from other sources". In the case of M.S. Shoes East Ltd., the assessing officer also imposed a penalty of {59,58,588/- under Section 271(l)(c) of the Act for'concealment of income. The penalty was cancelled by the Tribunal since it had deleted the addition madb 'under the head "income fi'om other sources" and also allowed the assessee's claim for deduction under Section 80HHC. 13. The contention of the standing counsel for the Revenue is that the finding of the Tribunal in all the cases is perverse as it has overlooked the first statetnent of the Sheikh made on28.12.1994 andhas given undue weightage to the retraction and to the rT A 99 g / 200 6, 210 12007, 57 5 /2007, 139 41 2009 & 1 47 | 2007 Page 12 of15

affidavit dated 13.0I.1997 which was filed by the assessee in the course of the fresh assessment proceedings. The contention of the assessee, who appeared ttu'ough its Managing Director, is that the Tribunal has taken the decision on the basis of the evidence adduced before the income tax authorities including copious documentary evidence and has not chosen to go only by the first statement made by the Sheikh. 'He further pointed out that the Tribunal has refered to all the three statements of the Sheikh and has held, on a proper appreciation of them, that the retraction and the affidavit dated 13.01.1997 contained the truth and should be believed. It is contended that there is nothing brought on record to show that the findings of the Tribunal are perverse,. nor was there any inherent irnprobability in the evidence adduced by the ,assessee in order that the conclusion of the Tribunal may be criticized as irrational. 14. On a fair reading of the order of the Tribunal, we are unable to say that its appreciation of the evidence is contrary to law. We have already adverted to the documentary evidence which was placed before the income tax authorities in both the rounds of the proceedings as also before the Tribunal. The Tribunal has taken note of every itern of evidence, including the tluee statements of the Sheikh. It has preferred to rest its decision on the overwhelming documentary evidence adduced by the assessee to prove the exports which included correspondence with the goverrunental authorities, their approvals, etc. None of the documentary evidence has been impeached or sought to be discredited on behalf of the Revenue. The Tribunal has also taken due notice of the statements of the Sheikh and has preferred to accept the retraction, supported latel by the affidavit dated 13.01.1997 swoln to by him before the Indian Consulate at Dubai. No material has been brought on record or in the course of the proceedirigs before the Tribunal to throw any doubt on the credibility of the affidavit sworn to before the Indian Consulate in Dubai. The Sheikh was neither produced by the assessing officer nor by the assessee and he was not subjected to any examination or cross-examination by flre income tax authorities. It is in these rT A 999 | 200 6, 2 | 0 12007, 57 5 12007, 139 41 2009 &. 1 47 /2007 Page 13 of 15

circumstances that the Tribunal has chosen to accept the retraction of the Sheikh, supported by the affidavit. Added to this is the fact that there was copious documentary evidence in support of the exports. The decision taken by the Tribunal is not, in ow opinion, vulnerable to the charge that it has been arrived at by ignoring relevant material or evidence or by taking into account irrelevant evidence or material. The findings of the Tribunal are essentially findings of fact and they cannot be subjected to the criticism ofbeing unreasonable or perverse or irrational. It has been held by the Supreme Court in Sree Meenakshi Mills Ltd. v. CIT, (1957) 31 ITR 28 as foilows: - ,,.....1t has been held on the corresponding provisions in the English Income-tax statutes that a finding on a question of fact ts open to attack as erroneous in law only if it is not supported by any evidence, or if it is unreasonable and perverse, but that where there is evidence to ionsider, the decision of the Tribunal is final even though the Court might not, on the materials, have conte to the same conclusion if it had the power to substitute its own judgment. In Great Western Railway Co. v. Bater(l), Lord Atkinson observed: - "Their (Commissioners') determinations of questions of pure fact are not to be disturbed, any more than are the ' rtndings of a iury, unless it should appear that there was no evidence before thent upon which they, as reasonable men, could come to the conclusion to which they have conxe: and this, even though the Court of Review would on' the evidence have come to a conclusion entir ely dffir ent f' om theirs'" To the same effect areithe obseniations of the Supreme court in CIT v. Daulat Ram Rawatmull, (1973) 87 IFR 349: ' ".....Before dealing with the facts of this case, we may advert to the principles which should govern the decisions of the court in such lilce -coses. Findings on questions of pure fact arrived at by the Tribunal are not to be disturbed by the High Court on a reference unless it rT A ggg | 200 6, zlo 12007, 57 5 | 2007, r39 412009 &. | 47 12007 Page 14 of 15

('" appears that there w'as no evidence before the Tribunal upon whi-ch they, as a reasonable rnen, could come to the conclusion to which they havecome;andthisisso,sventhoughtheHighCourtwouldonthe evidence have come to a conclusion intirely dffirent from that of tle Tribunal. In other words such a finding can be reviewed only on the ground that there is no eviden"u io trpport it or that it is perverse""'" 14. we are, therefore, satisfied that the Tribunal committed no ellor in holding that the assessees were entitled to the deduction under section 80HHC of the Act in respect of the export of goods to Taj and that the assessing officer was not justified in assessing the export proceeds not as business income but as "income from other sources". The substantial questions of law in ITA No'999/2006,139412009'21012006 and 57512007 arcanswered in the affirmative, in favour of the assessee and against the Revenue. The Tribrural was also right in cancelling the pen4tty imposed on the assessee iws. M. s. shoes East Ltd. (ITA No.14712006). All the substantial questions of law are thus answered in favour of the assessee' The appeals of the Revenue are accordingly dismissed with no order as to costs' ' t,il lU"-n-< ,' (R.V.EASwAR) JUDGE (S. RAVINDRA BHAT) JUDGE SEPTEMBER28,2ol2 hs rr A, gg9 12006, 2t 0 12007, 57 5 l2o}7, 139 4 | 2009 & | 47 | 2007 Page 15 of15 i.