Rajasthan H.C : Whether the learned Tribunal was right in its wisdom to allow the deduction under s. 80HHC of the Act even though the conditions as laid down or as inserted by the Expln. (aa) were not fulfilled by the assessee?

High Court Of Rajasthan : Jaipur Bench

Income Tax Officer vs. Vaibhav Textiles

Section 80HHC

Asst. Year 1990-91

Y.R. Meena & Shashi Kant Sharma, JJ.

IT Appeal No. 18 of 1999

26th August, 2002

Counsel Appeared

R.B. Mathur, for the Appellant : J.K. Ranka with Raj Kumar Yadav, for the Respondent

Note

Reference may also be made to another decision of the Rajasthan High Court in the case of CIT vs. Mangalam Arts (2002) 177 CTR (Raj) 308 and Editorial Comments below that decision.

JUDGMENT

BY THE COURT :

This appeal has been admitted in terms of the following question : “Whether the learned Tribunal was right in its wisdom to allow the deduction under s. 80HHC of the Act even though the conditions as laid down or as inserted by the Expln. (aa) were not fulfilled by the assessee?”

2. The assessee-firm filed its return for the asst. yr. 1990-91 and declared a total income of Rs. 20,339 only. The assessee’s case was selected for scrutiny and notice under s. 143(2) was issued. During the course of assessment, it is noticed that assessee has claimed deduction under s. 80HHC of the Act though the articles were sold in India against foreign currency. AO negatived the claim of deduction under s. 80HHC. In appeal before the CIT(A), CIT(A) followed its earlier order in the case of Anil Exports vs. ITO (ITA No. 1811/Jp/1992) and also considered the decision of Allahabad High Court Ram Babu & Sons & Anr. vs. Union of India (1997) 141 CTR (All) 310 : (1996) 222 ITR 606 (All) : TC S25.2580 and allowed the claim of the assessee. Tribunal has also allowed the claim of assessee. Heard learned counsel for the parties. Mr. Mathur, learned counsel for the Revenue submits that there is no specific finding that clearance is involved in this case of sales in a showroom against the foreign currency received from the foreigners, therefore, in view of Expln. (aa) to sub-s. 4B of s. 80HHC, the assessee is not entitled for deduction under s. 80HHC. The transaction requires clearance of any customs’ station, as defined in Customs Act, 1962. Mr. J.K. Ranka, learned counsel for the assessee, submits that the Tribunal has followed its decision in the case of Anil Exports wherein the finding was given and Tribunal has also taken the view that facts of the case in hand as well as facts in the case of Anil Exports are more or less similar, therefore, there is no justification to interfere in the order of Tribunal in the case of this assessee.

In the case of Anil Exports vs. ITO (supra), the facts and conditions regarding clearance have been set out in para 8, which reads as under : “In the present case the facts are that the assessee made sale to the foreign tourists and these sales were made by issuing sales slips which were printed for specific purpose i.e., for sale to the foreign tourists and these printed sales slips were got printed as per the guide lines of import/export policy of the Government. After verifying sales slips, which is part of the paper book, we find that the assessee made sales against credit card facility and when credit voucher was encashed in foreign currency and we found that there is a condition also which is printed on these sales slips at bottom which reads as under : “Conditions—‘Articles purchased under this voucher are totally prohibited from being sold, gifted or otherwise disposed of within the territory of India to any person, and there is also a printed block at the end of the conditions wherein it is printed that ‘the purchase of the said goods is for occasioning export of those goods out of the territory of India and not for sale in India’. We also notice that there is a signature of buyer also on this sale voucher. This sale voucher indicates that the material sold is only for carrying with the tourists to their country and not for use in the country itself where it was purchased and the ratio of the decision of the Hon’ble Allahabad High Court directly helps the assessee because they have clarified that it does not matter that who is exporting the material. The material should be carried out for the country either by seller or by purchaser.”

6. In the case in hand, Tribunal has discussed the facts and law involved in para 5 of its order, which reads as under : “We have examined the facts of this ground of appeal and also the submissions made by the rival parties. In this connection, we are of the opinion that while deciding the case of Anil Exports in ITA No. 1811/Jp/92, cited supra, we have discussed similar issue in detail and have claimed all the relevant aspects including introduction of Expln. (aa) under s. 80HHC and have followed the decision of Allahabad High Court reported at Ram Babu & Sons & Anr. vs. Union of India (1997) 141 CTR (All) 310 : (1996) 222 ITR 606 (All) wherein the Hon’ble High Court has discussed the consequences of introduction of Expln. (aa) which means that it would not be an export out of India if two conditions are satisfied: (i) it should be a transaction by way of sale otherwise in a shop, emporium or an establishment situated in India, and (ii) it should not involve clearance in the custom as defined in the Customs Act. Both these conditions must be satisfied if the transaction is to be held to be not an export out of India. If either of these two conditions is not satisfied, it is an export out of India. The Hon’ble High Court, therefore, held that if the transaction involves clearance at customs, it will be an export out of India within the meaning of Expln. (aa). If we examine these provisions in the light of the written submissions made by the learned authorised representative before the CIT(A), dt. 10th Aug., 1991, and the decision of this Bench sited supra, there can be only decision that would be in favour of the assessee. After examining all the facts and circumstances of the case, we follow our decision cited supra and allow this ground of the assessee for these assessment years.”

7. The Tribunal considered the requirement for deduction under s. 80HHC, in case the articles or goods sold in showrooms in India against foreign exchange. Tribunal has taken the view that after considering the facts of this case and the facts involved in the case of Anil Exports, the only decision which can be arrived at the assessee is entitled for deduction under s. 80HHC of the Act. It is also pertinent to note that Department has not challenged the order of Tribunal in case of Anil Exports. Considering these facts, we find no infirmity in the order of the Tribunal. In the result, no case is made out for interference in the order of the Tribunal. The appeal stands dismissed.

[Citation : 258 ITR 346]

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