2026 (1) TMI 627 - HC - Income Tax

Submission of Bank Realization Certificates for export deductions: consignment-wise BRCs suffices; AO to re-examine and act accordingly.

Applicability of deduction entitlement turned on submission of Bank Realization Certificates (BRC). The analysis recognises that banks issue BRC ... Applicability of Section 80HHC(3) - dispute is confined to submission of Bank Realization Certificate (for short ‘BRC’) with respect to export - HELD THAT:- It is factually correct that BRC is issued by Banks consignment wise. Consolidated BRC is not issued by Bank. There are all possibilities of submission of BRC by appellant with DGFT as well as Customs Authorities. The appellant cannot be denied benefit of deduction on the ground that it has not submitted consolidated BRC. The appeal stands disposed of with a direction to Assessing Authority to re-examine its record and if it is found that consignment-wise BRC are available, demand would be dropped. If consignment-wise BRC are not available on record, the appellant may be asked to submit the same. The appellant shall submit BRC within two months from the date of requisition and Assessing Officer shall pass an appropriate order within one month thereafter. Issues: (i) Whether applicability of Section 80HHC(3) in favour of exporters with export turnover above Rs.10 crores is settled; (ii) Whether the appellant can be denied deduction under Section 80HHC for DEPB value for lack of a consolidated Bank Realization Certificate (BRC).Issue (i): Whether applicability of Section 80HHC(3) in favour of exporters with turnover above Rs.10 crores has been settled.Analysis: The Court noted that the question regarding applicability of Section 80HHC(3) to exporters with export turnover exceeding Rs.10 crores has been resolved by the Supreme Court decision referred to in the judgment and treated that legal position as settled in favour of the assessee.Conclusion: In favour of the assessee.Issue (ii): Whether the absence of a consolidated BRC disentitles the appellant from deduction under Section 80HHC for DEPB-related export value.Analysis: The Court examined the factual and documentary practice that banks issue BRCs consignment-wise and that consolidated BRCs are not issued. The Court recognised that consignment-wise BRCs may have been submitted to DGFT and tax authorities and directed factual verification by the Assessing Officer rather than denying deduction solely for lack of a consolidated BRC. The Court ordered re-examination of the record, permitted the Assessing Officer to requisition consignment-wise BRCs, allowed the appellant a time window to produce them, and required the Assessing Officer to pass an appropriate order thereafter.Conclusion: In favour of the assessee.Final Conclusion: The appeal is disposed by directing factual verification of consignment-wise BRCs and by providing the assessee an opportunity to produce such documents; the matter is remitted to the Assessing Officer for determination in accordance with these directions.Ratio Decidendi: Consignment-wise Bank Realization Certificates, being the customary bank-issued evidence of export realization, suffice for claiming deduction under Section 80HHC and absence of a consolidated BRC alone cannot justify denial of the deduction; the assessing authority must verify and permit submission of consignment-wise BRCs before denying relief.