TaxTMI 
TaxTMI 
2011 (10) TMI 483
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....rom the purchasing country to the selling country. The bills are settled through Bank of Baroda in India. The proceeds are received through convertible foreign currency and payments are also made in convertible foreign currency. The assessee is also maintaining the Exchange Earners Foreign Currency Account (EEFC) account. The assessee claims that the entire business is covered by Foreign Exchange Management Act, 1999. The bills are raised in the name of M/s Maharaja Metal Industries, Bangalore, and the sale bills are raised by M/s Maharaja Metal Industries. 3. For the assessment year 2001-02, the assessee on a total turnover of Rs. 2.74,02,676, he has shown net profit of Rs. 51,85,088, which the assessee claimed as deduction under section 80HHC. While examining the books of account of the assessee, it was noticed that the assessee was engaged in purchasing the goods from one country and selling it to another country. He had claimed 100% deduction on export profit as against 80% allowable from the assessment year 2001-02. The assessee accepted the said mistake, filed a revised return and paid taxes on 20% of the income at Rs. 11,25,020. He also claims certain other benefits, abou....
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....dministered by any local Government to sea or to any foreign territories administrated by another local Government. The decisions on which reliance is placed by the assessee have totally ignored the expression in the section "export out of India of any goods or merchandise and the necessity of customs clearance". Therefore, he was of the view, as the assessee has not exported out of India any goods or merchandise, since the goods did not. pass through the customs stationed in India and since the goods have not moved from Indian Territory, it cannot be said that there is export of goods or merchandise out of India section 2(18) of the Customs Act, 1962 defines "export" as taking out of India to a place outside India. Therefore, he was denied the benefit of exemption from payment of taxes on profits earned out of export. Aggrieved by the said order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals-II), Bangalore. The appellate authority held that the Assessing Officer has done a very thorough, comprehensive and good job by framing the assessment order in a very logical and speaking manner. He has very well brought out a case to establish that the meanin....
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....see contended that the whole object of enacting the said section 80HHC is to earn precious foreign exchange for the country. As on the date, this provision was enacted, the country was actually in need of foreign exchange. Whether the goods are exported from India or from any country outside India to another country, the criteria is that the assessee should earn profit, and the said profit is to the brought into the country by way of foreign exchange. If the intention of the Parliament was that the goods or merchandise has to be exported 'from India' instead of 'out of India', they would have used the words from India'. The very object of using this expression 'export out of India' is to avoid such a situation, because the object is to earn foreign exchange whether it is from a trade which involves export of goods from India or from one country outside India into another country. The interpretation placed by the authorities is contrary to the object with which the aforesaid provision was introduced and is also contrary to the express words used in the statute, and therefore he submits that the orders are to be set aside and the assessee is to be granted the benefit of deduction. In....
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....ustoms Act, 1962 (52 of 1962) (b) ........... (ba) ........... (c) ........... (d) ..........." Explanation (2) to sub-section (2) of section 80HHC reads as under: "For the removal of doubts, it is hereby declared that where any goods or merchandise are transferred by an assessee to a branch, office, warehouse or any other establishment of the assessee situate outside India and such goods or merchandise are sold from such branch, office, warehouse or establishment, then, such transfer shall be deemed to be export out of India of such goods and merchandise and the value of such goods or merchandise declared in the shipping bill or bill of export as referred to in sub-section (1) of section 50 of the Customs Act, 1962 (52 of 1962), shall, for the purpose of this section, be deemed to be the sale proceeds thereof.]" 12. Chapter-VIA of the Act deals with deductions to be made in computing the total income. Part-C deals with deductions in respect of certain incomes and one such deduction is provided under section 80HHC. Therefore, it is clear that this Chapter-VIA contains beneficial provisions granting several deductions to....
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....a period of six months from the end of the previous year or within such further period as the competent authority may allow in this behalf. Therefore, the law has prescribed a limit within which the sale proceeds in convertible foreign exchange is to be brought into this country. In the case of stock transfer from India to a place outside India where the assessee has a branch office, ware-house, or other establishment, if that date is taken into consideration as the starting point for six months time to bring back the foreign currency, it would cause injustice to the assessee. Therefore, Explanation (2) makes it clear that only when the assessee sells such goods or merchandise from such branch office, warehouse or establishment, such transfer shall be deemed to be export out of India and six months period is to be computed from the date of such sale from a territory to an ultimate purchaser. 15. Explanation (aa) makes it clear that in what circumstances it will not be an export out of India. Any transaction by way of sale or otherwise in a shop, emporium or any other establishment situated in India not involving clearance at Customs station though the goods are exported out of I....
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....way of sale or otherwise in a shop, emporium or establishment situate in India, and (b) that it does not involve clearance in any customs station as defined in the Customs Act. This view of the Allahabad High Court had been consistently followed by several other High Courts, including the Rajasthan High Court itself in ITO v. Vaibhav Textiles [2002] 238 ITR 346. Reliance was placed on a number of orders of the Income-Tax Tribunal following the view taken in Ram Babu's case [1996] 222 ITR 606 (All.), consistently and the law laid down therein. In fad, even in the case of the respondent-assessee, for the previous assessment years, the Tribunal had taken the same view. Although the Revenue attempted to canvass against the view by seeking references under sections 256(1) and (2) of the Act, the attempt failed. There was no further challenge to the settled consistent judicial view taken on the issue. It was also pointed out that the judgment of the Allahabad High Court in Ram Babu's case [1996] 222 ITR 606, had been challenged by the Revenue before this court, but the special leave petition, was summarily dismissed. In view of this position, the Tribunal felt that consistency of the jud....
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.... to it for the technical services rendered and this arrangement is effected only with the concurrence or the permission of the Reserve Bank of India. The question in the instant case is, whether instead of remitting the amount to the foreign reinsurers first and receiving the commission due to the appellant later, the arrangement by which the appellant remitted the reinsurance premia, after retaining the fee due to it for technical services rendered will satisfy the requirement of section 80-O of the Income-tax Act." In answering the said question, it held as under:- "..the objective was to encourage Indian companies to develop technical know-how and to make it available to foreign companies so as to augment the foreign exchange earnings of this country and establish a reputation of Indian technical know-how for foreign countries. The objective was to secure that the deduction under the section shall be allowed with reference to the income which is received in convertible foreign exchange in India or having been received in convertible foreign exchange outside India, is brought to India by and on behalf of taxpayers in accordance with the foreign exchange regulations." The....
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....Dy. CIT [2006] 10 SOT 679, dealt with the very question which arises for consideration in this case. After carefully scrutinising the provision of law, various judgments and after noticing the judgments of the Apex Court, it is held that, ".. The direct shipment of goods to another country without touching base in India should not be an impediment to the assessee from claiming the benefits of s. 80-HHC, if it was otherwise entitled to do so. When third country trade is a recognized feature of the new import-export policy and procedure of the Government of India, there is no reason to deny deduction under s. 80HHC solely on the ground that the exports were not made ex-India. It is undisputed that the assessee had earned foreign exchange for the country. The focus and emphasis of foreign polity is to increase the foreign reserves of the country. "Export" literary means sending goods to another country. So, the word "export" does not mean only sending goods out of one's own country to another. The wordings of s. 80HHC do not provide for such an interpretation at all as distinguished from the expression "from India to a place outside India" as appearing in sub-s. (1) of s.80HHE. The....