TaxTMI 
TaxTMI 
2013 (7) TMI 282
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....n under Section10A in respect of amount of Rs.3,48,14,034/- and Rs.1,00,28,000/-. Since these grounds are interrelated, therefore, we dispose of these grounds together. 4. Brief facts are that the assessee claimed a sum of Rs.9,61,32,037/- as deduction u/s. 10A of the Act. The assessee had two units i.e. STPI unit located at Mumbai & SEZ unit located at Kandla. The claim of deduction for STPI unit was Rs.6,30,41,654/- and the deduction for SEZ unit was Rs.3,30,90,382. The assessee had produced certificate of the Chartered Accountant under Rule 16D in form 56F. The AO referred to the condition specified u/s. 10A(3) that the deduction under this section can be allowed if the sale proceeds of articles or things or computer software exported out of India are received in or brought in India in convertible foreign exchange within a period of 6 months from the end of the previous year or within such further period as the competent authority may allow in this behalf. He found that the sale proceeds of 6,13,18,000 have not been received by the assessee in India in convertible foreign exchange within the period of 6 months from the end of the PY. He also found some anomalies in the dates ....
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....eeds should be deemed to be received in India as it is a constructive receipt which should be entitled to deduction u/s. 10A of the Act. There are two other items of 50,14,000 each in respect of exports made to Dinowie Pte Ltd on 31.3.2005. The assessee has been allotted one star export house recognition w.e.f. 1.4.2004 to 31.3.2009. This recognition is defined by the foreign trade policy for FY: 2004-2009 of the Government of India, Ministry of Commerce. As per clause 3.5.2.1(v), such export houses have been given general permission for realization of the export proceeds within extended period of 360 days. A copy of the relevant circular was submitted for ready reference. The ld. AR asserted that- the sale proceeds in this case has been realised on 19.10.2005 and 6.2.2006 respectively which are within the period of 360 days from the date of shipment i.e. 31.3.2005. A certificate from the bank in this regard was enclosed. He accordingly argued that the conditions prescribed u/s. 10A are fulfilled and the deduction under this section is allowable to the assessee. Without prejudice the Ld.AR argued that the AO should have allowed proportionate deduction u/s. 10A as applicable to STPI....
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....in the appellant's case with support from explanation 1. The second explanation is also not applicable. The appellant has not opened any A/C abroad specifically for this purpose and has not credited the foreign exchange to such account. There is no such claim. The appellant claims that it has adjusted it's account with the foreign buyer with the permission of the RBI. This may be a fact. RBI may have permitted the appellant to make such adjustment of foreign exchange receivable and payable to the same party but that does not satisfy the conditions of Sec 10A(3) or explanation 2 there to. RBI is the competent authority under see 10A(3) but it has not given extension of time beyond six months to bring in foreign exchange. It has not permitted the appellant to open an account abroad and deposit it's sale proceeds. So the statutory requirement of sec 10A(3) has not been fulfilled in order to claim deduction u/s 10A. In view of this, the refusal to grant deduction u/s 10A in respect of this amount of Rs 5,12,90,000/- is confirmed. 3.8 So far as the other component is concerned, that is, the two items of Rs 50,14,000 each (total 1,28,00,000) there is substance in the arguments of the ....
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....other hand, learned DR stated that the extended period has been provided under Section 10A and the receipts were not received within the period as provided under Section10A. Therefore, the AO was right in disallowing the deduction. Learned DR further placed reliance on the order of AO to the extent which the issue was decided in favour of the assessee and placed reliance on the order of learned CIT(A) to the extent which the issue was decided against the assessee. 11. In reply, learned counsel of the assessee stated that the explanation added to Section 10A clearly clarifies that if the period is extended by the appropriate authority, then the deduction is allowable. Attention of the Bench was drawn on clause 1 & 2 of the explanation to Section10A. Further reliance was placed on the order of learned CIT(A) where the addition was deleted by him. 12. We have heard rival submissions and considered them carefully. After considering the submission and perusing the material on record, we found no infirmity in the finding of the learned CIT(A) to the extent of which the AO was directed to allow the deduction, however, the finding of the learned CIT(A) in respect to the issue involve....
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.... Court has rightly observed that, 'a two-way traffic" is unnecessary i.e. first receive the amount and thereafter pay the amount. If the assessee has adjusted the receivable amount against payable amount, then the two-way traffic is avoided and the assessee has done this exercise, which in our view, is correct. In view of these facts and circumstances of the case, we hold that the assessee is entitled for deduction under Section10A on the amount which was adjusted against the payable amount by the assessee. Accordingly, we direct the AO to allow the deduction to the assessee. 14. Regarding the issue involved in the appeal of the department, we noted that due to mistake, the AO did not allow deduction of Rs.3,48,14,034/-, which was explained before the CIT(A), who found that the AO has not given any comment as to why the same is not allowed. The CIT(A) has also observed in his finding that the AO has not specifically disallowed such claim and, therefore, the AO was directed to allow deduction on the amount of Rs.3,48,14,034/-. These findings of the learned CIT(A), which are reproduced somewhere above, also neither could be controverted nor any other material were brought on recor....
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....e laws mentioned in the order of CIT(A) at page 9. After considering the submission, learned CIT(A) found that the AO has rejected the claim of the assessee summarily and without examining the nature of expenditure. The CIT(A) observed that the AO has considered the expenditure as capital expenditure without ascertaining the facts and circumstances of the expenditure. Learned CIT(A) further observed that if the expenditure has been incurred in respect of the documentation in the process of the assessee's trading business, such expenditure cannot be considered to be capital expenditure. Learned CIT(A) also observed that the AO has not doubted the actual incurring of such expenditure. Taking into consideration various case laws, CIT(A) allowed the issue in favour of the assessee. 24. After considering the order of the AO and CIT(A), we found no infirmity in the finding of the CIT(A), who allowed the issue in favour of the assessee by ascertaining the factual matrix of the case and considered various case laws relied upon by the learned AR before him. Accordingly, we confirm the order of the learned CIT(A) on the issue involved. 25. In appeal for the assessment year 2006-07(i.e.....