TaxTMI 
TaxTMI 
2016 (9) TMI 1036
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....ee derives income from share of profit from firm and export business. The export business is conducted in the name and style of Lotus International. The assessee claims to have filed return of income on 31.10.1995 declaring total taxable income of Rs. 1,59,029/-, and inter alia also claimed exemption under Section 80HHC of the Income Tax Act at Rs. 1,07,33,971/-. It transpired during the course of processing under Section 143(1)(a) that though the assessee has claimed deduction under Section 80HHC but the required certificate of a Chartered Accountant claiming deduction under Section 80HHC was not enclosed along with the return of income and accordingly the claim was rejected vide order dated 24.1.1999. 4. The assessee moved an application for rectification under Section 154 of the Act claiming that the requisite certificate under Section 80HHC was duly attached along with the return of income and thus the claim was rightly made, however, the Assessing Officer passed order under Section 154 rejecting the contention of the assessee by observing that no such certificate was enclosed with the return of income and the fact was also supported on perusal of part-V of the return of inc....
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....ssed that even otherwise assessee could not have moved an application under Section 154 since the issue was highly debatable and accordingly the application under Section 154 was not maintainable and thus dismissed the appeal. Even before the CIT(A) no audit report u/s 80HHC claiming deduction at Rs. 1,07,33,971/- was filed. 7. The assessee further assailed by filing an appeal before the Tribunal, however, the Tribunal vide the order impugned observed that since the assessee is an exporter and as per the computation of income, had claimed deduction under Section 80-HHC to the tune of Rs. 1,07,33,971/- and such claim being allowable, thus held the claim to be allowable and accordingly allowed the same. 8. Learned counsel for the Revenue vehemently contended that the audit report was not annexed with the return of income and even as per the certificate of the Chartered Accountant, the allowable deduction was only Rs. 6,00,410/- and in none of the three orders namely, order of the AO, CIT(A) or Tribunal there is an averment by the assessee that two audit reports were filed one claiming deduction of Rs. 6,00,410/- and another claiming deduction of Rs. 1,07,33,971/- and even the T....
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.... binding on the Revenue Authorities and in support has relied on judgments rendered in Seeyan Plywoods v. ITO & Another [1999] 238 ITR 295 (Ker), Tanna Exports & Another v. M.G. Kamat & Another [1993] 202 ITR 210 (Bom), Khatau Junkar Ltd. & Another v. K.S. Pathania & Another and JCT Ltd. & Another v. Hari Kishan & Another [1992] 196 ITR 55 (Bom) and of Apex Court in Mangalore Chemicals & Fertilizers Ltd. v. DCIT AIR 1992 SC 152. 11. We have heard the learned counsel for the parties and perused the material placed before us. 12. It would be appropriate to quote Section 80HHC of the Act and in particular sub-clause (1) and (4) respectively, which reads ad infra:- 80HHC. Deduction in respect of profits retained for export business.-(1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of the (profits) derived by the assessee from the export of such goods or merchandise ....
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....in accordance with the provisions of law. Therefore, twin conditions are necessary: (i) the assessee should be an exporter and convertible foreign exchange is required to be received in the given time in India, and (ii) to claim such deduction, report of a Chartered Accountant is mandatory. 13.1 While the foremost requirement is that the assessee has to be an exporter and the return of income is to be supported by an audit report. The latter is the requirement of furnishing substantive foundation for claiming such allowance and it is the requirement of furnishing proof that the foundation for claiming such deduction has been laid. While compliance of audit report under sub-clause (4) to claim deduction is mandatory with the return is concerned, being the requirement in the realm of procedure for furnishing evidence in support of the claim in the given facts and circumstances, if furnished during the assessment proceedings or even at the appellate stage, Courts have held that the claim cannot ordinarily be denied. [Zenith Processing Mills v. Commissioner of Income-Tax [1996] 219 721 (Guj); Commissioner of Income-Tax v. Nagpur Hotel Owners' Association [2001] 247 ITR 201 (S.C.....
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....ort having been placed before it claiming deduction under Section 80HHC at Rs. 1,07,33,971/-. It would be appropriate to quote few lines of para 11 of the impugned order which reads ad infra :- "The Audit Report specifying the amount of rebate allowable at Rs. 6,00,410/- was on the basis of the amount received in the country in convertible foreign exchange when the Auditor audited the accounts. The Auditor, therefore, justifiably issued the certificate only to this extent but after the order of the CIT Jaipur controversy in regard to the total amount to be considered for purposes of rebate u/s 80HHC totalled to Rs. 1,07,33,971/-, which was claimed as per the computation of total income while filing the return of income. Under these circumstances, we have no hesitation in allowing the appeal of the appellant in full and directing the AO to allow the benefit u/s 80HHC to the assessee." (emphasis supplied) 16. On perusal of the above, the Tribunal simply observes that an audit report specifies the amount of rebate allowable at Rs. 6,00,410/- on the basis of the amount received in the country in convertible foreign exchange, but the Tribunal is also silent about any audit r....