AI Drafter 
TaxTMI 
TaxTMI 
2003 (7) TMI 25
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....in law in holding that the action by the Commissioner of Income-tax under section 263 of the Income-tax Act, 1961, is with jurisdiction? 2. Whether, on the facts, in totality of the circumstances and in view of detailed explanations/clarifications, the learned Tribunal was right in law in holding that remittances received by the assessee in convertible foreign exchange from abroad as advertisement charges were not on account of sale proceeds of any goods which are exported out of India and hence would not be export turnover under Explanation (B) to section 80HHC of the Income-tax Act, 1961? 3. Whether the learned Tribunal was right in law in directing the Assessing Officer to recompute the deduction as per the decision of the Special Bench. 4. Whether the learned Tribunal was right in law in holding that the Commissioner of Income-tax was within his power to invoke the jurisdiction under section 263 though the Commissioner of Income-tax (Appeals) had decided the issue relating to deduction under section 80HHC of the Act before initiation of action under section 263 of the Act?". As all the aforesaid questions are arising out of the same impugned order of the Tribunal, w....
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....turnover given in sub-section (4B) of section 80HHC. Mr. Ranka placed reliance on the decisions published in CIT v. Trinity Hospital [1997] 225 ITR 178 (Raj) ; Associated Cement Companies Ltd. v. Commissioner of Customs [2001] 124 STC 59 (SC) ; H. Anraj v. Government of Tamil Nadu [1986] 61 STC 165 (SC); P. S. Apparels v. Deputy CTO [1994] 94 STC 139 (Mad) ; Scientific Engineering House Pvt. Ltd. v. CIT [1986] 157 ITR 86 (SC) and State of Andhra Pradesh v. National Thermal Power Corporation Ltd. [2002] 127 STC 280 (SC). Mr. Mathur, learned counsel for the Department, submits that whatever the goods the assessee exports in the form of journal, he got deduction under section 80HHC. He further submits that if any information or advertisement is to be published at the instance of non-resident of India and any amount is received from abroad, that amount does not come within the definition of "goods" and the Commissioner of Income-tax as well as the Tribunal have rightly disallowed that amount under section 80RRC of the Act. Mr. Mathur, learned counsel for the Department, brought to our notice paras. 8 and 9 of the order of the Commissioner of Income-tax wherein he has dealt with t....
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....l and not in lieu of the supply of journal. The contention of the assessee of the payment in convertible foreign exchange in lieu of supply of goods is misconstrued inasmuch as firstly, there was no supply of goods or export business done by the assessee who otherwise was engaged in publication of journal, and, secondly the payment of convertible foreign exchange was in lieu of the advertisement published, which constituted advertisement charges and not in lieu of supply of any goods outside India. It may also be stated that whenever there is export of goods abroad, there will be purchasers placing orders for such goods and sellers supplying the goods in regard to sales abroad either independently or in lieu of orders received. In the instant case, there was no iota of evidence to show any orders for goods placed by a foreign buyer and it is only the advertisements given by the parties outside India that otherwise appeared in the shape of an advertisement, in the journal published by the assessee. Whatever book was given by the assessee to the persons giving advertisements was only by way of evidence to show that the advertisements so given have been published and in lieu of whi....
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....g and sale thereof. The contention of learned counsel that the advertisement charges are for supply of the composed and printed material and, therefore, the receipts on account of advertisement charges were on account of sale of goods does not appeal to us. Advertisement charges are paid by the customers for inserting the advertisement in the journal. The very fact that the customers pay substantial amounts as advertisement charges when compared to the cost of printing goes very much against the theory advanced before us that such charges are paid for composing, printing and supply of printed copy of advertisement material. When the cost of composing, printing and supply of printed material is considerably low, a question arises as to why a customer would pay a high price to the assessee for the said job. The answer to this query is abundantly clear in so far as it is an open secret that the charges paid for advertisement by the customers depend on the circulation of magazine and publication. More the circulation of the magazine, the customer would be prepared to pay more as his message will be received by more people. The real intention of the customer is to get the benefit of cir....
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....-------------- Total turnover We have gone through the certificate issued by the chartered accountant, in respect of the assessment years 1991-92 and 1992-93 and find that in computing the export turnover the definition as per the Explanation after section 80HHC( 4A) has been ignored, the learned chartered accountant has misunderstood. Explanation (b) to section 80HHC reads as under: 'Export turnover' means the sale proceeds received in, or brought into India by the assessee in convertible foreign exchange in accordance with clause (a) of sub-section (2) of any goods or merchandise to which this section applies and which are exported out of India, but does not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Customs Act, 1962 (52 of 1962)." The Commissioner of Income-tax as well as the Tribunal both found that this amount does not come under the definition of "export turnover". Before we answer the question, we would....
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.... thereof are as follows: Subscription Rs Advertisement Rs. Assessment year 1991-92 Indian 9,150 1,36,243 Foreign 12,386 4,49,797 Assessment year 1992-93 : Indian 52,221 10,17,992 Foreign 43,824 15,55,742 Sub-section (1) of section 80HHC provides that whether the assessee being an Indian company or a person 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 be a deduction in computing the total income of the assessee to the extent of profit referred to in sub-section (18) derived by the assessee from the export of such goods or merchandise. The details of percentage of deduction of benefit have been given in sub-section (18). The benefit has been given on the basis of export turnover which has been defined in clause (b) of Explanation to sub-section (48) of the Act which reads as under: " 'export turnover' means the sale proceeds received in, or brought into, India by the assessee in convertible foreign exchange in accordance with clause (a) of sub-section (2) of any goods or merchandise to which this section applies and wh....