TaxTMI 
TaxTMI 
2000 (12) TMI 89
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....med deduction to the tune of Rs. 2,06,03,389 under s. 80HHC(1) in lieu of the export of sports goods and household utensils worth Rs. 40,27,66,975.45 out of India. In terms of that section, the petitioner was entitled to claim deduction on the sale proceeds of the exported goods in convertible foreign exchange within a period of six months from the end of previous year commencing from 1st April, 1995, in contemplation of the delay in realisation of the proceeds of export sales by 30th Sept., 1996. It submitted an application under s. 80HHC(2)(a) before respondent No. 1, seeking extention of item upto 31st March, 1997. The relevant portion of that application is extracted below : " ...... The detail of these bills along with the reasons for delay in the realisation is given below: ------------------------------------------------------------------------------------------ Bill Dated Party name Amount Reasons  ....
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....bsp; without presenting the documents for the release of the goods. The shipping line-Hapag Lloyds has ....
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.... this dispute would take another time of 6 to 9 months. 1475 19-12-95 M/s Royal 4,88,724 Goods in respect of this invoice Distributors have reached the buyer, but he is &nb....
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....sp; by us asking for earlier payment are enclosed herewith at pages Nos. 4 to 6. We may have to resort to litigation to enforce the payment. 1496 17-1-96 ....
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....nbsp; They have requested for a further credit of 60 days in their communication dt. 26th Sept., 1996. ....
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....n our account because of fault of our bankers. ------------------------------------------------------------------------------------------ The above explanation would amply show that delay in realisation of the export bill mentioned above is beyond our control." Respondent No. 1 partly accepted the application of the petitioner but granted extension under section 80HHC(2)(a) only up to February 28, 1997. This was conveyed to the petitioner vide letter annexure P2, dated December 10, 1996. Before the expiry of the extended period, the petitioner submitted the application annexure P3, dated February 24, 1997, for extension of time up to September 30, 1997, by assigning reasons similar to those enumerated in the application dated September 27, 1996. In that application it was specifically mentioned that one of the buyers, namely, Mitra Sports, U.K.,....
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....sp; Lloyd without presenting documents for release of goods. we had filed a legal case against the shipping line in the German Court and judgment was &nb....
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.... USA to fight the case and even to look into the possibility of settling it out of Court provided the settlement amount is reasonable. The recent &....
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....p; Court settlement will take sometime. 4494 17-1-96 M/s Mayor 20,06,530 Goods in respect of this invoice International reached the customer late and due to (P) Ltd. Tens this reason, the party was not in a Australia po....
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....; dollars but a better offer is expected. The correspondence exchanged in this regard is at pp. 9 to 11. ---------------------------------------------------------------------------------------------- The above explanation would show that the realisation of the two export bills mentioned above is pending for the reasons beyond our control. We shall, therefore, request you that the time limit for the real....
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....dent No. 1 had already been communicated to it vide letter dated March 17, 1998. A similar request made by the petitioner vide application annexure P-13, dated June 6, 1998, met with a similar fate and vide letter annexure P-14, dated July 14/15, 1998, the Income-tax Officer (Technical), Jalandhar, informed that respondent No. 1 has declined to entertain the application for extension. On receipt of the letter annexure P-14, the petitioner submitted representation annexure P-15, dated November 21, 1998, mentioning therein that the entire amount due from Mayor International Pvt. Ltd., Tens Australia, had been received in three instalments on August 1, 1998, August 17, 1998 and September 28, 1998, and requested for grant of retrospective extension of time. The same was rejected by respondent No. 1 vide order annexure P-17, dated December 22, 1998. Paragraphs 10 to 12 of the order annexure P-17 passed by respondent No. 1, which give an idea of the reasons recorded by the said respondent for declining the petitioner, prayer, read as under : "10. The assessee was again allowed an opportunity of being heard by fixing the case for December 8, 1998, when Shri Ravinder Mahajan, C. A., ....
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....nsion for an indefinite period and, therefore, the request made on its behalf vide applications dated March 28, 1998, and November 30, 1998, was declined. As regards the order of assessment, respondent No. 1 has averred that it is appealable and, therefore, the High Court should decline to entertain the petitioner's prayer for its invalidation. We have heard learned counsel for the parties. Section 80HHC(1) and (2)(a) (as it stood before being amended by the Finance Act, 1999) read as under : "80HHC. (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 : Provided that if the assessee, being a holder of an Export House Certificate or a Trading House Certificate (hereafter in this section referred to as an Export House or a Trading House, as the case may be), issues a certificate referred....
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....cessarily includes the power to refuse extension of time beyond the period of six months, is quasi-judicial in nature. The statutory embodiment of the requirement of recording reasons in writing is clearly indicative of the Legislature's intention that the power vested in the Chief Commissioner or Commissioner to grant or refuse extension of time must be exercised reasonably and fairly and must not be exercised arbitrarily and the order passed by the concerned authority must reflect objective application of mind to the factors relevant to the determination of the issue as to whether the assessee could not bring or receive the sale proceeds of the exported goods due to reasons beyond his control. The expression "reasons beyond his control" has not been defined in the Act. Therefore, we shall have to interpret the same keeping in view the context in which it appears and by adopting that mode of interpretation, it can easily be said that the assessee can seek extension of time beyond six months only by showing that he had acted with due diligence and had taken the necessary steps for bringing the sale proceeds within the stipulated period but could not do so due to reasons on which he....
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.... of the period stipulated in section 80HHC(2)(a) by giving detailed reasons to show that the amount of sale proceeds could not be received in or brought into India due to reasons beyond its control. Respondent No. 1 accepted the reasons put forward by the petitioner and granted extensions from time to time, but vide letter annexure P-6 future extensions were sought to be declined on the ground that the assessment was likely to become time-barred and vide annexures P-10, P-12 and P-14, respondent No. 1 refused to grant further extension without assigning any reason. The application annexure P-15, dated November 21, 1998, submitted by the petitioner, was rejected by respondent No. 1 on the following two grounds : 1. The assessee has already been allowed sufficient time in the form of extensions granted from time to time. 2. The assessment cannot be kept pending for an indefinite period. In our opinion, both the reasons assigned by respondent No. 1 for declining the petitioner's prayer for extension are extraneous and irrelevant to the parameters which should govern the exercise of power under section 80HHC(2)(a). The mere fact that the extensions were granted from time to-ti....
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....re not likely to conclude soon and on that ground the extension had been declined on the premise that it would cause loss to the Revenue. This court accepted the reasons put forward by the respondents to justify the decision of the competent authority not to grant further extension by making the following observations : "In the present case, the Commissioner of Income-tax granted five extensions spreading over more than two years to the petitioner to bring convertible foreign exchange into the country. Finding that civil as well as proceedings under section 138 of the Negotiable Instruments Act, 1881, had started between the petitioner and the defaulting party, which was not likely to conclude soon, further extension in time was declined. Extension has not to be given on the mere asking. Rather the section provides that extension can be given only after recording reasons for doing so. The Commissioner of Income-tax was satisfied that any further extension of time would be futile causing loss to the Revenue. In the facts and circumstances of the case, it cannot be held that the discretion exercised by the Commissioner of Income-tax was arbitrary or unjust. In our view, the Commis....