TaxTMI 
TaxTMI 
2019 (3) TMI 1039
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....deration of this Court : (i) Whether the Assessee, namely, M/s.Parwaz Food Packer, as a Supporting Manufacturer, is entitled to deduction under Section 80HHC (1A) of the Act for the export made by it for and on behalf of Export Houses viz., M/s.Lloyds International Limited and M/s.Adani Export Limited ? (ii) Whether the condition of production of Certificates of the Export House and Report of the Accountant, as prescribed under sub-section (4A) of Section 80HHC of the Act is a mandatory requirement or not ? (iii) Whether the Export Premium or Commission received by the Assessee from the Export Houses at the rate of 3.25% of the FOB value of the exports made by it on behalf of the Export Houses is also entitled to deduction under Section 80HHC (1A) of the Act in terms of the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax v. Baby Marine Exports, (2007) 290 ITR 323 (SC) ? (iv) Whether the Reassessment Proceedings under Section 147/148 of the Act for Assessment Years 1992-1993 and 1993-1994 beyond a period of four years of Assessment Years in question in the year 1999 by the Assessing Authority to disallow part of deduction under Section....
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....ive. The assessee has no hand in it. The contracts between the assessee and the export houses are also separate contracts and those contracts cannot bind the foreign buyers as there was no privity of contract with the assessee, the processors and the foreign buyers. Merely because the G.R.I. form prescribed by the Reserve Bank of India under the rules framed under the Foreign Exchange Regulation Act for accounting for the receipt of foreign exchange was signed by the assessee, they will not become the exporters. As per the contract between the assessee and the export houses, the f.o.b. price in foreign exchange has to be received by the assesee and the draw back was received by the assessee, only because the assessee has paid the customs duty and it is the person who paid the customs duty who is entitled to get the draw back. There was also specific provision in the agreement with the export houses that the benefits under the Customs and Central Excise Act will be delivered by the assessee. The benefits under the export-import policy regarding REP licence will be obtained by the export houses. There is no merit in the contention of the assessee that it has exported its products by ....
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....s of the form 10CCAC filed for both the years by the above export house are annexed to this order.) Having therefore allowed the benefit to pass into the hands of the export house as a consequence of the agreements entered into with the same, it is crystal clear that the refusal of the appellant to provide a disclaimer certificate from the export houses on the plea that it is the 'real exporter', is only a thin attempt to hide the fact that no turnover was disclaimed in its favour by them.' 25. Considering the entire facts and circumstances of the case, we are of the view that the ratio of the decision of the Hon'ble Supreme Court reported in 247 ITR 578 (supra) applies to this case and the assessee is not entitled to the benefit of section 80HHC of the Act, as the real exporter is the export house which has not given disclaimer certificate in prescribed form and this ground is dismissed." 4. Mrs.Pushya Sitharaman, learned Senior Counsel, appearing for the Assessee, has submitted that the Assessee made direct exports of the goods to the foreign buyers, namely, sea products, such as, shrimps, prawns, fish etc., on behalf of the Export House viz., M/s.L....
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.... they were apparently time barred and, as such, reassessment could not have been made against the assessee. Finally, she would contend that the Export Houses were only getting profits on account of sale of REP Licence on the basis of export made by the assessee also and the exports were actually made by the assessee only as per the agreement between the parties. 6. Conversely, Mr.Karthik Ranganaghan, learned Senior Standing Counsel, appearing for the Respondent/Revenue, has urged before us that in view of the admitted failure of the assessee to produce the relevant mandatory Certificates and Declarations from Export Houses and Report of Chartered Accountant, which Certificates are essential to establish that there is no double claim of deduction under Section 80HHC of the Act, one by the Main Export House and the other by the Supporting Manufacturer like the assessee in the present case, and since there was no production of such Certificates and Declarations, which was mandatory, there was no question of allowing any deductions under Section 80HHC (1A) of the Act to the Assessee. 7. The learned Senior Standing Counsel has also submitted that even though in view of the decisio....
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....n and that was the reason why the Export House did not give the Disclaimer Declaration to the Assessee under Section 80HHC (4A) of the Act. 9. We have heard the learned counsel for the parties at length and perused the material on record. 10. We have no iota of doubt that the conditions prescribed under Section 80HHC (1A) of the Act read with Section 80HHC (4A) of the Act are mandatory and cannot be held to be directory in nature and the Assessee cannot claim benefit under the said provisions as Supporting Manufacturer, in the absence of relevant Certificate from the Export House, and the Report of the Chartered Accountant, as stipulated therein. It is clear from the Scheme of the provisions of Section 80HHC of the Act that direct exporters get the said benefit under Sub-section (1) of Section 80HHC of the Act, whereas, the Supporting Manufacturers started getting the said deduction after the amendment of Section 80HHC with effect from 01.04.1989. The said provisions of Section 80HHC to the relevant extent are quoted below for ready reference : "80HHC.Deduction in respect of profits retained for export business.- (1) Where an assessee, being an Indian company or a person (....
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....pril, 2004, and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year. (2) (a) This section applies to all goods or merchandise, other than those specified in clause (b), if the sale proceeds of such goods or merchandise exported out of India are received in, or brought into, India by the assessee other than the supporting manufacturer in convertible foreign exchange, within 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. xxxxx (4A) The deduction under sub-section (1A) shall not be admissible unless the supporting manufacturer furnishes in the prescribed form along with his return of income,- (a) the report of an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed on the basis of the profits of the supporting manufacturer in respect of his sale of goods or merchandise to the Export House or Trading House; and (b) a certificate from the Export House or Trading House containing suc....
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.... before us, in none of the Assessment Years, has complied with these conditions, he is not entitled to deduction under Section 80HHC (1A) of the Act, at all. 13. Once we come to the conclusion that the Assessee is not entitled to said deduction for want of compliance with the mandatory conditions, there is no doubt in holding that even though Export Premium would form part of FOB value and could have been entitled to deduction under Section 80HHC (1A) of the Act in terms of the decision of the Hon'ble Supreme Court in the case of Baby Marine Exports (supra), the distinguishing feature in the case before the Hon'ble Supreme Court and the case before us is that, in the case before the Hon'ble Supreme Court, the assessee complied with all the conditions and was held entitled to deduction under Section 80HHC (1A) of the Act and the only issue was, whether such deduction would extend to Export Premium also or not, and that question was answered in favour of the assessee by the Apex Court. There is no dispute on the said proposition laid down by the Hon'ble Supreme Court, but the entitlement to get such deduction under Section 80HHC (1A) of the Act would depend upon th....