Garg Dyeing & Processing Industries v. Assistant Commissioner of Incometax

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The Tax Publishers2013 TaxPub(DT) 0406 (Del-HC) : (2013) 212 TAXMAN 0160 INCOME TAX ACT, 1961 --Deduction under section 80HHCComputation Unrealised export proceeds regarded as business loss--A part of foreign exchange was not realised on account of foreign buyer refusing to pay for the exported goods. Consequently, assessee sought for deduction of the same from the export turnover while calculating the relief under section 80HHC. Commissioner (Appeals) viewed that assessing officer should have considered the sale proceeds not realised, for the purpose of deduction as bad debt/business loss since the foreign buyer refused to remit the sale proceeds for the exported goods and the Indian Embassy in Paris also informed the difficulties in realising the same. *Held:* Tribunal while confirming the order of Commissioner (Appeals), directed assessing officer to consider the claim in light of letter written by Indian Embassy in connection with said claim. Income Tax Act, 1961, Section 80HHC In the Madras High Court Chitra Venkataraman & K. Ravichandra Baabu, JJ. Galaxy Granites (P.) Ltd. v. CIT Tax Case (Appeal) No. 492 of 2006 A.Y. 1996-97 23 July, 2012 Income-tax Act, 1961, s. 80HHC,Expln. (b) In favour of: Assessee Appellant by : T. N. Seetharaman Respondent by : K. Suresh Kumar JUDGMENT *Chitra Venkataraman, J.* The assessee is on appeal as against the order of the Tribunal relating to the assessment year 1996-97, raising the following substantial question of law : 'Whether the Tribunal is right in law in holding that unrealised export turnover should be included in the total turnover while it is not treated as export turnover for the purposes of computing the allowable deduction under section 80HHC ?' 2. The assessee company claimed relief under section 80HHC in the return filed for the above said year. It pointed out that a sum of Rs. 22,45,433 which is rupee equivalent to the foreign exchange earned had not been realised before 31-3-1996, but extension of time was granted by the Commissioner till 31-12-1997. While so, out of the above-said sum, a sum of Rs. 15,74,033 was realised. It further pointed out that a sum of Rs. 9,26,324 was not realised on account of the foreign buyer refusing to pay for the exported goods. Consequently, the assessee sought for deduction of 9,26,324 from the export turnover while calculating the relief under section 80HHC in calculating the relief under section 80HHC. The assessing officer pointed out that apart from the non-receipt of Rs. 9,26,324 foreign exchange was not realised by 31-12-1997 for a sum of Rs. 6,47,709. Thus, the income deductible under section 80HHC was worked out on the total turnover of Rs. 1,01,20,167 including the export turnover of Rs. 75,46,769 and business profit of Rs. 14,16,993. Thus the deduction allowable under section 80HHC was arrived at Rs. 10,56,674. Aggrieved by the same, the assessee went on appeal before the Commissioner (Appeals) who confirmed the assessing officers method for granting the relief. However, he pointed out that the communications received by the assessee from the Indian Embassy in Paris dated 7-4-1997 and 20-3-1998 categorically stated that it would not be worthwhile to pursue the matter regarding realisation of sale proceeds of Rs. 9,26,324 from the foreign buyer and that the financial condition of the foreign company was not good and hence moving the Court against the foreign buyer would not be encouraging and such a litigation might add up to further loss to the assessees company. In the circumstances, the assessee made the plea that the assessing officer should have considered the sale proceeds not realised to the tune of Rs. 9,26,324 for the purposes of working out the relief under section 80HHC. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 0406 (Del-HC) : (2013) 212 TAXMAN 0160

INCOME TAX ACT, 1961

--Deduction under section 80HHCComputation Unrealised export proceeds regarded as business loss--A part of foreign exchange was not realised on account of foreign buyer refusing to pay for the exported goods. Consequently, assessee sought for deduction of the same from the export turnover while calculating the relief under section 80HHC. Commissioner (Appeals) viewed that assessing officer should have considered the sale proceeds not realised, for the purpose of deduction as bad debt/business loss since the foreign buyer refused to remit the sale proceeds for the exported goods and the Indian Embassy in Paris also informed the difficulties in realising the same. Held: Tribunal while confirming the order of Commissioner (Appeals), directed assessing officer to consider the claim in light of letter written by Indian Embassy in connection with said claim.

Income Tax Act, 1961, Section 80HHC

In the Madras High Court

Chitra Venkataraman & K. Ravichandra Baabu, JJ.

Galaxy Granites (P.) Ltd. v. CIT

Tax Case (Appeal) No. 492 of 2006

A.Y. 1996-97

23 July, 2012

Income-tax Act, 1961, s. 80HHC,Expln. (b) In favour of: Assessee

Appellant by : T. N. Seetharaman

Respondent by : K. Suresh Kumar

JUDGMENT

Chitra Venkataraman, J.

The assessee is on appeal as against the order of the Tribunal relating to the assessment year 1996-97, raising the following substantial question of law :

'Whether the Tribunal is right in law in holding that unrealised export turnover should be included in the total turnover while it is not treated as export turnover for the purposes of computing the allowable deduction under section 80HHC ?'

2. The assessee company claimed relief under section 80HHC in the return filed for the above said year. It pointed out that a sum of Rs. 22,45,433 which is rupee equivalent to the foreign exchange earned had not been realised before 31-3-1996, but extension of time was granted by the Commissioner till 31-12-1997. While so, out of the above-said sum, a sum of Rs. 15,74,033 was realised. It further pointed out that a sum of Rs. 9,26,324 was not realised on account of the foreign buyer refusing to pay for the exported goods. Consequently, the assessee sought for deduction of 9,26,324 from the export turnover while calculating the relief under section 80HHC in calculating the relief under section 80HHC. The assessing officer pointed out that apart from the non-receipt of Rs. 9,26,324 foreign exchange was not realised by 31-12-1997 for a sum of Rs. 6,47,709. Thus, the income deductible under section 80HHC was worked out on the total turnover of Rs. 1,01,20,167 including the export turnover of Rs. 75,46,769 and business profit of Rs. 14,16,993. Thus the deduction allowable under section 80HHC was arrived at Rs. 10,56,674. Aggrieved by the same, the assessee went on appeal before the Commissioner (Appeals) who confirmed the assessing officers method for granting the relief. However, he pointed out that the communications received by the assessee from the Indian Embassy in Paris dated 7-4-1997 and 20-3-1998 categorically stated that it would not be worthwhile to pursue the matter regarding realisation of sale proceeds of Rs. 9,26,324 from the foreign buyer and that the financial condition of the foreign company was not good and hence moving the Court against the foreign buyer would not be encouraging and such a litigation might add up to further loss to the assessees company. In the circumstances, the assessee made the plea that the assessing officer should have considered the sale proceeds not realised to the tune of Rs. 9,26,324 for the purposes of working out the relief under section 80HHC.