ITO, New Delhi v. M/s. Ramsons Organics Ltd., New Delhi

ITA 224/DEL/2011 | 2007-2008
Pronouncement Date: 25-03-2011 | Result: Dismissed

Appeal Details

RSA Number 22420114 RSA 2011
Assessee PAN AAACR6191C
Bench Delhi
Appeal Number ITA 224/DEL/2011
Duration Of Justice 2 month(s) 11 day(s)
Appellant ITO, New Delhi
Respondent M/s. Ramsons Organics Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 25-03-2011
Date Of Final Hearing 21-03-2011
Next Hearing Date 21-03-2011
Assessment Year 2007-2008
Appeal Filed On 14-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES F: NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI K.G. BANSAL ACCOUNTANT MEMBER ITA NO. 224/DEL/2011 ASSESSMENT YEAR: 2007-08 ITO VS. RAMSONS ORGANICS LTD. WARD 15(2) ROOM NO. 213 AL-146 SHALIMAR BAGH C.R. BUILDING NEW DELHI. NEW DELHI. AAACR6191C (APPELLANT) (RESPONDENT) APPELLANT BY : SH. H.K. LAL SR. DR RESPONDENT BY : NONE ORDER PER I.P. BANSAL J.M. THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST THE ORDER PASSED BY LD. CIT(A) DATED 1 ST OCTOBER 2010 FOR A.Y. 2007-08. GROUNDS OF APPEAL READ AS UNDER: - 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) HAS ERRED IN TREATING THE FOREIGN EXCHANGE F LUCTUATION OF RS. 49 86 549/- AS BUSINESS INCOME AND THEREBY ALLOWING DEDUCTION U/S 10B ON THE SAME. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT 49 86 549/- WAS NOT D ERIVED FROM EXPORTS AND HENCE IT IS NOT ENTITLED TO EXEMPTION U/S 10B. 3. THAT THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FRESH GROUNDS OF APPEAL AND/OR DELETED OR AMEND ANY OF THE GROUNDS O F APPEAL. ITA NO. 224/D/2011 2 2. THE ASSESSEE IN THE PRESENT CASE IS ENGAGED IN T HE BUSINESS ACTIVITY OF MANUFACTURE AND EXPORT OF SANDSTONE QUARTZITE A ND LIME STONE AND MANUFACTURING PROCESS OF THE ASSESSEE INCLUDES CUTT ING POLISHING CALIBRATING SANDBLASTING AND OTHER VALUE ADDITION WORKS. THE ASSESSEE IS 100% EXPORT ORIENTED UNIT (EOU). IT HAS EXPORT TUR NOVER OF RS. 8 64 53 462/- AND FOREIGN EXCHANGE FLUCTUATION EARN ING OF RS. 49 86 549/- BESIDE MISCELLANEOUS INCOME OF RS. 10 060/-. IT CL AIM EXEMPTION U/S 10B AND FILED RETURN OF INCOME AT NIL. THE AO FIRSTLY REJECTED THE CLAIM OF THE ASSESSEE REGARDING EXEMPTION U/S 10B AND HAS TREATE D THE FOREIGN EXCHANGE FLUCTUATION INCOME AS INCOME FROM OTHER SO URCES. 3. IT WAS THE GRIEVANCE OF THE ASSESSEE BEFORE CIT( A) THAT THE CLAIM OF THE ASSESSEE REGARDING EXEMPTION U/S 10B HAS WRONGL Y BEEN DISALLOWED BY IGNORING THE JUDICIAL PRECEDENTS AVAILABLE IN THE C ASE OF ASSESSEE WHICH INCLUDED THE DECISION OF HONBLE DELHI HIGH COURT. AN ADDITION REGARDING FOREIGN EXCHANGE EARNING WAS ALSO AGITATED ON THE G ROUND THAT THE SAID GAIN IS AS A RESULT OF FLUCTUATION IN THE EXCHANGE RATE ON THE AMOUNT RECEIVED IN RESPECT OF EXPORT SALES AND HENCE COULD NOT BE TURN ED AS INCOME FROM OTHER SOURCES. LD. CIT(A) HAS ACCEPTED SUCH CLAIM OF THE ASSESSEE REGARDING GRANT OF DEDUCTION U/S 10B AS WELL AS FOREIGN EXCHA NGE GAINS BEING PART OF PARTIAL OF EXPORT INCOME. ON THE ISSUE REGARDING G RANT OF EXEMPTION U/S 10B DEPARTMENT HAS ACCEPTED THE ORDER OF CIT(A) AS NO S UCH GROUND HAS BEEN FILED BEFORE US. THE ONLY OBJECTION RAISED BY THE REVENUE IS WITH REGARD TO ITA NO. 224/D/2011 3 FOREIGN EXCHANGE GAIN WHICH HAS BEEN CONSIDERED BY THE CIT(A) AS PART AND PARTIAL OF EXPORT INCOME. 4. LD. CIT(A) HAS RECORDED A FINDING OF FACT THE AS SESSEE AS A MATTER OF PRACTICE IS CREDITING THE EXPORT SALES IN ITS BOOKS ON THE DATE OF SENDING THE CONSIGNMENT TO THE BUYER ON THE BASIS OF THE EXCHAN GER RATE PREVAILING AT THAT TIME. SINCE THE EXPORT REALIZATION IS RECEIVE D IN FOREIGN EXCHANGE AFTER SOMETIME THE DIFFERENCE OF ACTUAL PROCEED REALIZE AND THE AMOUNT CREDITED IN THE BOOKS IS SHOWN AS FOREIGN EXCHANGE FLUCTUATI ON AND IS ADDED TO THE BUSINESS INCOME IF THE PROCEEDS ARE MORE OR ALTERNA TIVELY SHOWN AS LOSS IF THE PROCEEDS ARE LOWER. FOR DECIDING THE ISSUE LD. CIT(A) HAS RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. M/S ZEM PLUS JEWELLERY INDIA PVT. LTD. WHICH IS SINCE REPOR TED AS 194 TAXMAN 192 (BOM.). IN THIS MANNER LD. CIT(A) HAS GRANTED THE RELIEF TO THE ASSESSEE. WITH THESE FINDINGS OF LD. CIT(A) THE REVENUE IS A GGRIEVED HENCE IN APPEAL. 5. NOTICE OF HEARING WAS SENT TO ASSESSEE. HOWEVER ON THE FIXED DATE OF HEARING NONE WAS PRESENT ON BEHALF OF ASSESSEE. THEREFORE WE PROCEED TO DECIDE THE PRESENT APPEAL EX-PARTE QUA THE ASSESSEE AFTER CONSIDERING THE SUBMISSION OF LD. DR. AFTER NARRAT ING THE FACTS RELYING UPON THE ORDER OF AO IT WAS PLEADED BY LD. DR THAT FORE IGN EXCHANGE GAIN CANNOT BE REGARDED AS EXPORT INCOME IN THE HANDS OF THE AS SESSEE. HE SUBMITTED THAT IT HAS A CHARACTER OF INCOME FROM OTHER SOURCE S AND THUS AO WAS RIGHT ITA NO. 224/D/2011 4 IN ASSESSING THE SAME AS INCOME FROM OTHER SOURCES AND LD. CIT(A) HAS WRONGLY HELD THAT THIS WAS IN THE NATURE OF EXPORT INCOME OF THE ASSESSEE. 6. WE HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R ORDER OF CIT(A) AND THE SUBMISSION MADE BY LD. DR. A FINDING OF FA CT HAS RECORDED BY LD. CIT(A) THAT ASSESSEE AS A MATTER OF PRACTICE IS CRE DITING THE SALES IN ITS BOOKS OF ACCOUNT ON THE DATE OF SENDING THE CONSIGN MENT TO THE BUYER ON THE BASIS OF EXCHANGE RATE PREVALENT AT THAT TIME. SINCE SALE PROCEEDS ARE REALIZED LATER ON THERE IS DIFFERENCE IN THE AMOUN T REALIZED AND THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT. THE RESULT WILL EITHER BE MORE AMOUNTS RECEIVED OR LESS AMOUNT RECEIVED AND AT THE TIME OF UTILIZATION OF THE FOREIGN EXCHANGE THE ASSESSEE IS SHOWING THE INCOME/LOSS IN THE ACCOUNT AS FOREIGN EXCHANGE FLUCTUATION. THIS FINDING OF FA CT HAS NOT BEEN CONTROVERTED BY THE REVENUE. IF IT IS SO THEN THE EXCESS REALIZATION ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION RELATE TO THE SALE PRICE OF THE ASSESSEE WHICH IS VERY MUCH PART OF EXPORT TURNOVER AND ACCORDING TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. ZEM PLUS JEWELLERY INDIA LTD. (SUPRA) HAS HELD THAT EXEMPTIO N U/S 10A SHOULD BE GRANTED ON THE FOREIGN EXCHANGE GAIN EARNED ON REAL IZATION OF EXPORT RECEIPTS IN THE YEAR OF EXPORT AND GAINS ON THE SAL E OF EARLIER YEARS SHOULD BE EXCLUDED FROM THE PROFIT OF YEAR UNDER CONSIDERA TION. THUS THE GAIN REALIZED BY THE ASSESSEE OF EXPORT RECEIPTS IS ELIG IBLE FOR DEDUCTION U/S 10B AND LD. CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. NO CONTRARY ITA NO. 224/D/2011 5 DECISION HAS BEEN BROUGHT TO OUR NOTICE. WE DECLIN E TO INTERFERE IN THE RELIEF GRANTED BY THE LD. CIT(A). 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25.3.11 SD/- SD/- (K.G. BANSAL) (I.P. BANSAL) ACCOUNTANT MEMBE R JUDICIAL MEMBER * KAVITA DATED: 25.3.11 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT