Supreme (India) Impex Ltd.,, Surat v. The ACIT.,Circle-4,, Surat

ITA 673/AHD/2008 | 2004-2005
Pronouncement Date: 13-08-2010 | Result: Partly Allowed

Appeal Details

RSA Number 67320514 RSA 2008
Assessee PAN AADCS9506P
Bench Ahmedabad
Appeal Number ITA 673/AHD/2008
Duration Of Justice 2 year(s) 5 month(s) 23 day(s)
Appellant Supreme (India) Impex Ltd.,, Surat
Respondent The ACIT.,Circle-4,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 13-08-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 13-08-2010
Date Of Final Hearing 11-08-2010
Next Hearing Date 11-08-2010
Assessment Year 2004-2005
Appeal Filed On 20-02-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH A AA A BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI BHAVNESH BHAVNESH BHAVNESH BHAVNESH SAINI SAINI SAINI SAINI JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER AND AND AND AND SHRI SHRI SHRI SHRI N.S.SAINI N.S.SAINI N.S.SAINI N.S.SAINI ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER DATE OF HEARING :12-8-2010 DRAFTED ON:12-8-201 0 ITA NO. 673 /AHD/ 2008 ASSESSMENT YEAR :2004-05 SUPREME (INDIA) IMPEX LIMITED 823/2 ROAD NO.8 G.I.D.C. SACHIN NEAR SAGAR HOTEL SURAT. VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-4 AAYAKAR BHAVAN MAJURA GATE SURAT. PAN/GIR NO. : AADCS9506P (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI RAMESH MALPANI. RESPONDENT BY: SHRTI ANIL KUMAR D.R. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I SURAT DATED 31-12-2007. 2. IN THIS APPEAL ASSESSEE HAS RAISED FOLLOWING GRO UNDS OF APPEAL:- GROUND NOS.1 AND 2 READS AS UNDER :- 1. THAT LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN UPHOLDING THE DISALLOWANCE/REJECTION O F DEDUCTION UNDER SECTION 80HHC OF THE I.T. ACT 1961 (THE ACT) BY WRONGLY INTERPRETING THE AMENDMENTS MADE B Y THE TAXATION LAWS (AMENDMENT) ACT 2005 (THE AMENDMENT ACT). 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE NIL DEDUCTIO N UNDER SECTION 80HHC OF THE ACT BY MISINTERPRETING THE PR OVISIONS OF THE AMENDMENT ACT. - 2 - 3. AT THE TIME OF HEARING THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING THESE GROUNDS OF APPEAL. THEREFORE THEY ARE DISMISS ED AS NOT PRESSED. 4. GROUND NO.3 READS AS UNDER:- 3. THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN SUSTAINING ADDITION OF `.2 89 46 582/- ATTRIBUTABLE TO COMMISSION DEDUCTED IN THE ALES INVOICES. 5. AS PER THE LEARNED ASSESSING OFFICER THE ASSESS EE IS AN PRIVATE LTD. COMPANY ENGAGED IN THE BUSINESS OF MAN UFACTURE AND EXPORT OF TEXTILE FABRICS. IN THE COURSE OF ASSESSM ENT PROCEEDINGS THE AO SOUGHT TO VERIFY THE EXPORT INVOICES ISSUED BY THE ASSESSEE AND THE BANK REALIZATION CERTIFICATES OBTAINED BY H IM TO SEE THE CORRECTNESS OF THE EXPORT SALES ACCOUNT FILED BY TH E ASSESSEE. ON VERIFICATION OF THE INVOICES AND BANK CERTIFICATES THE AO FOUND THAT THE ASSESSEE HAS PAID COMMISSION TO THE IMPORTERS I N THE RESPECTIVE INVOICE ITSELF AND SUCH COMMISSION COMES TO RS.2 89 46 582/- IN TOTAL. AS THE ISSUE NEEDS MORE ELABORATION VIDE PROCEEDINGS OF ORDER SHEET DATED 1.12.2006 DET AILS WERE CALLED FOR. TO THE QUERIES RAISED BY THE AO THE R EPLY OF THE ASSESSEE WAS THAT THE COMMISSION WAS PAID TO THE BUYERS/IMPORTERS HIMSELF AS DEDUCTION DIRECTLY FRO M THE EXPORT SALES INVOICE. THE ASSESSEE SUBMITTED THAT IT IS C USTOMARY IN THIS LINE OF EXPORT TRADE TO ALLOW COMMISSION TO THE BUY ER/IMPORTER HIMSELF DIRECTLY FROM THE SALE INVOICE. HE STATED THAT THE RATE OF DEDUCTION ON ACCOUNT OF COMMISSION USED TO BE DECID ED AT THE TIME OF ENTERING INTO SALES CONTRACT ITSELF. THE L ETTERS OF CREDIT ISSUED BY THE BANK WERE OBTAINED FOR THE SALE PROCE EDS NET OF COMMISSION AS COMMISSION TO THE BUYER/IMPORTER IS D EDUCTED DIRECTLY FROM THE INVOICE PRICE. THE ASSESSEE EXPL AINED THAT THIS - 3 - ADJUSTMENT WAS NEVER TREATED AS PAYMENT OF COMMISSI ON IN THE ACCOUNT OF THE ASSESSEE AS DEDUCTION AS ALLOWED TO THE BUYER HIMSELF AND NOT TO A THIRD PERSON. THE FOREIGN BUY ER MAKES THE PAYMENT OF THE NET AMOUNT ONLY AND THE SALES ARE RE CORDED IN THE ACCOUNTS OF THE ASSESSEE FOR THE NET AMOUNT. 6. THE AO DID NOT ACCEPT THE VARIOUS ARGUMENTS AND EXPLANATIONS OFFERED BY THE ASSESSEE AND HELD THAT THE COMMISSION PAID BY THE ASSESSEE TO THE BUYERS/IMPORTERS FORMED PART OF HIS SALES AND THEREFORE LIABLE TO BE TREATED AS INCOME OF THE ASSESSEE. ACCORDINGLY THE AO MADE AN ADDITION OF RS.2 89 46 582/- TO THE RETURNED INCOME OF THE ASSESSEE ON THE ABOVE GROUND . IN ORDER TO RE-STRENGTHEN THE ABOVE ADDITION THE AO HAS RELIED ON LAW STATED IN SECTION 93 OF THE INCOME TAX ACT 1961 AS A DETE RRENT FOR AVOIDANCE OF INCOME TAX BY TRANSACTION RESULTING IN TRANSFER OF INCOME TO NON-RESIDENT. 7. IN THE FIRST APPEAL THE CIT(A) CONSIDERED THE I SSUE EXTENSIVELY. HE FOUND THAT THE BANKS HAVE INFORME D THE AO THAT THE ASSESSEE HAD NOT REMITTED ANY AMOUNT OF COMMISS ION FROM INDIA DURING THE PREVIOUS YEAR RELEVANT TO THE ASSE SSMENT YEAR UNDER APPEAL AND THE COMMISSION HAD BEEN DIRECTLY D EDUCTED FROM THE EXPORT INVOICES. THE BANKS HAVE FURTHER RECONC ILED AND CERTIFIED THAT THE COMMISSIONS PAID BY THE ASSESSEE THROUGH THE EXPORT INVOICES WERE ON THE BASIS OF GUARANTEED REC EIPT (GR) AND SDF FORMS SCRUTINIZED BY THE RESERVE BANK OF INDIA. THE CIT(A) AGREED WITH THE AO THAT THE PAYMENTS OF COMMISSION TO BUYERS IN UAE ARE BOUND BY THEIR REGULATIONS AND ACCORDINGLY DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE REGARDING THE PAYME NT OF COMMISSION TO FOREIGN BUYERS. THE ASSESSEE HAD ALS O ARGUED BEFORE THE AUTHORITIES THAT EVEN THOUGH THE NOMENCL ATURE GIVEN TO THE PAYMENTS WAS COMMISSION IT WAS ACTUALLY IN T HE NATURE OF DISCOUNT GIVEN THROUGH THE EXPORT INVOICES ITSELF. IN ADDITION TO HOLDING OF UAE REGULATIONS AGAINST THE ASSESSEE TH E CIT(A) HAS ALSO AGREED WITH THE AO THAT SECTION 93 APPLIES TO THE CASE AS THE - 4 - ASSESSEE HAD ACCRUED INCOME OUT OF THE TRANSACTIONS ENTERED INTO WITH NON-RESIDENT BUYERS. VARIOUS CASE LAWS WERE C ONSIDERED BY THE CIT(A) INCLUDING THAT OF AHMEDABAD STAMP VENDOR S ASSOCIATION VS. UNION OF INDIA 257 ITR 202 KERALA STATE STAMP VENDORS ASSOCIATION VS. OFFICE OF THE ACCOUNTANT GENERAL AN D ORS. 282 ITR 8. CIT VS. SHIV PRAKASH JANAKRAJ & CO. P. LTD. 22 2 ITR 583 STATE BANK OF TRAVANCORE VS. CIT 158 ITR 102 CIT VS. MADRAS RACE CLUB 255 ITR 98 CIT VS. SITALDAS TIRATHDAS 41 IT R 367 CIT VS. TOLLYGUNGE CLUB LTD. 107 ITR 776 AND CIT VS. BIJL EE COTTON MILLS P. LTD. 116 ITR 60. 9. WHILE CONSIDERING THE ABOVE JUDICIAL PRONOUNCEME NTS THE CIT(A) HAS FURTHER AGREED WITH THE AO IN ROPING DOW N THE PROVISIONS OF LAW CONTAINED IN SECTION 194H TO AMPLIFY THE CON CEPT OF SERVICES RENDERED AGAINST THE PAYMENT OF COMMISSION. THE CI T(A) ALSO AGREED WITH THE AO IN RELYING ON THE LAW CONTAINED IN SECTION 5 OF THE INCOME TAX ACT TO HOLD THAT THE COMMISSIONS PAI D BY THE ASSESSEE THROUGH THE EXPORT INVOICE ARE IN THE NATU RE OF INCOME ACCRUES OR ARISING TO THE ASSESSEE OUTSIDE INDIA. ULTIMATELY THE CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSIN G AUTHORITY. THE ABOVE ISSUE IS THE FIRST GROUND RAISED IN THE P RESENT APPEAL FILED BY THE ASSESSEE. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE MAIN PLANK OF TH E ARGUMENT ADVANCED BY THE LEARNED AUTHORISED REPRESENTATIVE O F THE ASSESSEE IS THAT THE COMMISSION PAID BY THE ASSESSE E WAS IN THE NATURE OF TRADITIONAL DISCOUNT EXTENDED TO FOREIGN BUYERS AND THE ASSESSEE HAD RECEIVED ONLY THE NET PROCEEDS AND THE REFORE THERE COULD NOT BE ANY CONCEPT OF INCOME AGAINST THE AMOU NT WHICH WAS NEVER RECEIVED BY THE ASSESSEE OR ACCRUED TO THE AS SESSEE. IN SUPPORT OF HIS CONTENTION HE RELIED UPON THE DECIS ION OF HON'BLE KERALA HIGH COURT IN THE CASE OF DEPUTY COMMISSIONE R OF - 5 - AGRICULTURAL INCOME TAX & SALES TAX (LAW) VS. TRAVA NCORE RAYONS LTD. (1977) 1977 CTR (KER) 264 WHEREIN IT WAS HELD AS UNDER:- THE COMPANY WAS ALLOWING A UNIFORM PERCENTAGE OF DEDUCTION TO THE BUYERS BY WAY OF COMMISSION AN D THE INVOICES SHOW THAT AFTER MENTIONED THE GROSS PRICE OF THE GOODS CALCULATED AT THE RATES SPECIFIED THEREIN THE AMOUNT OF COMMISSION IS DEDUCTED AND THE RESULTANT BALANCE IS SHOWN AS THE NOT PRICE ACTUALLY PAYABLE BY THE BUYERS. IN THE CIRCUMSTANCES SUCH A DEDUCTION ALLOWED TO THE BUYER S BY A MANUFACTURER OR A WHOLESALES BY WHATEVER NAME IT M AY BE DESCRIBED IS CLEARLY IN THE NATURE OF A TRADE DISC OUNT. WHERE A TRADE DISCOUNT HAS BEEN BONA FIDE GRANTED T HE CONSIDERATION FOR THE SALE IS ONLY THE AMOUNT WHICH IS ACTUALLY PAD OR PAYABLE AFTER THE DISCOUNT IS DEDUC TED AND THAT HENCE AMOUNTS ALLOWED BY THE ASSESSEE TO TH E BUYERS BY WAY OF TRADE COMMISSION OR DISCOUNT WERE NOT A L IABLE TO BE ADDED TO OR INCLUDED. IN THE TURN-OVER FOR THE P URPOSES OF ASSESSMENT TO CST. ACCORDINGLY IT IS HELD THAT THE TRIBUNAL WAS RIGHT IN DIRECTING THAT THE AMOUNT OF RS. 2 60 327.72 REPRESENTING COMMISSIONS DEDUCTED BY THE ASSESSEE N THE VARIOUS INVOICES OF SALES SHOULD BE EXCLUDED FROM THE TAXAB LE TURNOVER OF THE ASSESSEE-COMPANY FOR THE YEAR 1961- 62. 11. HE ALSO RELIED ON THE DECISION OF COLOUR CHEM L TD. VS. CIT (1997) 225 ITR 164 (BOM) WHEREIN IT WAS HELD THAT R ELATIONSHIP BETWEEN THE ASSESSEE AND THE FOREIGN BUYER WAS CLEA RLY THAT OF VENDOR AND BUYER AND THE PAYMENT OF COMMISSION HAD THE EFFECT OF REDUCING THE SALE PRICE OF GOODS SUPPLIED TO THE BU YER BY THE ASSESSEE. 12. HE FURTHER RELIED ON THE DECISION OF THE HON'BL E SUPREME COURT IN THE CASE OF J.B.BODA & CO. PVT. LTD. VS. C BDT (1997 ) 223 ITR 271 (SC) WHEREIN IT WAS HELD THAT ASSESSEE ACTI NG AS AGENT OF FOREIGN REINSURER COLLECTING PREMIA FROM THE CEDIN G INSURANCE COMPANY IN INDIA AND REMITTING THE SAME TO THE FORE IGN INSURER IN FOREIGN EXCHANGE WITH THE PERMISSION OF THE RBI A FTER RETAINING ITS BROKERAGE IN FOREIGN EXCHANGE; THE BROKERAGE INCOME RETAINED BY - 6 - ASSESSEE IS RECEIPT OF INCOME IN CONVERTIBLE FOREIG N EXCHANGE QUALIFYING FOR DEDUCTION UNDER S. 80-O. 13. ON THE OTHER HAND THE MAIN THRUST MADE BY THE LEARNED COMMISSIONER IS THAT EVEN THOUGH THE ASSESSEE HAS R ECORDED THE ONLY NET RECEIPTS AS ITS EXPORT SALES THE ASSESSEE HAS CLAIMED THE BENEFITS OF IMPORT ENTITLEMENT LIKE DEPB ON THE AMO UNT OF GROSS VALUE OF INVOICE WHICH SHOWS THAT AS FAR AS THE ASS ESSEE IS CONCERNED THE EXPORT SALE PROCEEDS IS REPRESENTED BY THE GROSS INVOICE VALUE AND NOT BY THE NET VALUE AS CLAIMED B Y THE ASSESSEE. 14. AT THIS JUNCTURE IT IS NECESSARY FOR US TO STA TE THAT THE ASSESSEE HAS ACCOUNTED THE EXPORT SALES TURNOVER AT THE NET FIGURE AND CLAIMED DEPB BENEFITS ON THE GROSS AMOUNTS IN A CCORDANCE WITH THE GUIDELINES ISSUED BY THE RBI IN THE LIGHT OF THE EXPORT IMPORT POLICY OF THE GOVERNMENT OF INDIA. THE ASSE SSEE HAS GIVEN THE DEDUCTION OF DISCOUNT TO THE FOREIGN BUYER BY W AY OF COMMISSION BEING REDUCED DIRECTLY IN THE SALES INVO ICE IN THE LIGHT OF THE REGULATIONS AND GUIDELINES OF THE RBI. THIS METHOD OF INVOICE AND GIVING DISCOUNT/COMMISSION AND RECEIVING THE FO REIGN EXCHANGE NET OF INVOICE ARE PERMISSIBLE UNDER THE L AW RELATING TO THE EXPORT AND FOREIGN EXCHANGE MATTERS. THE EXPOR T IMPORT POLICY AND THE RBI REGULATIONS APPROVED THIS METHOD. THE EXPORT IMPORT POLICY AND THE RBI REGULATIONS FURTHER ALLOW AN ASS ESSEE TO CLAIM BENEFITS OF IMPORT ENTITLEMENT LIKE DEPB ON THE GRO SS AMOUNT OF INVOICE VALUE INSTEAD OF THE NET AMOUNT OF INVOICE VALUE. THEREFORE THE BENEFIT ACCRUES TO THE ASSESSEE IN R ESPECT OF DEPB ON THE DIFFERENTIAL INVOICE AMOUNT WHICH WAS NEVER RECEIVED BY THE ASSESSEE IN INDIA IN CONVERTIBLE FOREIGN EXCHANGE A S AN EXPORT PRIVILEGE ENJOYED BY THE ASSESSEE UNDER THE RELEVAN T RULES AND REGULATIONS. THEREFORE THIS DIFFERENCE REFLECTED IN THE NET INVOICE VALUE AND THE GROSS INVOICE VALUE FOR THE PURPOSE O F ACCOUNTING OF EXPORT SALE TURNOVER AND CLAIMING DEPB BENEFITS CAN NOT BE TAKEN AS A GROUND TO REJECT THE CONTENTIONS OF THE ASSESS EE. THEREFORE - 7 - THE ISSUE HAS TO BE EXAMINED DEVOID OF THE ABOVE TE CHNICALITY POINTED OUT BY THE LEARNED COMMISSIONER OF INCOME-T AX. 15. THERE IS NO DISPUTE REGARDING THE FACT THAT THE ASSESSEE HAS GIVEN COMMISSION/DISCOUNT IN THE EXPORT INVOICES IT SELF IN FAVOUR OF THE FOREIGN BUYER. THE FOREIGN BUYER HAS STATED TH AT THIS DISCOUNT/COMMISSION WOULD BE DISTRIBUTED BY HIM TO THE INTENDING AGENTS ABROAD. THEY HAVE STATED THAT THE COMMISSIO NS ARE TO BE PAID BY THEM DIRECTLY TO THE AGENTS IN THE COUNTRIE S OF IMPORT. IT IS ALSO A FACT ON RECORD THAT THE ASSESSEE HAS RECEIVE D THE NET AMOUNT ONLY AS EXPORT PROCEEDS BY WAY OF CONVERTIBL E FOREIGN EXCHANGE. ALL THESE MATTERS HAVE BEEN CERTIFIED BY THE BANKERS OF THE ASSESSEE. ALL THE MATTERS ARE WELL WITHIN THE LAW REGULATED BY THE RBI FOR THE PURPOSE OF EXPORT OF GOODS OUTSIDE INDIA. IN SUCH CIRCUMSTANCES THE SIMPLE FACT THAT EMERGES OUT OF THE MAZE OF ARGUMENTS IS THAT AS FAR AS THE ASSESSEE IS CONCERN ED HIS EXPORT SALES TURNOVER IS THE NET AMOUNT OF THE EXPORT INVO ICE ISSUED BY HIM. IT IS NOT PROPER TO TREAT THE GROSS INVOICE A MOUNT AS THE EXPORT SALES TURNOVER OF THE ASSESSEE. 16. IN FACT IN THE SITUATION OF THE CASE AS STATE D IN THE ABOVE PARAGRAPH IT IS TO BE SEEN THAT THE EXPORT SALE PR OCEEDS RECEIVED BY THE ASSESSEE WAS NET AMOUNT ALONE AND NOT THE GR OSS AMOUNT. IT IS ALSO TO BE SEEN THAT THE FOREIGN BUYER IS NOT BOUND TO PAY TO THE ASSESSEE THE AMOUNT COVERED BY THE COMMISSION O R DISCOUNT AT ANY FUTURE DATE. THEREFORE THE RIGHT/CLAIM OF THE ASSESSEE IN RESPECT OF THE EXPORT SALES WAS TO RECEIVE ONLY THE NET INVOICE AMOUNT AND NOTHING MORE. THEREFORE THERE IS NOTHI NG LEFT OVER BY WAY OF BALANCE TO BE TREATED AS INCOME ACCRUING OR ARISING TO THE ASSESSEE OUTSIDE INDIA BY VIRTUE OF THE IMPUGNED EX PORT SALES. THE ENTIRE INCOME ATTRIBUTABLE TO THE EXPORT SALES WERE ALREADY RECEIVED BY THE ASSESSEE IN INDIA IN THE FORM OF CO NVERTIBLE FOREIGN EXCHANGE. THIS POSITION IS PROVED BY THE CERTIFICA TES ISSUED BY THE BANKERS AS WELL AS LETTERS OF CREDIT OPENED BY THE FOREIGN BUYERS. WHEN THE ASSESSEE HAS RECEIVED ONLY THE NET PROCEED S AS PER THE - 8 - INVOICE THERE IS NOTHING FURTHER LEFT OVER TO BE T REATED AS INCOME RECEIVED OR TO BE RECEIVED OR ACCRUED OR DEEMED TO BE ACCRUED OR ARISING IN INDIA OR OUTSIDE INDIA. THEREFORE THE RELIANCE PLACED BY THE LOWER AUTHORITIES ON THE SECTION 5 OF THE INCOM E TAX ACT IS RATHER MISLEADING. 17. AS THE ASSESSEE HAS NOT PAID TO THE FOREIGN BUY ERS ANY AMOUNT BY WAY OF COMMISSION BUT IT WAS ONLY ADJUST MENT THROUGH THE EXPORT INVOICES BY WAY OF COMMISSION/DISCOUNT SECTION 94H ALSO HAD NO ROLE TO PLAY. THEREFORE WE FIND THAT ALL THE DISCUSSIONS MADE BY THE LOWER AUTHORITIES TO MAKE ADDITIONS OF THE COMMISSION AMOUNT WERE BASED ON HYPOTHESIS AND NOT ON ANY FACT S PROVED. WHEN THE ASSESSEE HAD NO ADDITIONAL AMOUNT TO BE RE CEIVED FROM THE FOREIGN BUYERS NO QUESTION OF ADDITIONAL INCOM E ARISES. THE INCOME OF THE ASSESSEE IS FULLY EMBEDDED IN THE NET SALE PROCEEDS RECEIVED AND ACCOUNTED BY HIM. WHEN THE INCOME ITS ELF IS NOT GENERATED THERE IS NO QUESTION OF SUCH INCOME BECO MING ACCRUED OR DUE. WHEN THERE IS NOTHING LEFT OVER TO BE FURTH ER RECEIVED BY THE ASSESSEE THERE IS NO QUESTION OF ANY INCOME AR ISING IN THE HANDS OF THE ASSESSEE ATTRIBUTABLE TO THE QUANTUM OF COMMISSION RECORDED IN THE INVOICE. THEREFORE WE FIND THAT T HE ENTIRE DISCUSSIONS BUT WELL MADE BY THE LOWER AUTHORITIES HAVE BEEN MADE UNFORTUNATELY IN A WRONG DIRECTION. 18. WHEN THE FACTUM OF ACTUAL RECEIPT OF SALE PROCEEDS TO THE EXTENT OF NET INVOICE AMOUNT IS ESTABLISHED BEYOND ANY DOUBT THERE IS NO JUSTIFICATION IN OVERLOOKING UPON THOSE SPEAKING FACTS ON THE TECHNICAL GROUND THAT THE ASSESSEE HAS CLAIMED THE DEPB BENEFIT ON THE GROSS AMOUNT OF THE INVOICE. THE DE PB CLAIM WAS MADE BY THE ASSESSEE ON THE BASIS OF PERMISSION GRA NTED BY THE RBI AND THAT HAS NOTHING TO DO WITH THE ACTUAL AMOU NT OF EXPORT SALES PROCEEDS RECEIVED BY THE ASSESSEE IN THE FORM OF CONVERTIBLE FOREIGN EXCHANGE. - 9 - 19. THEREFORE IT IS QUITE OBVIOUS WITHOUT MUCH DIS CUSSION AND DELIBERATION THAT THE REVENUE HAS NO CASE TO HOLD T HE ASSESSEE RESPONSIBLE FOR AN ADDITIONAL INCOME OF RS.2 89 46 582/-. THE SAID ADDITION IS ACCORDINGLY DELETED. OUR ABOVE VIEW AL SO FINDS SUPPORT FROM THE DECISION OF THIS TRIBUNAL IN THE CASE OF S HRI SANJAY JAIN VS. DCIT IN ITA NO.1533/AHD/2008 FOR ASSESSMENT YEAR 20 04-05 ORDER DATED 16.12.2009 AND THE DECISION IN THE CASE OF SH RI NARENDRA D. MODH VS. ACIT IN ITA NO. 453/AHD/2009 DATED 11-6-20 10 FOR ASSESSMENT YEAR 2005-06. THUS THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 20. GROUND NO.4 READS AS UNDER : 4. WITHOUT PREJUDICE TO ABOVE GROUND OF APPEAL TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN NOT CONSIDERING ABOVE ADDITION/DISALLOWANCE IN GROU ND NO.3 WHILE CALCULATING DEDUCTION UNDER SECTION 80HHC. 21. IN VIEW OF OUR DECISION IN GROUND NO.3 OF THE A PPEAL OF THE ASSESSEE THERE IS NO NEED TO GIVE FINDING ON MERIT S ON GROUND NO.4 BECAUSE THE SAME WOULD BE ACADEMIC IN NATURE. 22. GROUND NO.5 OF THE APPEAL READS AS UNDER :- 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING CHARGING OF INTER EST UNDER SECTION 234B OF THE ACT. 23. AT THE TIME OF THE HEARING NO ARGUMENTS WERE AD VANCED BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESS EE. THEREFORE THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED FOR WANT OF PROSECUTION. 24. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. - 10 - ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 13 TH DAY OF AUGUST 2010. SD/- SD/- (BHAVNESH SAINI) (N. S. SAINI) JUDICIAL MEMBER A CCOUNTANT MEMBER AHMEDABAD: ON THIS 13 TH DAY OF AUGUST 2010 PATKI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)- 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 12-8-2010 ------------ ------- 2. DRAFT PLACED BEFORE AUTHORITY 12-8-2010 --- ---------------- 3. DRAFT PROPOSED & PLACED 12-8-2010 ---------- --------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 12-8-2010 --------- ---------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 13-8-2010 --- ----------------- 6. KEPT FOR PRONOUNCEMENT ON 13-8-2010 --- ----------------- 7. FILE SENT TO THE BENCH CLERK 13-8-2010 -------------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- - --------------------