M/S. RAMU S. DEORA, MUMBAI v. THE DCIT 12(3),

ITA 7523/MUM/2007 | 1997-1998
Pronouncement Date: 29-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 752319914 RSA 2007
Assessee PAN AAMPD2141H
Bench Mumbai
Appeal Number ITA 7523/MUM/2007
Duration Of Justice 3 year(s) 7 month(s) 11 day(s)
Appellant M/S. RAMU S. DEORA, MUMBAI
Respondent THE DCIT 12(3),
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted K
Tribunal Order Date 29-07-2011
Date Of Final Hearing 07-07-2011
Next Hearing Date 07-07-2011
Assessment Year 1997-1998
Appeal Filed On 18-12-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH KMUMBAI BEFORE SHRI J.SUDHAKAR REDDY(AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) ITA NO.7523/MUM/2007 ASSESSMENT YEAR 1997-98 SHRI RAMU S. DEORA SAMBHAV CHAMBERS 4 TH FLOOR SIR P.M. ROAD FORT MUMBAI-400 001 PAN-AAMPD 2141H VS. THE DCIT 12(3) MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SAMEER DALAL RESPONDENT BY: SHRI P. NAIK DATE OF HEARING : 07.07.2011 DATE OF PRONOUNCEMENT: 29 TH JULY 2011 O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 27.9.2007 PASSED BY THE LD. CIT(A)-XII FOR THE ASSESSMENT YEAR 1997-98. 2. THE ASSESSEE HAS NOT PRESSED GROUND NO. 1 THEREF ORE IT IS DISMISSED AS NOT PRESSED. 3. THE SECOND ISSUE WHICH HAS BEEN RAISED IN GROUND NO. 2 & 3 IS REGARDING REDUCTION OF 90% OF INTEREST EARNED BY TH E ASSESSEE FROM THE EEFC ACCOUNT AMOUNTING TO RS.67 80 738/- IN COMPUTI NG RELIEF U/S.80 HHC. WE FIND THAT THIS ISSUE IS COVERED AGA INST THE ASSESSEE BY THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHAH ORIGINALS (327 ITR 19). THE JURISDICTIONAL HI GH COURT IN THAT ITA NO. 7523/M/2007 2 CASE HAVE HELD THAT THE PROFIT ARISING FROM EXCHAN GE FLUCTUATIONS IN RESPECT OF EXPORT PROCEEDS DEPOSITED ABROAD UNDER T HE EEFC ACCOUNT ARISES ON THE COMPLETION OF EXPORT ACTIVITY AND DOE S NOT BEAR A PROXIMATE OR DIRECT NEXUS WITH THE EXPORT TRANSACTI ON SO AS TO FALL WITHIN THE EXPRESSION DERIVED BY THE ASSESSEE IN SUB-SECTION (1) OF 80 HHC. THEREFORE THE RECEIPTS ON ACCOUNT OF FOREI GN EXCHANGE FLUCTUATION CANNOT BE TREATED AS PART OF BUSINESS I NCOME AND ARE NOT ELIGIBLE TO BE INCLUDED IN THE PROFIT OF BUSINESS W HILE CALCULATING DEDUCTION U/S.80HHC. THE HIGH COURT ALSO HELD THAT THE INTEREST WHICH HAS ARISEN AS A RESULT OF DEPOSIT MAINTAINED IN THE EEFC ACCOUNT CAN SIMILARLY NOT TO BE REGARDED AS REPRESE NTING THE BUSINESS INCOME. RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHAH ORIGINALS (SUPRA) WE DISMISS THE APPEAL OF THE ASSESSEE ON THIS ISSUE. 4. THE NEXT ISSUE RAISED IN GROUND NO. 4 IS REGARDI NG THE REDUCTION OF 90% SUNDRY BALANCE WRITTEN OFF AMOUNTING TO RS.2 65 804/- FROM THE PROFITS OF BUSINESS FOR THE PURPOSE OF CALCULAT ION OF DEDUCTION U/S.80 HHC. EVEN THOUGH THIS ISSUE WAS SET ASIDE B Y THE TRIBUNAL TO THE FILES OF ASSESSING OFFICER IN ITA NO. 6427/MUM/ 02 FOR THE ASSESSMENT YEAR 1997-98 VIDE ORDER DT.22.12.05. WE DO NOT FIND ANY SPECIFIC DISCUSSION OF THIS AMOUNT IN THE ORDER OF THE ASSESSING OFFICER. IF THE SUNDRY BALANCE OF RS.2 65 804/- WH ICH HAS BEEN WRITTEN OFF AND HENCE OFFERED AS INCOME THIS YEAR O N ACCOUNT OF CESSATION OF LIABILITY WERE ALLOWED AS DEDUCTION IN THE RESPECTIVE YEARS IN WHICH SUCH BALANCES WERE INITIALLY CREATED THEN THE AMOUNT OF INCOME ON ACCOUNT OF THE REVERSAL OF THE BALANCE CA NNOT BE EXCLUDED IN COMPUTING THE RELIEF U/S.80 HHC. WE DIRECT THE A O TO RE-WORK THE RELIEF U/S.80 HHC IN RESPECT OF RS.2 65 804/- ON TH E BASIS OF ABOVE DIRECTION. 5. THE NEXT ISSUE RAISED IN GROUND NO. 5 IS REGARDI NG EXCLUSION OF RS.27 26 275/- FROM THE EXPORT TURNOVER. HERE AGAI N THIS ISSUE WAS ITA NO. 7523/M/2007 3 SET ASIDE BY THE TRIBUNAL TO THE FILES OF ASSESSING OFFICER IN ITA 6427/MUM/02 FOR THE A.Y. 97-98 DT.22.12.05 BUT WE D O NOT SEE ANY DISCUSSION ON THIS ASPECT BY THE LOWER AUTHORITIES. APPARENTLY THIS AMOUNT REPRESENTS DELAYED RECEIPT OF EXPORT PROCEED S AND THE ASSESSEE HAD MOVED THE APPLICATION BEFORE THE COMMI SSIONER FOR CONDONATION OF THE DELAY (PARA 9 OF ITA 6427/M/02 DT.22.12.05 IN THE FIRST ROUND OF APPEAL) WE SET ASIDE THIS ISSUE TO THE FILES OF AO WITH THE SAME DIRECTION TO FIND OUT WHETHER THE LEARNED COMM ISSIONER HAS CONDONED THE DELAY. THE AO WILL PASS APPROPRIATE OR DER AFRESH ON THIS ISSUE AFTER GIVING REASONABLE OPPORTUNITY TO THE AS SESSEE. THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STA TISTICAL PURPOSES ON THIS ISSUE. 6. THE LAST GROUND NO. 6 IS AGAINST NOT GRANTING OF RELIEF IN RESPECT OF THE DIRECTIONS OF COMMISSIONER OF INCOME TAX (AP PEAL) IN THE FIRST ROUND IN THE COMPUTATION OF INCOME NOW DETERMINED. THIS APPEAL ARISES IN RESPECT OF THE GROUNDS SET ASIDE BY THE T RIBUNAL IN THE EARLIER ROUND IN ITA NO 7258/M/02 DT.22.12.05. THEREFORE TH E GIVING EFFECT TO ORDER OF THE LD. CIT(A) IS NOT ON APPEAL BEFORE US. THE AO SHALL GIVE EFFECT TO THE RELIEF GRANTED BY THE APPELLATE AUTHO RITIES EARLIER WHILE PASSING AN ORDER GIVING EFFECT TO THIS ORDER OF THE TRIBUNAL. WITH THIS OBSERVATION THE APPEAL FILED BY THE ASSESSEE ON TH IS ISSUE IS DISMISSED. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 29 TH DAY OF JULY 2011 SD/- SD/- (J. SUDHAKAR REDDY) (ASHA VIJAYA RAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 29 TH JULY 2011 RJ ITA NO. 7523/M/2007 4 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR K BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR I.T.A.T MUMBAI ITA NO. 7523/M/2007 5 DATE INITIALS 1. DRAFT DICTATED ON: 15.7.2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 22.7.11 SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/PS 6. ORDER PRONOUNCED ON: SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: SR. PS/PS 9. DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER: