Dy. Commissioner of Income Tax vs V.I.P. Exports

G. Sivarajan, J.

This is an appeal filed by the Income Tax Officer, Ward I, Mattancherry, against the order of the Income Tax Appellate Tribunal, Cochin Bench in ITA. No. 757 (Coch)/90 dated 16-11-1998 in respect of the assessment year 1983-84. In the assessment for the year 1983-84, the respondent-assessee claimed the benefit of deduction u/s 80HHC of the Income Tax Act, 1961 (hereinafter referred to as ''the Act''). Admittedly the assessee had exported goods processed by it either through export houses or through sister concerns. The assessing officer took the view that in order to get the benefit of deduction u/s 80HHC, the assessee must be the real exporter. Since the export in the instant case was made through export houses, the assessing officer denied the benefit of deduction u/s 80HHC of the Act to the assessee. Being aggrieved by the said assessment, the assessee took up the matter in appeal before the Commissioner (Appeals I), Cochin, who, by his order dated 25-6-1990, Annexure B, allowed the appeal relying on a decision of the Tribunal in the case of Sea Pearl Industries. Though the department had filed appeal against the said order, the same was confirmed by the Tribunal following its earlier decision.

The learned Central Government standing counsel for taxes appearing for the appellant submits that the decision relied on by the Commissioner (Appeals) and by the Tribunal in the instant case came up before this court and this court in Commissioner of Income Tax Vs. Sea Pearl Industries (No. 1), , relying on a decision of the Supreme Court in Mineral and Metal Trading Corporation Vs. R.C. Mishra and others, , held that the assessee therein was not entitled to the benefit of deduction u/s 80HHC of the Act as the real exporters are the export houses. Standing counsel further submitted that this decision has been affirmed by the Supreme Court in Sea Pearl Industries v. CIT (2001) 247 ITR 578 . Standing counsel, accordingly, submitted that the question raised by the appellant in this case is squarely covered by the said two decisions.

Shri Joseph Franklin, learned counsel appearing for the respondent-assessee submits that even if the assessee is obliged to file a disclaimer certificate, the assessee is prepared to obtain the disclaimer certificate from the export houses/sister concerns and produce the same before the assessing officer without further delay.

We have considered the rival submissions. On going through the decisions of this court and the Supreme Court mentioned above, we find that the question raised in this appeal is covered by the said decisions, as per which, during the relevant assessment year the benefit of deduction u/s 80HHC was available only to real exporters, in the instant case, the export houses/sister concerns. The respondent, not being direct exporter, is not entitled to claim the benefit of section 80HHC of the Act for the year concerned. Hence, the orders of the two appellate authorities cannot be sustained. They are accordingly set aside.

Counsel for the assessee, however, submits that the assessee is entitled to the benefit of a Circular issued by the Central Board of Direct Taxes, under which, if the assessee obtains a disclaimer certificate from the real exporter, it will get the benefit of section 80HHC. The Circular is seen dated 14-8-1986 and the assessment year concerned is 1983-84. However, if the Circular No. 466, dated 14-8-1986 was applicable to the. Assessment year 1983-84, and if the assessee obtains disclaimer certificate from the export house/sister concern, who had exported the goods, and produce the same before the assessing officer, supported by materials to show that the export house/sister concern has not got the benefit u/s 80HHC, it is open to the assessing officer to consider the same and pass appropriate orders. This is for the reason that the assessee had succeeded before the two appellate authorities, and therefore, it had no occasion earlier to do so.

This appeal is dismissed subject to the above.