Commissioner of Income Tax vs Ganeshi Lal and Sons

The Income Tax Appellate Tribunal, Allahabad, has referred the following question of law u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), for opinion to this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sales effected at the assessee''s counter in India to foreign tourists against foreign currency should be considered as export sales for the purposes of allowing deduction u/s 80HHC of the Income Tax Act, 1961 ?"

Briefly stated the facts involved in the present case are as under :

The present reference relates to the assessment year 1983-84. The respondent is a firm carrying on the business of embroidery and marble goods and selling precious and semi-precious stones. It had effected sales of various goods to foreign customers at its counter against foreign exchange which the foreign customers had taken them outside India. The respondent claimed special deduction u/s 80HHC of the Act. It was disallowed by the Income Tax Officer but was allowed by the Commissioner of Income Tax (Appeals) which order has been upheld by the Tribunal.

Heard Sri A. N. Mahajan, learned standing counsel for the Revenue, and nobody has appeared on behalf of the assessee. The controversy raised in the present reference has been set at rest by the apex court in Commissioner of Income Tax Vs. Silver and Arts Palace, and the apex court has held that the special deduction is available u/s 80HHC of the Act in respect of counter sale made to foreign tourists against foreign exchange which goods subsequently are taken by the foreign tourists outside India.

In this view of the matter, we answer the question referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue. However, there shall be no order as to costs.