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

G. Sivarajan, J.—This is an appeal filed by the ITO, Ward-1, Mattancherry, against the order of the Tribunal, Cochin Bench, in ITA. No. 757/(Coch)/1990, dt. 16th Nov., 1998, in respect of the asst. yr. 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 (for short ''the Act''). Admittedly the assessee had exported goods processed by it either through export houses or through sister-concerns. The AO 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 AO 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 CIT(A)-I, Cochin, who, by his order dt. 25th June, 1990, Annex.-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 CIT(A) 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 and Ors. 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 AO 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 CBDT, under which, if the assessee obtains a disclaimer certificate from the real exporter, it will get the benefit of Section 80HHC. The circular is dt. 14th Aug., 1986, and the assessment year concerned is 1983-84. If the Circular No. 466, dt. 14th Aug., 1986 [(1986) 161 ITR 68, was applicable to the asst. yr. 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 AO, supported by materials to show that the export house/sister-concern has not got the benefit u/s 80HHC, it is open to the AO 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.