D. Anuradha Vs. the Deputy Commissioner of Income Tax, Chennai - Court Judgment

Excerpt:
section 80 hhc of the income tax act –(prayer: appeal under section 260 a of the income tax act against the order dated 31.3.2006 made in i.t.a.no.1650/mds/2004 on the file of the income tax appellate tribunal, chennai bench "a" for the assessment year 2000-01.) k. ravichandrabaabu, j. 1. this tax case (appeal) filed by the assessee as against the order of the income tax appellate tribunal in respect of the assessment year 2000-01, was admitted on the following substantial questions of law: "1) whether the itat is right in law in rejecting the claim of deduction u/s.80 hhc made in respect of dimensional granite blocks exported by the appellant herein? 2) whether on the facts and in the circumstances of the case, the itat is right in law in reaching the erraneous conclusion that what was exported by the appellant was rough granite blocks, this conclusion being totally contrary to the supplier's certificate produced by the appellant? 3) whether on the facts and in the circumstances of the case, the itat is right in law, in concluding, based only on the terminology in the invoice and without reference to the dimensions and type of the granite mentioned therein, that what had been exported by the appellant was only rough granite blocks and not dimensional blocks?" 2. the assessee, an exporter claimed export benefit under section 80 hhc of the income tax act to the tune of rs.74,09,716/- on the total export sales of rs.2,09,48,250/-. the assessing officer, on the perusal of the documents, namely export invoices, found that the part of export sales to the buyers to an extent of rs.1,54,26,957/- are only rough granites but not dimensional granite blocks. accordingly, the assessing officer, by following the cbdt's circular, did not grant deduction in respect of export of rough granite blocks. the assessing officer also pointed out that the assessee is only a trading exporter and has not incurred any expenses towards cutting, trimming and polishing to make the granites as value added products. however, the assessing officer has granted deduction of rs.19,52,965/- only on sales of dimensional granite blocks to the extent of rs.55,21,293/-. in so far as the remaining claim is concerned, the same was rejected as inadmissible. aggrieved against the same, the assessee filed an appeal before the first appellate authority. 3. the commissioner of income tax (appeals) found that the assessee was a trading exporter and the process of cutting, polishing and marking were done by the suppliers. the first appellate authority, pointed out that as the perusal of records shows that the appellant had exported cut and trimmed granite blocks, he was eligible for deduction under section 80 hhc as per the cbdt circular no.729 dated 1.11.1995. the said order of the commissioner of income tax (appeals) was challenged by the revenue before the income tax appellate tribunal. 4. it is seen from the order of the income tax appellate tribunal that the invoice filed by the assessee at page nos.11 and 22 of the paper book before the tribunal shows that the assessee had exported rough granite and however in so far as the export of dimensional granite blocks are concerned, the assessing officer had already granted deduction under section 80 hhc of the income tax act. the tribunal further pointed out that the contention of the assessee, namely, that the word 'rough' was wrongly typed in the invoice cannot be accepted, as the export document should contain the correct description of the goods. the tribunal had also pointed out that the goods cannot pass through the customs clearance if the description was not given correctly. it is not the case of the assessee that the customs authority had rectified the mistake by making necessary entries in their documents. further, the tribunal opined that even without polishing or trimming, the colour of the granite could be identified and therefore, the tribunal pointed out that merely because the colour of the granite was mentioned, it could not be construed that the assessee had exported only dimensional blocks of granite. thus, the tribunal rejected the contention of the assessee and accepted the case of the revenue; consequently allowed the appeal. aggrieved against the same, the present appeal is before us. 5. learned counsel appearing for the assessee pointed out that the tribunal, without looking into other records, had only made its opinion that without polishing or trimming, the colour of the granite could be identified. she also contended that the first appellate authority, had, in fact, accepted the case of the assessee based on the perusal of the records which shows that what was exported was only dimensional blocks of granite. on the other hand, learned standing counsel appearing for the revenue contended that when the documents filed by the assessee, more particularly the invoice itself shows that it is only a rough granite export, now the assessee cannot say that it is not rough granite and it is a dimensional blocks of granite. accordingly, learned standing counsel appearing for the revenue submitted that the assessee is not entitled to any relief under section 80 hhc of the income tax act, insofar as the rough granite is concerned, based on the circular dated 1.11.1995, which grants exemption only in respect of dimensional blocks of granite. 6. we have gone through the orders passed by the authorities below and heard learned counsel appearing for the appellant and learned standing counsel appearing for the respondent. 7. it is seen from the order of the assessing authority that the assessee has furnished invoices showing that rough blocks were exported along with the dimensional blocks of granites. taking note of the quantum with regard to the dimensional blocks of granite sales, the assessing officer has granted deduction to the tune of rs.19,52,965/- and in respect of the remaining sale, he rejected the same on the ground that they exported only rough blocks and not dimensional blocks. it is seen that the assessee has furnished the purchase invoices, packing list and a certificate from the principal procurer, namely, the seller before the authorities. 8. it is also seen that the assessee had not furnished the export documents before the authorities. even from the consideration of the purchase invoices in respect of the disputed sale is concerned, the assessing officer had noted that what was purchased was only rough blocks and it is also an undisputed fact that the assessee had not incurred any expenditure towards cutting, trimming and polishing to make the granites as value added products. the assessee, admittedly, is only a trading exporter. thus when the fact remains that the assessee had exported only rough block, as admitted by the assessee's own document, namely, purchase invoices, we find no reason to accept the case of the assessee. 9. though, no doubt, it is true that the first appellate authority has allowed the case of the assessee by holding that the assessee had exported cut and trimmed granite blocks based on the perusal of the records, we fail to understand as to how the first appellate authority has come to such a conclusion, as the assessee's own document, namely, purchase invoices in respect of disputed sale admittedly shows that only rough granite blocks were exported and not the dimensional blocks of granite. the assessee's contention that the word 'rough' was wrongly typed in the invoice is totally unbelievable and cannot be accepted as it appears to be an after thought. when that being the position, the assessing officer as well as the tribunal had rightly rejected the case of the assessee by holding that the assessee was not entitled to relief under section 80 hhc of the income tax act as per cbdt's circular no.729 dated 01.11.1995, as admittedly, rough blocks were exported and not dimensional blocks insofar as the remaining claim of the assessee in respect of the total sales export of rs.2,09,48,250/-. the assessee had already given deduction in respect of rs.19,52,965/- in respect of dimensional blocks of granite export is concerned. hence, there is no reason to interfere with the order passed by the tribunal. accordingly, the tax case (appeal) is dismissed answering the questions in favour of the revenue. no costs.