Decided on September 30,1994



Moksh Mahajan, Accountant Member - (1.) THE appeal filed by the department and cross-objection filed by the assessee against the order of the learned Commissioner of Income-tax (Appeals) dated 19-4-1989 for assessment year 1985-86 are taken together for the sake of convenience.
(2.) Shri D.D. Goyal represented the department and Shri Ashok Malik, CA appeared on behalf of the assessee. We would take up the appeal of the department first. The sole contention raised in this appeal pertains to acceptance of assessee's claim for deduction under Section 80HHC of the Act. The facts in brief are that the assessee is an exporter who claimed deduction of Rs. 10,38,359 on the export turnover made in the assessment year 1985-86. The assessee's accounting period ended on 31-12-1984. On scrutiny of the assessee's claim in respect of deduction under Section 80HHC, it was found that on 1-12-1983 the assessee company entered into agreement with M/s. Mahajan International - its sister concern. As per the terms of the contract the goods exported actually belonged to M/s. Mahajan International and the orders were also obtained by it from the buyers. Except for preparing the bills in its name, all the other activities were performed by M/s. Mahajan International. Even the benefits resulting from exports were also to be received by M/s. Mahajan International. On these facts, the Assessing Officer after finding that the entire arrangement was made to circumvent caution list on which M/s. Mahajan International was put by the Reserve Bank of India, held that the assessee being not a real exporter is not entitled to deduction under Section 80HHC of the Act. The learned CIT(A) allowed the claim of the assessee after holding that as the prerequisite conditions for allowance of deductions under Section 80HHC were satisfied the assessee was entitled to its claim as made. It is against this decision of CIT(A) that the department has come before us.
(3.) BEFORE us both the parties supported their claim - one relying on the order of the Assessing Officer and the other on the order of the learned CIT(A). While according to the learned Departmental Representative the expression 'exporter' has to be understood in the meaning of a real exporter and not the ostensible one as is the case of the assessee, as per the learned counsel for the assessee, no such situation is envisaged in the section. Relying on the decision of Delhi High Court in the case of Ferro Alloys Corporation Ltd. v. R.C, Mishra, Director, Tax Credit [1978] 114 ITR 753, Shri D.D. Goyal argued against the assessee's right to deduction. As per Shri Malik, the wording of section being clear and unambiguous, the primary conditions viz., exports of goods and merchandise being made and sale of goods being receivable in convertible foreign exchange, being satisfied by the assessee, the relief was rightly allowed by the CIT(A).;

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