- (1.) These appeals arise out of the orders passed by the Income Tax Appellate Tribunal Lucknow Bench, Lucknow dated 16-1-2009, in respect of assessment years. The department has raised the following substantial questions of laws to be considered by the High Court:- 1. Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in coming to the conclusion that the assessee is entitled to exemption u/s. 10A/ 10B of the Act on the basis of the judgment of the Hon'ble Supreme Court in the case of 7.5. Boda & Co. v. CBDT,1996 223 ITR 271 despite the fact that the said judgment was rendered in the context of section 80O of the Act as it stood in the A/Ys 1984-85 & 1985-86? 2. Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in mis-interpreting the provisions of sub-section (3) of section 10A/ 10B of the Act, which makes it mandatory to bring in India all the sale proceeds of articles or things in convertible foreign exchange with the stipulated period? 3. Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in coming to the conclusion that the provisions of section 80O are parallel or pari materia to the provisions of sections 10A & 10B of the Act, despite the fact that sub-section (3) of section 10A/ 10B deal with sale proceeds of article or thing while section 80O deals with income?
(2.) The facts of the leading case (ITA No. 512 of 2009), as disclosed in paras 3 and 4 of the order of the Appellate Tribunal, are as stated below:- 3. In the year under consideration, the assessee imported 14.1086 kgs. of gold bars on a total of thirteen invoices received from three foreign parties namely (i) Hayatt Jewellers, (ii) Dhakan Jewellers and (iii) Evershine Jewellery of Dubai. The total value of import was shown at 17,02,589 US Dollars and accordingly, after converting into Indian rupees, a sum of Rs. 7,85,71,961/- was debited as purchase. However. in respect of sales, assessee shown export of sale of 151.293 kgs. of gold jewellery through a total ten invoices valuing at 19,99,583 US Dollars resulting into a credit of 9,12,73,602/- under the head sales. After adjusting administrative expenses and crediting other income, a net profit of Rs. 1,02,68,919/- was shown as per audited accounts. After considering depreciation and interest, income of Rs. 96,32,570/- was worked out as reflected on pages 4 & 5 of the order of the Assessing Officer. 4. The Assessing Officer referred to section 10A and held that provisions of sub-section (3) of section 10A are not complied with by the assessee according to which assessee is required to repatriate and credit entire sale proceeds in a bank account. According to the Assessing Officer, whereas total sale proceeds amounted to Rs. 9,12,73,602/- assessee has shown a credit of only Rs. 1,27,65,693/- as reflected on page 7 of the Assessing Officers order. The case of the assessee was that it credited net proceeds for which exemption u/s. 10A was claimed whereas the case of Assessing Officer is that the assessee ought to have credited in Indian Rupees entire sale proceeds of 9.12 crores. The assessee referred to the decision of Hon'ble Supreme Court in the case of J.B. Boda and Co. (P) Ltd. v. CBDT, 1997 223 ITR 271, according to which, if net proceeds are received in foreign exchange and credited then assessee would not be disentitled from exemption. The Assessing Officer, however, did not agree with the above decision and held that facts in JB Boda & Co. (P) Ltds case are different therefore, it will not be applicable to the facts of the present case. Accordingly he denied exemption to the assessee u/s. 10A as according to him entire sale proceeds have not been brought into India and have not been credited in the bank account.
(3.) In para 8 of the order of the Tribunal, it observed as follows:- ... The undisputed facts are that assessee had imported gold bars without incurring any expenditure in foreign exchange. It was import on credit. It was converted into gold ornaments and exported. The assessee received back net amount and credited it into the bank account and claimed exemption on the income computed on that basis... The Tribunal relied upon judgment of the Supreme Court in J.B. Boda & Co. (P.) Ltd. v. CBDT, 1997 223 ITR 271, in observing that if assessee receives net proceeds in foreign exchange then the deduction under section 10A of the Income-tax Act, 1961, for promotion of exports, should not be denied.;