Sunil Ambwani, J. - (1.) THIS Income Tax Appeal has been preferred by the Commissioner of Income Tax against the order passed by the Income Tax Appellate Tribunal, in which the following substantial questions of law have been framed: "(i) Whether on the facts and circumstances of the case, the ITAT was justified in allowing the deduction of Rs. 5,19,337/ - u/s. 80HHC to the assessee on counter sales inspite of the specific provisions of Explanation (aa) to Section 80HHC of the Act? (ii) Whether on the facts and circumstances of the case, the ITAT was justified in allowing the deduction u/s. 80HHC of the Act in respect of counter sales made to the foreign tourists, when the assessee has inspite of several opportunities, failed to file any to the effect that the goods were cleared at any of the custom stations -
(2.) THE facts, given rise to the present appeal, are that the respondent -assessee is a dealer of jewellery and handicrafts from shops/emporium at Jaipur. The assessee sold the goods by counter sale to foreign tourists in the showroom against the convertible foreign exchange in India. The deduction under section 80HHC of the Income Tax Act, 1961 was not allowed by the Assessing Officer, on the ground that though the goods were sold at the counter of the shop/emporium, for which the sale voucher was signed by the tourists which provided their passport number and declaration to the effect that the goods will not be gifted or sold in India, the exemption cannot be allowed until the proof of clearance of the goods at the Customs Station was produced. We have heard learned counsel appearing for the parties.
(3.) WE find that the Apex Court in CIT v. Silver & Arts Palace [ : (2003) 259 ITR 684 (SC)] has held that the counter sale to the foreign tourists against convertible foreign exchange in India, is eligible for deduction under section 80HHC of the Income Tax Act. The Apex Court has also approved the decision of the Allahabad High Court in the case of Ram Babu & sons v. Union of India [ : (1996) 222 ITR 606 (All.)].;