Case Law Details
J.P. Khaitan Vs Mr. Debasish Chowdhury (Calcutta High Court)
The issue under consideration is whether extra realization made in rupees for export sale proceeds in foreign exchange due to adverse exchange rate of rupee would be part of the export turnover in the year of receipt and qualify it for deduction u/s Section 80-HHC ?
In the present case, A.O. has rejected the deduction u/s 80-HHC with the view that addition amount received will not be considered as export turnover. As per A.O., after receiving the full amount from Allahabad Bank in Indian rupees, the chapter stood closed and any subsequent income which could not be visualized at the time of export cannot be said to be related to that particular export. This view was upheld both by the CIT and the learned Tribunal.
High Court is unable to agree with this view. It was not possible for the appellant to know as on the date of export as to the manner in which exchange rate may fluctuate in future. The subsequent excess realization in Indian rupees due to adverse exchange rate of rupee cannot be said to be unrelatable to the particular export. After all, the object of incorporating Section 80-HHC in the said Act is clearly to grant incentive to the exporters who earn valuable foreign exchange for our country. The deduction contemplated under the said section for the purpose of calculating total income, is obviously to encourage exports resulting in flow of foreign exchange into the country. Such a piece of legislation, in our opinion, must be interpreted as liberally as possible in favour of the exporter/assessee. It is trite law that if a particular taxing provision is liable to two interpretations, one favouring the assessee and the other favouring the department, the former interpretation ought to be accepted.
Hence, on an overall consideration of the facts and circumstances of the case, we are of the view that extra realization made in rupees for export sale proceeds in foreign exchange due to adverse exchange rate of rupee would be part of the export turnover in the year of receipt subject to the foreign exchange coming into the country within the statutorily prescribed time period. We are also of the view that export sale proceeds received in accordance with and in terms of the export contract and with approval of RBI could not be ignored for the purpose of relief under Section 80-HHC of the said Act. The questions of law on which the instant appeal was admitted are answered accordingly.
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