Tuesday, November 12, 2013

HC grants extra time to assessee for repatriation of forex realizing economic crisis in Russia

Due to disintegration of the USSR and economic crisis in Russia, the buyers were unable to remit payment within time and, therefore, assessee's application seeking extension of time to realize convertible foreign exchange in India was allowed


a) The assessee, engaged in manufacture and export of certain goods, had exported almost 100 per cent of its produce to erstwhile Russia or USSR. For the purpose of taxation, it wanted to claim benefit of Section 80HHC in respect of profits derived from exports;

b) As per section 80HHC, to avail of the said benefit, the assessee was required to receive the sale proceeds in convertible foreign exchange within a period of six months from the end of the previous year;

c) During relevant period, on assessee’s failure to receive part of sale proceeds in convertible foreign exchange within stipulated period, it filed an application seeking extension of time to realize such proceeds;

d) The Commissioner rejected assessee's application.  Against said order, assessee filed the instant writ.

The High Court held as under:

1) The Commissioner had not rebutted or denied that assessee was factually correct when it had stated that due to economic crises, fall or depreciation in value of Russian currency payments were not being received by the Indian exporters from buyers in the USSR or countries which were earlier part of the USSR;

2) He had also not adverted to fact that RBI had realized said problem and had taken notice of unprecedented situation and hardships faced by exporters from India;

3) It was also undisputed fact that assessee had realized entire export proceeds before expiry of time-limit for completing assessment. Thus, the impugned order was to be set aside and assessee's application seeking extension of time was to be allowed - York Exports (P.) Ltd. v. CIT [2013] 38 taxmann.com 205 (Delhi)

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