DEPUTY COMMISSIONER OF INCOME TAX v. LOTUS TRANS TRAVELS (P) LTD
[Citation -2005-LL-1130-20]

Citation 2005-LL-1130-20
Appellant Name DEPUTY COMMISSIONER OF INCOME TAX
Respondent Name LOTUS TRANS TRAVELS (P) LTD.
Court ITAT
Relevant Act Income-tax
Date of Order 30/11/2005
Assessment Year 1996-97, 1998-99
Judgment View Judgment
Keyword Tags convertible foreign exchange • proportionate amount • boarding and lodging • domestic turnover • indian currency • special bench • excise duty
Bot Summary: The amounts in foreign exchange collected by the assessee included the amounts payable to hotels for boarding and lodging of foreign tourists. T h e assessee s gross foreign exchange receipts of Rs. 6,72,89,350 were accordingly reduced by the sum of Rs. 2,51,64,250 being the amount in relation to which the assessee had issued 10CCEA certificates. In the assessment order, the AO while reducing the assessee s gross receipts in convertible foreign exchange by the sum of Rs. 2,51,64,250, he did not reduce the same amount from the total receipts of the business of the assessee from domestic sales as well as foreign tourists. During the course of hearing before us, the learned Departmental Representative argued that there was no warrant in the language of the provisions of s. 80HHD(3) to reduce the total receipts of the business of the assessee by the amounts for which the assessee had issued 10CCEA certificates. The learned CIT(A) erred in interfering with the computation of deduction as made by the learned AO. The learned Authorised Representative of the assessee argued that as the foreign exchange receipts of the assessee had been reduced, it was only logical that the same should be reduced from the total business receipts of the assessee as well. Various High Court judgments and Tribunal decisions relied upon by the assessee have been rendered in the context of s. 80HHC that for the purpose of working out export profits of the assessee, the amount of excise duty included in the domestic turnover should be excluded. Accordingly, the same a r e reduced from gross receipts in convertible foreign exchange that the assessee is considered to be entitled to and deduction is granted only in respect of net receipts in foreign currency.


S.C. Tiwari, A.M.: These two appeals have been filed by Revenue on 20th May, 2002 against orders of learned CIT(A)-VII, New Delhi, dt. 27th Feb., 2002 and 1 1 t h Feb., 2002, respectively in case of assessee in relation to assessment orders under s. 143(3) for asst. yrs. 1996-97 and 1998-99, respectively. only point of dispute in these two appeals relates to correct method of calculation of deduction under s. 80HHD available to assessee. Facts of case leading to this dispute, briefly, are that assessee is engaged in business of travel agent and tour operator. assessee is eligible to deduction under s. 80HHD in relation to its receipts in convertible foreign exchange on account of services provided to foreign tourists. amounts in foreign exchange collected by assessee included amounts payable to hotels for boarding and lodging of foreign tourists. In accordance with provisions of sub-s. (2A) of s. 80HHD, assessee issued certificate in Form 10CCEA to hotels of amounts paid to them in Indian currency obtained b y conversion of foreign exchange received from group of foreign tourists. T h e assessee s gross foreign exchange receipts of Rs. 6,72,89,350 were accordingly reduced by sum of Rs. 2,51,64,250 being amount in relation to which assessee had issued 10CCEA certificates. In assessment order, AO while reducing assessee s gross receipts in convertible foreign exchange by sum of Rs. 2,51,64,250, he did not reduce same amount from total receipts of business of assessee from domestic sales as well as foreign tourists. learned AO accordingly, worked out deduction under s. 80HHD at Rs. 15,08,969 only for asst. yr. 1996-97. On assessee s appeal, learned CIT(A) held that sum of Rs. 2,51,64,250 was required to be reduced both from numerator as well as denominator. He, accordingly, worked out deduction under s. 80HHD at Rs. 42,85,325. Aggrieved by that order, Revenue is in appeal before us. During course of hearing before us, learned Departmental Representative argued that there was no warrant in language of provisions of s. 80HHD(3) to reduce total receipts of business of assessee by amounts for which assessee had issued 10CCEA certificates. That being so, learned CIT(A) erred in interfering with computation of deduction as made by learned AO. learned Authorised Representative of assessee argued that as foreign exchange receipts of assessee had been reduced, it was only logical that same should be reduced from total business receipts of assessee as well. In support of these contentions, learned counsel for assessee relied upon judgments in CIT vs. Sudarshan Chemicals Industries Ltd. (2000) 163 CTR (Bom) 596: (2000) 245 ITR 769 (Bom); CIT vs. Chloride India Ltd. (2002) 178 CTR (Cal) 432: (2002) 256 ITR 625 (Cal); CIT vs. Wolkem India Ltd. (2002) 178 CTR (Raj) 301 and CIT vs. Wheels India Ltd. (2005) 197 CTR (Mad) 284. learned counsel also relied upon decision of Tribunal, Calcutta in Chloride India Ltd. vs. Dy. CIT (1995) 53 ITD 180 (Cal) and decision of Special Bench of Tribunal in IFB Agro Industries Ltd. vs. Dy. CIT (2003) 78 TTJ (Cal)(SB) 177: (2002) 83 ITD 96 (Cal)(SB). learned counsel for assessee further argued that if different course was adopted that would result into absurd situation. Hence, following judgment of Hon ble Supreme Court in CIT vs. J.H. Gotla (1985) 48 CTR (SC) 363: (1985) 156 ITR 323 (SC) at p. 339, basis followed by learned CIT(A) should be upheld so as to avoid absurd results. We have carefully considered rival submissions. Various High Court judgments and Tribunal decisions relied upon by assessee have been rendered in context of s. 80HHC that for purpose of working out export profits of assessee, amount of excise duty included in domestic turnover should be excluded. In our opinion, case of assessee is on better footing. In case of assessee, being tour operator, amounts charged from tourists include amounts payable to hotels for boarding and lodging of tourists. As per provision of sub-s. (2A) of s. 80HHD, such receipts belong to hotels and not to tour operator. Accordingly, same r e reduced from gross receipts in convertible foreign exchange that assessee is considered to be entitled to and deduction is granted only in respect of net receipts in foreign currency. That being so, it is difficult to understand as to how such amounts for which assessee issued certificates under Form 10CCEA should be treated as belonging to assessee as tour operator for purpose of total business receipts of assessee. It is settled legal position that so as to work out proportionate amount correctly, both numerator as well as denominator should be found out on uniform basis. There is detailed discussion in this respect in decision of Tribunal, Calcutta in Chloride India Ltd. s case (supra). In our opinion, legal position is more clear in case of tour operator because exclusion of payments to hotels, etc., is provided for in statute itself by sub-s. (2A) of s. 80HHD. We, therefore, do not see much room for view other than that adopted by learned CIT(A). We uphold same and dismiss these appeals filed by Revenue. *** DEPUTY COMMISSIONER OF INCOME TAX v. LOTUS TRANS TRAVELS (P) LTD.
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