1 itxa1126.10.sxw IN THE HIGH COURT OF JDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1126 OF 2010 The Commissioner of Income Tax-5 ...Appellant. Vs. M/s Classic Diamonds (I) Ltd. ..Respondent. Mr. Suresh Kumar for the Appellant. Mr. Mr. Prakash Shah i/'by PDS Legal for the Respondent. CORAM : J.P. DEVADHAR AND A.A. SAYED, JJ. DATE : 8TH JULY, 2011. P.C. 1. Heard. 2. Admit on the following substantial questions of law: "(a) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in confirming the order of CIT(A) and directing the AO to allow netting of interest u/s 80HHC? (b) Whether on the facts and circumstances of the case and in law, the Hon'ble Tribunal is correct in law in treating income earned by the assessee arising out of cancellation of forward contracts of foreign exchange as 2 itxa1126.10.sxw income arising out of export activity for the purpose of computing deduction u/s 80 HHC? (c) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is correct in law in allowing deduction u/s 80HHC to the Assessee in respect of income amounting to Rs. 5,14,08,64/-, attributable to urealised export proceeds when the mandatory conditions laid down u/s 80 HHC(4) inserted w.e.f. 01-04-2004? (d) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is correct in law in allowing application of circular No.91 dated 1.4.2003 issued by RBI for computing deduction u/s 80HHC in view of the fact that the circular would apply only to assessees claiming deduction u/s 10A and not to assessees claiming deduction u/s 80HHC disregarding the fact that allowing of deduction u/s 10A is not hit on account of belated realization of sale proceeds in case the approval of competent authority has been obtained which is not permitted u/s 80HHC in view of section 155(13) which allows subsequent enhancement of deduction on belated realization of export proceeds? 3. As regards first question (a) is concerned, learned Counsel for the parties state that the question is answered in favour of the revenue by the decision of this Court in the Case of CIT Vs. Asian Star Ltd., reproted in 326 ITR 56. Accordingly, the first question (a) is answered in favour of the revenue against the assessee. 4. As regards the second question (b) is concerned, the Tribunal has 3 itxa1126.10.sxw allowed the claim of the assessee by following its decision in the case of Assessee A.Y. 2003-2004 that the revenue has accepted the said decision of ITAT for A.Y. 2003-3004. Hence, second question (b) cannot be entertained. 5. As regards third and fourth questions (c) and (d) are concerned, the grievance of the revenue is that under section 80HHC (2)(a) of the Act the export proceeds are required to be received in or brought into India by the assessee in convertible foreign exchange within a period of six months from the end of the previous year or within such further period as the Competent Authority may allow in this behalf. In the present case, the assessee's unit is situated in SEEPZ area, where no time limit is prescribed for bringing the exports proceeds in convertible foreign exchange to India. In these circumstances, the decision of ITAT in allowing the claim of the assessee in respect of export proceeds realised beyond six months but before the end of the assessment year cannot be faulted. Accordingly the third and fourth questions (c) and (d) cannot be entertained. Hence, Appeal is dismissed. ( A.A. SAYED, J. ) ( J.P. DEVADHAR , J.)