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2020 (1) TMI 870 - HC - Income TaxDeduction u/s 80 HHC - excluding from the total business income the Re-assortment charges and Labour Commission for the purpose of calculating deduction u/s 80 HHC - scope of amendment - Retrospectivity - Tribunal held that such charges are not includeble in business profits for the purpose of computation of special deduction under Section 80HHC accordingly the Appeal was allowed - HELD THAT:- The Assessment Year in question is of importance. The Assessment Year is 1991-92. The Section 80 HHC of the Act was amended with effect from 1 April 1992 and explanation was brought in the same. In the case of K.K. Doshi and Co. v. Commissioner of Income-Tax [2000 (8) TMI 74 - BOMBAY HIGH COURT] an issue arose before this Court whether the service charges constitute business income for the purposes of computing export profits under Section 80HHC. Prior to the amendment export profits included interest, commission, etc., which did not have element of turnover came to be included in the profit and loss account. By way of amended provisions in the Explanation (ba) to Section 80HHC of the Income Tax Act, 1961 it was no longer permissible to do so. The Court opined that there was no nexus between the profits on the one hand and the export activity on the other hand, which was necessary. The question of retrospective operation of the 1991 amendment to Section 80HHC arose for consideration of the Supreme Court in the case of P.R. Prabhakar v. Commissioner of Income-Tax [2006 (7) TMI 121 - SUPREME COURT] and disposed of the Appeal setting aside the order passed in K.K. Doshi (supra) holding that the amendment of 1 April 1992 is prospective in nature. In view of this dicta of the Supreme Court in the case of P.R. Prabhakar (supra) and K.K. Doshi (supra), the foundation of the decision of the Tribunal does not survive and the question of law as framed will have to be answered against the Revenue.
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