2002 (12) TMI 50 - HC - Income Tax

1. Whether on the facts and in the circumstances the Tribunal is right in holding that the appellant is not eligible for relief under section 80HHC in respect of the income of Rs. 14, 35, 756 claimed by the appellant as eligible for deduction under section 80HHC? - 2. Whether on the facts and in the circumstances of the case the Tribunal is right in holding that in an assessment under Chapter XIV-B relief under section 80HHC cannot be allowed? - Tribunal had no opportunity to decide the said question. Accordingly the appeal is allowed and the order of the Appellate Tribunal is set aside and the matter is remitted back to the Appellate Tribunal to decide the question whether the assessee is eligible to claim deduction under section 80HHC of the Act on the merits of the case.

Summary

Issues:
1. Eligibility for relief under section 80HHC in block assessment under Chapter XIV-B.
2. Interpretation of section 158BB of the Act regarding deduction under section 80HHC.

Issue 1:
The appellant claimed relief under section 80HHC in a block assessment under Chapter XIV-B of the Act. The Income-tax Appellate Tribunal, relying on section 158BB of the Act, held that the appellant was not eligible for the deduction under section 80HHC as the assessment had to be made only "in accordance with Chapter IV" based on the result of a search, excluding the provisions of Chapter VI-A. The appellant argued that section 158BB was amended retrospectively from July 1, 1995, when Chapter XIV-B was inserted, allowing computation of income "in accordance with the provisions of the Act" instead of the old provision. The court agreed with the appellant's submission, noting that the amendment made section 158BB applicable for determining undisclosed income of the block period, including the provisions of Chapter VI-A. The court held that the Tribunal should assess whether the appellant is eligible for deduction under section 80HHC, remitting the matter back to the Tribunal for a decision on the merits.

Issue 2:
The court addressed the interpretation of section 158BB of the Act in relation to relief under section 80HHC. The retrospective amendment to section 158BB from July 1, 1995, mandated computation of undisclosed income of the block period in accordance with the Act, allowing consideration of provisions in Chapter VI-A. The court emphasized that the amended provision should be applied for determining eligibility for deduction under section 80HHC. The court set aside the Tribunal's order and remitted the matter back for a fresh decision, permitting the parties to present evidence in support of their claims. The court clarified that the Tribunal could refer the matter to the Assessing Officer for further consideration, highlighting the retrospective effect of the amendment and the importance of assessing eligibility for relief under section 80HHC based on the amended provisions.