2015 (9) TMI 1539 - HC - Income Tax

Computation of deduction u/s 10A - Whether Tribunal was justified holding that there was nothing on record to show that the profits arrived by the assessee in respect of the 10A unit carrying on the business of manufacturing of sewing machine needles was not in normal course of business and that the abnormally high profit was due to extraordinary arrangement between the assesee and the German Company entered into only with a view to boost the profits of the assessee and therefore allowing deduction ? - Held that - The question as proposed stands concluded against the Appellant Revenue by the decision of this Court for the Assessment Year 2004-05 2012 (9) TMI 407 - BOMBAY HIGH COURT and AY 2005-06 2015 (6) TMI 1044 - BOMBAY HIGH COURT wherein held Section 10A is a provision which is in the nature of a deduction and not an exemption - the deduction under Section 10A has to be given effect to at the stage of computing the profits and gains of business - Section 80B(5) defines for the purposes of Chapter VI-A gross total income to mean the total income computed in accordance with the provisions of the Act before making any deduction under the Chapter - Decided against revenue

Summary

Issues:
- Appeal challenging the order of the Income Tax Appellate Tribunal for Assessment Year 2007-08
- Substantial question of law regarding profits of the assessee in the manufacturing business

Analysis:
The judgment delivered by the High Court of Bombay pertains to an appeal under Section 260A of the Income Tax Act, 1961, challenging the order passed by the Income Tax Appellate Tribunal for the Assessment Year 2007-08. The main issue raised by the Revenue was whether the Tribunal was correct in allowing a deduction of a substantial amount based on the profits derived by the assessee in the manufacturing business of sewing machine needles. The Revenue contended that the abnormally high profit was a result of an extraordinary arrangement between the assessee and a German Company, solely aimed at boosting the profits. The Court noted that a similar issue had been decided against the Revenue in previous cases for the same assessee. Therefore, the Court concluded that the proposed question did not give rise to any substantial question of law based on the precedents set in earlier judgments.

The learned Counsel representing the Revenue acknowledged that the question raised had already been addressed in previous decisions by the Court concerning the same assessee for different assessment years. The Court referred to its orders dated 4th September 2012 and 24th June 2015, where similar issues were considered, and the Tribunal's decision was upheld. Based on the reasoning and conclusions drawn in those orders, the Court found no merit in entertaining the proposed question as it had already been settled in previous judgments. Consequently, the Court dismissed the appeal, emphasizing that the issue raised did not present any new substantial question of law for consideration.

In conclusion, the High Court of Bombay dismissed the appeal challenging the Tribunal's order for the Assessment Year 2007-08. The Court based its decision on the precedent set in earlier judgments concerning the same assessee and the identical issue of abnormally high profits in the manufacturing business. By affirming the decisions made in previous cases, the Court found no grounds to entertain the substantial question of law raised by the Revenue, ultimately leading to the dismissal of the appeal without any costs being imposed.