TMI Blog1999 (4) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... appealed to the CIT(A) and submitted that sub-clauses (i) and (ii) relate to the deduction to be worked out separately and independently. Sub-clause (i) provides formula for computing the profits derived from export of manufactured goods, whereas sub-clause (ii) provides the manner in which the profits derived from export of trading goods are to be computed. It was submitted that nowhere in sub-section (3) of section 80HHC or in the clause (c) thereof, is mandated that the loss computed under one sub-clause is required to be set off against the profit as computed under the other sub-clauses. Even on merit, the loss on export of trading goods could not be reduced from the manufacturing export profit. It was further submitted that in any event, it was a debatable issue. Reliance was placed on the CBDT Circular No. 689 dated 24-8-1994 and the Bombay High Court decision in the case of Khatau Junkar Ltd. v. K.S. Pathania [1992] 196 ITR 55/61 Taxman 157. Reliance was further placed on the following decisions: (i) Tanna Exports v. M.G. Kamat [1993] 202 ITR 219 (Bom.). wherein it was held that recalculation of relief under section 80HHC is not permissible under section 143(1)(a). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputed profits derived from the export of manufactured goods are, say, Rs. 100 and the computation in respect of export of traded goods results into a loss of, say, Rs. 50, each of these sums having been computed by independent mechanism, then, the assessee gets relief in respect of the profit of Rs. 100 derived from export of manufactured goods and the loss that is suffered in the export of traded goods will have to be simply ignored. According to the learned counsel, neither the text of the Law nor the intention is capable of providing any different answer. In support of this contention, the learned counsel relied upon the decision of the Cochin Bench of the Tribunal in the case of A.M. Moosa and the decision of the Chandigarh Bench of the Tribunal in the case of Avon Cycles Ltd. 5. Without prejudice to the submissions that the claim made by the assessee is an obvious entitlement, based on the Legislative intentment as also the text of the Law, the learned counsel for the assessee made an alternate submission that the matter in question is not free from the possibility of more than one conceivable view point and, therefore, the first proviso to section 143(1)(a) cannot be invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee, given on the basis of adjusted profits, adjusted export turnover and adjusted total turnover. It was however, noticeable that as per column 10 of the same Annexure there was a loss of Rs. 32,59,557 from profits from export of trading goods, computed as per sub-clause (ii) of clause (c) of sub-section 3 of Section 80HHC. As the loss from the export of trading goods was more than the profits from export of manufactured goods there being net loss, the assessee was not eligible to deduction under section 80HHC. Thus, according to the learned D.R. it was clear from the face of the return and documents filed along with it, i. e., the audit report under section 80HHC that the assessee was not eligible for the deduction. The same had been disallowed by way of adjustment in the intimation issued by the Assessing Officer. The learned D.R. drew our attention to the jurisdictional decision of the Bombay High Court in the case of Khatau Junkar Ltd. wherein at the end of 2nd para on page 71 of the report, it has been held that the Assessing Officer can disallow the claim for deduction if he was satisfied on the basis of the material which was before him that the assessee was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) was to mean that issuing of notice under section 143(2) shall necessarily cause prejudice to section 143(1)(a) of the Act. This is a far fetched interpretation of the statute, to say that whenever in a provision, it is not provided that the provision is without prejudice to some other provisions of the statute, necessarily a prejudice is caused against the latter provisions. He drew our attention to the judgment of the Delhi High Court in the case of Apogee International Ltd. v. Union of India [1996] 220 ITR 248/87 Taxman 198 at page 252-H, wherein it has been held "..... we are unable to read in Chapter XIV, prescribing the procedure for assessment, any prohibition to the issue of intimation under section 143(1)(a)(i) after a notice under sub-section (2) of the section has come to be issued..." The learned D.R. further submitted that in the case of Indian Maize Chemicals Ltd. v. Dy. CIT [1996] the Delhi Bench of the Tribunal [87 Taxman(AT) 298] held that there was no force in the assessee's arguments that having issued notice under section 143 (2) the Assessing Officer could not pass order under section 143(1)(a) of the Act. The learned D.R. further submitted that again the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... good even on merit." The ground taken in second appeal before the Tribunal reads as follows: "The learned CIT(A) erred in upholding the Assessing Officer's action of making prima facie adjustment under section 143(1)(a) in respect of the claim of deduction made under section 80HHC of the I.T. Act." The learned counsel submitted that the amplitude of the ground taken, both in first appeal and second appeal, was sufficiently wide to permit such a plea being taken, which only deals with one aspect of the ground of appeal as the ground taken was comprehensive enough to include pleading of this aspect of the case. 8. We have considered the rival submissions and perused the facts on record. The real question before us is whether it could be reasonably ascertained that there is a possibility of more than one view point on the matter in question. The Hon'ble Bombay High Court in the case of Khatau Junkar Ltd. has held as under: "The use of the phrases 'prima facie admissible' in clause (ii) to the proviso and 'prima facie inadmissible' in clause (iii) to proviso also lend support to this interpretation. In its literal sense, 'prima facie' means on the face of it. Hence, on the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ahd.) 734, to which one of us (Accountant Member) was a party were in favour of the assessee, and the computation made by the assessee was in accordance with the method given in these two cases. The contrary decision cited by the learned D.R. i.e., the decision of the Indore Bench of the Tribunal in the case of Prestige Foods Ltd. is at best a different view point which only strengthens the assessee's case rather than of the Department, that the matter in question is not free from debate. The observation of the learned CIT(A) that the issue stands clinched by the Hon'ble Supreme Court in the case of Cambay Electric Supply Industrial Co. Ltd. is patently wrong because that judgment was under section 80E of the Act as it stood prior to its amendment by Finance (No. 2) Act, 1967. For the purpose of the special deduction permissible thereunder, the balancing charge arising as a result of the sale of old machinery and buildings and worked out in accordance with section 41(2), irrespective of its real character, has to be taken into account and included as income of the business. The Supreme Court further held that the Legislature has deliberately used the expression 'attributable to' ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short term deposits was erroneously included in its total income - Whether Tribunal has jurisdiction to examine a question of law which arises from facts as found by authorities below and having bearing on tax liability of assessee even though such question was not raised before authorities below nor in grounds of appeal but raised by way of additional issue in a forwarding letter - Held, yes (case remanded back to Tribunal for consideration of new grounds on merits)." 11. We also do not agree with the contention of the learned D.R. that the Hon'ble Calcutta High Court had not properly appreciated the correct legal position in the said judgment. He has placed reliance on certain Tribunal judgments and the judgment of the Delhi High Court in the case of Apogee International Ltd. It is well-settled law that the High Court judgment has to be given preference over the Tribunal judgments and the judgment of the Delhi High Court in the case of Apogee International Ltd. is the only High Court which is in favour of the Revenue. It is now well settled that where two views are possible, the one in favour of the assessee should be taken - CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC ..... X X X X Extracts X X X X X X X X Extracts X X X X
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