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Commissioner of Income Tax, Chennai Versus M/s. Orient Express

2015 (7) TMI 808 - MADRAS HIGH COURT

Entitlement to deduction on profit from sale of DEPB from its total income - whether ITAT erred in allowing the claim without fulfilling the conditions prescribed in the 3rd proviso to Section 80HHC? - Held that:- The Revenue, on the premise that the decision of the Gujarat High Court in the case of Avani Exports & Ors. V. Commissioner of Income Tax & Ors [2012 (7) TMI 190 - GUJARAT HIGH COURT] is pending before the Supreme Court has filed the present Tax Case (Appeals). Now the Supreme Court [2 .....

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e Supreme Court, we do not find any reason to entertain these appeals. - Decided in favour of assessee. - Tax Case (Appeal) Nos. 298 and 299 of 2015 - Dated:- 7-7-2015 - R. Sudhakar And K. B. K. Vasuki,JJ. For the Appellant : Mr. T. Ravikumar Standing Counsel for Income Tax JUDGMENT (Judgment of the Court was delivered by R. Sudhakar,J.) The above Tax Case (Appeals) are filed by the Revenue as against the order of the Income Tax Appellate Tribunal raising the following substantial questions of l .....

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entitled to deduction of profit from sale of DEPB license from its total income in the light of Explanation (baa) to Section 80HHC and Section 28(iiie) of the Income Tax Act?" 2. The assessee is engaged in the business of manufacture of leather and leather garments. The assessment in these cases relate to the assessment years 1999-2000 and 2003-2004 and for the said assessment years, the assessee claimed deduction under Section 80HHC of the Income Tax Act. The Assessing Officer denied the s .....

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case of Avani Exports & Others V. CIT reported in 348 ITR 391 (Guj.), allowed the appeals by directing the Assessing Officer to recompute the deduction. As against the said order of the Commissioner of Income Tax (Appeals), the Revenue preferred appeals before the Income Tax Appellate Tribunal. The Tribunal, following the said decision of the Gujarat High Court, which was relied on by the Commissioner of Income Tax (Appeals), partly allowed the appeal holding as follows: "We have heard .....

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ssessing Officer u/s.80HHC of the Act. However, for computation of deduction, we deem it appropriate to remit the file back to the Assessing Officer. The Assessing Officer shall re-compute the deduction in accordance with the decision rendered in the case of M/s.Avani Exports & Others Vs. CIT (supra). Accordingly, the appeals of the Revenue are partly allowed for statistical purposes." 3. Aggrieved by the order of the Tribunal, the Revenue has filed the present Tax Case (Appeals) raisin .....

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t April 2001 respectively. 6. The dispute arose due to the condition contained in third and fourth proviso to Section 80HHC(3), which mandates satisfaction of two conditions by the assessees whose export turnover is more than ₹ 10.00 crores to claim the benefit under Section 80HHC of the Income Tax Act. This amendment classified the exporters into two categories, i.e., whose export is less than ₹ 10.00 crores and more than ₹ 10.00 crores. The assessee, whose export is more than .....

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ndment came to be challenged in a batch of writ petitions throughout the Country, which got transferred to the Gujarat High Court. The Gujarat High Court in the case of Avani Exports & Ors. V. Commissioner of Income Tax & Ors. reported in (2012) 348 ITR 391 quashed the amendment only to the extent that the operation of the said section could be given effect from the date of amendment and not in respect of earlier assessment years of the assessees, whose export turnover is above ₹ 1 .....

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ssessments have already been concluded. In other words, in this type of substantive amendment, retrospective operation can be given only if it is for the benefit of the assessee but not in a case where it affects even a fewer section of the assessees. 27. We, accordingly, quash the impugned amendment only to this extent that the operation of the said section could be given effect from the date of amendment and not in respect of earlier assessment years of the assessees whose export turnover is a .....

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