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2015 (4) TMI 1110 - BOMBAY HIGH COURT

2015 (4) TMI 1110 - BOMBAY HIGH COURT - TMI - Revision u/s 263 - deduction u/s 80 HHC - whether the lease hire charges and refund of duty on export proceeds on other services, received by the assessee was operational income attributable to the business of the Assessee or not ? - Held that:- Commissioner of Income Tax in exercising his powers in revision has sought to revise the same on the ground that the aforesaid income has for the purposes of Section 80 HHC of the Act has to be excluded from .....

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income from other sources merely on the ground that such income is not connected with export business and does not qualify for export business. This view of the Commissioner of Income Tax is not correct in law and the view taken by the Assessing Officer cannot be said to be erroneous. This is for the reason that undisputedly to take care of such contingencies that the parliament has prescribed a formula in Section 80 HHC (3) of the Act to arrive at the profits derived from the export business. T .....

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of profits and gain of business has to be reclassified as income from other sources, then clause (baa) of the explanation to Section 80 HHC of the Act would be rendered redundant. This is for the reason that then there would be no occasion to reduce the profits and gains of business by 90% of any income which falls therein. It is well settled principle of law that a statute should not be so interpreted that any part of statute is rendered redundant. Besides, in any view of the matter, the view .....

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ORAL JUDGMENT : These two appeals filed under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') have been filed against two orders of the Income Tax Appellate Tribunal (hereinafter referred to as 'I.T.A.T.') both dated 30 December 2005 passed for assessment year 1995-1996 and 1996-1997. 2. Both these appeals were admitted on 27 November 2006 on the following common substantial question of law: Whether on the facts an .....

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gether. However, counsel for the parties state that the issue arising in Income Tax Appeal No.63 of 2006 is different from the issues arising herein. Consequently, at their request Income Tax Appeal No.63 of 2006 is detagged. 3. The counsel for the parties state that the facts in both these appeals are more or less identical and therefore the result in any one of the appeals would govern the other. Accordingly, for the sake of convenience, we shall refer to facts in Tax Appeal No.60 o .....

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C of the Act to the extent of ₹ 23.22 crores. 5. On 1 February 2001, the Commissioner of Income Tax in exercise of his powers under Section 263 of the Act sought to revise the order dated 4 February 1999 passed under Section 143 (3) of the Act. The Commissioner of Income Tax by his order dated 1 February 2001 held that the order dated 4 February 1999 is erroneous for the reason that while computing deduction under Section 80 HHC of the Act income comprising of hire charges for v .....

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sessment order. 6. Being aggrieved, the appellant has filed appeal to the I.T.A.T. The appellant's contention was that exercise of jurisdiction under Section 263 of the Act by the Commissioner was improper. It was submitted that merely because the Assessing Officer has taken one of the two possible views it cannot be held that the order of the Assessing Officer is erroneous. Besides, the appellant also contended that in case of a composite business such as that carried on by the r .....

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's appeal. It held that in case of composite business, there is no reason to treat income earned on account of lease / hire of vessels / barges etc. as Income from other sources for the purpose of Section 80 HHC of the Act. This is particularly so as the parliament has given a formula to arrive at profits of exports in case of composite business in Sub-section 3 of the Section 80 HHC of the Act. Further I.T.A.T. relied upon the decision of the Apex Court in Malabar Industrial Co. .....

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ave dismissed the appeal without having considered the issue whether or not the income on account of lease / hire of vessels / barges etc. is income from business or income from other sources. It is submitted that the I.T.A.T. failed to deal with the merits of the matter and for that reason the impugned order of the tribunal is not sustainable. 9. As against the above, Mr. Naniwadekar, learned counsel appearing for the respondent - assessee submitted that the impugned order calls for .....

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t sustainable in law. Further, the Apex Court held that the view taken by the Assessing Officer or by the Commissioner has to be on the basis of the law prevailing on the day the view was taken. It is submitted that at the time when the Assessing Officer took a view that the same has to be considered as a part of business income, it could not have been said to be a view which is erroneous in law. Thus on the above account it is submitted that the exercise of the jurisdiction under Section 263 of .....

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income on account of hire/lease of vessels / barges etc. as part of the respondent - assessee business income as it formed a part of its composite business income under the head of profits and gain of business. The Commissioner of Income Tax in exercising his powers in revision has sought to revise the same on the ground that the aforesaid income has for the purposes of Section 80 HHC of the Act has to be excluded from business income and considered as income from other sources. Thi .....

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onnected with export business and does not qualify for export business. This view of the Commissioner of Income Tax is not correct in law and the view taken by the Assessing Officer cannot be said to be erroneous. This is for the reason that undisputedly to take care of such contingencies that the parliament has prescribed a formula in Section 80 HHC (3) of the Act to arrive at the profits derived from the export business. The above formula which enables arriving at the profits attributable to e .....

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