TMI Blog2021 (8) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, these items are to be deleted from the gross total income of the assessee, then the quantification under Section 80HHB should have been done correspondingly. We notice from the order of Commissioner dated 01.09.2005 (Annexure-I) that a different reasoning is adopted in analyzing the controversy and the conclusion reached therefrom could not be supported from the record. CIT (Appeals) erred in appreciating the effect order and consequential deduction and quantification under Section 80HHB . The Revenue has made out a case and we answer the questions of law in favour of the Revenue and against the assessee. This Court records that the deduction under Section 80HHB quantifying order dated 28.07.2003 is correct and ought not to have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made by the Assessing Officer and CIT (Appeals). The Revenue filed I.T.A. No.301/2009 and this Court by order dated 05.07.2021 dismissed the appeal filed by the Revenue. The narrative has bearing on the consideration of the question of law taken up for consideration by us in the Tax Appeal. The circumstances are that vide order dated 11.03.1999 made under Section 143(3) of the Act, the Assessing Officer determined the total income of assessee at ₹ 21,56,52,890/-. The Assessing Officer for determining income of assessee dis-allowed the claim of loss on revaluation of bonds amounting to ₹ 6,04,75,000/-, loss amounting to ₹ 43,30,000/- towards sale of government Bonds and declined deduction claimed under Section 80HHB amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2002 was prior to the decision of Income Tax Appellate Tribunal in I.T.A. No.47/Coch/2000. On 17.06.2003 the appeal filed by the assessee was allowed, substantial relief granted and the Tribunal accepted the case of assessee that receipt of government bond as against deferred payment is a substitute to receivables, the assessee is entitled to actual loss on sale of government bond and notional loss on revaluation of government bonds, treating them as current assets is permissible. Thus, the addition made by the Assessing Officer amounting to ₹ 6,04,75,000/- and ₹ 43,30,000/- is deleted and an effect order has to be made. The Assistant Commissioner, through order in Annexure-C issued the effect order, firstly recomputed the gros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng effect to the CIT (As)'s order i.e., at ₹ 10,06,26,590/- instead of ₹ 7,46,50,647/-. 2.3 The Revenue and the assessee filed appeals before the Income Tax Appellate Tribunal to the extent of relief granted under Section 80HHB, which was confirmed by the Appellate Tribunal as well. Hence, the Tax Appeal under Section 260A of the Income Tax Act at the instance of the Revenue. 3. The appeal was admitted on the following substantial questions of law: 1. Whether, on the facts and in the circumstances of the case and also in view of the loss arising out of the reduction in the value of the bonds allowed by the Tribunal in its earlier order dated 17.06.2003: i) is not the Assessing Officer right in law in reducing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated 15.02.2002. The said order was made prior to the decision of the Tribunal dated 17.06.2003. In other words, upon the decision rendered by the Tribunal, the assessee is entitled to claim loss on revaluation of current assets and corresponding thereto the gross total income determined as ₹ 21,38,66,220/- stands reduced by deducting loss on revaluation of assets, loss on sale of bonds, then the gross total income is not ₹ 21,38,66,220/- but ₹ 14,93,01,293/-. Therefore, the eligibility since is not questioned by the Revenue, the quantum of granting ₹ 10,06,26,590/- is illegal and unavailable in the facts and circumstances of the case. He argues that the effect order dated 28.07.2003 of the Deputy Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee since is successful in its claim on loss of sale and revaluation of bonds, which are one of the items added by the Assessing Officer in the effect order, this loss will have to be correspondingly given effect to, thereafter the gross total income is determined and thereon quantification undertaken. From the perspective of admitted circumstances, he could not convince us on the errors in the order of CIT (Appeals) and the Tribunal. 6. We appreciated the submissions and perused the record. Question Nos.1 and 2 7. The CIT (Appeals) in the order dated 27.12.1999 set aside the addition under Section 80HHB and directed reexamination of assessee s entitlement to deduction under Section 80HHB. The Assessing Officer accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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