NEXO INDUS. P LTD. vs. C I T

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ITA/975/2008HC Punjab & HaryanaPHHC01081020200802 May 2017Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE RAMENDRA JAIN5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, in view of its order in a related case (ITA No. 271 of 2010), decided to remand the issue relating to deduction under Section 80IB of the Act to the Assessing Officer for re-adjudication after affording an opportunity of hearing to the assessee. Regarding the claim under Section 80HHC, the Court noted that the Assessing Officer and the Tribunal had disallowed it based on the amended provisions of Section 80HHC and Section 28, which were introduced by the Taxation Laws (Amendment) Act, 2005, and the Taxation Laws (Second Amendment) Act, 2006, with retrospective effect. However, the High Court referred to its own decision in 'Guru Nanak Exports' and the Supreme Court's decision in 'CIT vs. Avani Exports', which held that such retrospective amendments were prospective and invalid to the extent they were made retrospective. Therefore, the Court found it appropriate to refer the matter back to the Assessing Officer for fresh examination of the claim under Section 80HHC, keeping in view the latest case law and after hearing the assessee. The appeal was disposed of with both issues being remanded for fresh adjudication.

What were the facts?

The appellant-assessee, Nexo Industries Private Limited, engaged in manufacturing and exporting fasteners, filed its return of income for assessment year 2003-04. The Assessing Officer assessed the income at a higher amount, which was partly allowed by the CIT(A). Both the assessee and the revenue appealed to the Income Tax Appellate Tribunal (Tribunal), which dismissed both appeals. The assessee then filed an appeal before the High Court of Punjab and Haryana under Section 260A of the Income Tax Act, 1961. The appeal concerns claims for deduction under Sections 80HHC and 80IB of the Act, specifically relating to excise duty rebate/refund.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. Whether excise duty rebate/refund, granted under the Central Excise Act, is an export incentive and eligible for deduction under Section 80HHC, as it is not provided under any specific Export Promotion Scheme. 2. Whether the claim for deduction under Section 80HHC should be declined due to a retrospective amendment in the Act concerning the option to choose between duty drawback and DEPB after the event. 3. Whether excise duty rebate/refund, not provided under an Export Promotion Scheme, is an eligible claim for deduction under Section 80IB. The assessee argued that excise duty rebate is an export incentive. The revenue contended that the retrospective amendment to Section 80HHC and related provisions of Section 28 of the Act disentitled the assessee to the deduction, as the assessee failed to provide necessary evidence to justify its claim regarding the option to choose between duty drawback and DEPB. The Tribunal had disallowed the claim under Section 80HHC based on the amended provisions and lack of evidence.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80HHC,Section 80IB,Section 44AB,Section 28

AI-generated summary — verify with the full judgment below

ITA No. 975 of 2008 (O&M) 1

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITA No. 975 of 2008 (O&M)

Date of decision: 2.5.2017 Nexo Industries Private Limited

……Appellant

Vs.

Commissioner of Income Tax, Ludhiana

…..Respondent

CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL

HON’BLE MR. JUSTICE RAMENDRA JAIN

Present: Mr. S.K. Mukhi, Advocate with Mr. Jaswinder Singh,

Advocate for the appellant.

Mr. Z.S. Klar, Senior Standing counsel for the respondent.

Ajay Kumar Mittal,J.

1.

The appellant-assessee has filed the instant appeal under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 2.1.2008, Annexure A.3, passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘A’, Chandigarh (in short, “the Tribunal”) in and ITA No.142/CHANDI/2007, for the assessment year 2003-04, claiming following substantial questions of law:- “I. Whether excise duty rebate/refund, which is given under the Central Excise Act is not an export incentive as it is not given under any Export Promotion Scheme of the Government? Gurbax Singh 2017.05.22 10:39

ITA No. 975 of 2008 (O&M) 2

II. Whether on the true and correct interpretation of the provision of Section 80HHC the claim be declined in pursuance to retrospective amendment in the Act relatable to option to be made amongst duty draw back and DEPB after the conclusion of an event? III. Whether on the true and correct interpretation of the provision of Section 80IB, the claim of excise Duty rebate/refund, which is given under the Central Excise Act and not under any Export Promotion Scheme, is an eligible claim?”

2.

A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The assessee is engaged in the business of manufacturing of fasteners and exporting goods. It filed its return of income on 30.11.2003 at an amount of ` 3,55,62,970/- alongwith audited financial statements under Section 44AB of the Act. The case was taken up for scrutiny. After examining the matter, the income of the assessee was assessed at ` 5,09,19,102/- vide order dated 24.2.2006, Annexure A.

1.

Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 12.10.2006, Annexure A.2, the appeal was partly allowed. Not satisfied with the order, both the assessee and the revenue filed appeals before the Tribunal. Vide order dated 2.1.2008, Annexure A.3, the Tribunal dismissed both the appeals. Hence the instant appeal by the appellant-assessee.

3.

ITA No. 975 of 2008 (O&M) 3 ITA No. 975 of 2008 (O&M) 4 relevant findings recorded by the Tribunal in this regard read thus:- “We have given our careful consideration to the rival contentions. In our considered view, the claim of the assessee has been disallowed by the Assessing Officer for want of evidence. The Assessing Officer has decided this issue vide Paras 3.6 to 3.6. 3. The Assessing Officer has referred to the amended provisions of Section 80HHC and insertion of clause (iiid) and (iiie) to Section 28 of the Income Tax Act 1961 as amended by the Taxation Laws (Amendment) Act, 2005. In para 3.6.3, the Assessing Officer has recorded a finding of fact that the assessee has failed to bring the necessary evidence on record for justification of its claim into account the increase of 90% of export incentive on account of Excise Duty Rebate/Refund for the purpose of calculation of deduction under Section 80HHC. The Commissioner of Income Tax(A) has also confirmed the view of the Assessing Officer vide para 5.4 of his order.”

6.

In view of the above, it is considered appropriate that the matter is referred back to the Assessing Officer for examining the matter afresh in respect of claim under Section 80HHC of the Act as well.

Accordingly both the issues relating to deduction under Section 80HHC and also under Section 80IB of the Act shall be readjudicated by the Assessing Officer keeping in view the latest case law on the point after

ITA No. 975 of 2008 (O&M) 5

hearing the assessee by passing a speaking order in accordance with law.

The appeal stands disposed of in the manner indicated hereinbefore.

(Ajay Kumar Mittal)

Judge

May 02, 2017

(Ramendra Jain)

‘gs’

Judge Whether speaking/reasoned

Yes

Whether reportable

Yes

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