C I T vs. DEE KAY KNITWEARS

ITA/562/2007HC Punjab & HaryanaPHHC01073272200718 July 2013Author: MR. JUSTICE DR. BHARAT BHUSHAN PARSOON,MR. JUSTICE RAJIVE BHALLA2 pages
AI SummaryDismissed

What were the facts?

The Revenue (Commissioner of Income Tax-I, Ludhiana) filed an appeal before the High Court challenging an order dated April 9, 2007, passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench-A. The appeal was admitted on two questions of law. The assessee is Dee Kay Knitwears. The assessment years are not explicitly stated. The dispute pertains to the computation of deduction under Section 80HHC of the Income Tax Act, 1961. The ITAT's order was challenged regarding the treatment of insurance claims, exchange rate fluctuations, and premium on export quota sales.

What did the High Court hold?

The High Court held that both questions of law were decided against the Revenue and in favour of the assessee. The Court noted that question (i), concerning insurance claims and foreign exchange fluctuation, had been answered against the Revenue in separate appeals (ITA No.165 of 2007 and ITA No.539 of 2008) by orders of even date. Similarly, question (ii), relating to premium on export quota sales, had been decided against the Revenue and in favour of the assessee in another appeal (ITA No.172 of 2006) by an order of even date. Based on the agreement of the counsel for the parties, the High Court answered both questions in terms of the aforementioned separate orders, meaning they were decided in favour of the assessee. The appeal filed by the Revenue was accordingly dismissed.

What were the issues?

1. Whether on the facts and law, the ITAT was justified in holding that insurance claim and exchange rate fluctuation were not 'other receipts' and thus 90% of such receipts could not be reduced from 'profit of business' under clause (baa) of Explanation below Section 80HHC(4C) of the I.T. Act? (Question of law) 2. Whether on the facts and in law, the ITAT was justified in considering 90% of the premium on export quota sales under the 1st proviso to Section 80HCC(3) for computing deductions under Section 80HHC of the I.T. Act, when the same was not in the nature of receipts covered under Sections 28(iiia), 28(iiib) and 28(iiic) of the I.T. Act? (Question of law) Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: The Revenue contended that insurance claims and exchange rate fluctuations were 'other receipts' and that 90% of these should be reduced from the profit of business under Section 80HHC(4C)(baa). The Revenue also argued that premium on export quota sales should be considered under the 1st proviso to Section 80HCC(3) for computing deductions under Section 80HHC, as it was not covered by Sections 28(iiia), 28(iiib), and 28(iiic).

Which sections of the Income-tax Act were involved?

Section 80HHC,Section 80HHC(4C),Section 28(iiia),Section 28(iiib),Section 28(iiic),Section 80HCC(3)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: July 18, 2013. Commissioner of Income Tax-I, Ludhiana ... Appellant v. Dee Kay Knitwears ... Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present: Shri Rajesh Katoch, Advocate, for the appellant. Shri Sunil Kumar Mukhi, Advocate for the respondent. Rajive Bhalla

, J. (Oral): The revenue has filed this appeal challenging order dated 9.4.2007 passed by the Income Tax Appellate Tribunal, Chandigarh Bench-A, Chandigarh. The appeal was admitted on the following questions of law:- “(i) Whether on the facts and law, the Hon'ble Income Tax Appellate Tribunal was justified in holding that insurance claim and exchange rate fluctuation were not in the nature of 'other receipts' and 90% of such receipts could not be reduced from 'profit of business' under clause (baa) of Explanation below Section 80 HHC(4C) of I.T. Act? (ii) Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was justified in considering 90% of the premium on export quota sales under 1st proviso

The order continues below.

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