COMMISSIONER OF INCOME TAX vs. M/S PREET FORGINGS PVT. LTD.

ITA/534/2008HC Punjab & HaryanaPHHC01080536200810 October 2012Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE GURMEET SINGH SANDHAWALIA3 pages
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What were the facts?

The assessee, M/s Preet Forgings Pvt. Limited, engaged in export and trading, filed its return for AY 2004-05. The Assessing Officer (AO) noted claims for deductions under Section 80HHC and Section 80IB. The AO reduced the deduction under Section 80IB from the business profits before calculating the deduction under Section 80HHC. The assessee appealed to the CIT(A), which directed the AO to allow Section 80HHC deduction without reducing the Section 80IB deduction. The revenue appealed to the ITAT, which dismissed the appeal. The revenue has now filed this appeal under Section 260A of the Income Tax Act, 1961, challenging the ITAT's order.

What did the High Court hold?

The High Court held that the substantial question of law is answered in favour of the revenue and against the assessee. The Court relied on its own previous decision in Asian Exim International v. Commissioner of Income Tax, Jalandhar, Punjab, ITA No.469 of 2010, decided on 18.4.2011. In that case, considering a similar issue, the Court had concluded that Section 80-IA(9) barred a claim for deduction under any other provision of Chapter VI-A if deduction under Section 80I of the Act had been allowed. Further, relying on judgments from the Kerala High Court (Olam Exports (India) Limited) and Delhi High Court (Great Eastern Exports), it was held that while calculating deduction under Section 80HHC of the Act, the deduction under Section 80IB of the Act was required to be reduced from the profits of the business. Therefore, the appeal filed by the revenue was allowed.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Hon'ble ITAT is justified in allowing deduction under Section 80HHC without reducing the deduction under Section 80IB from the profits of the business? (Question of law) Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the CIT(A)'s order, which was upheld by the ITAT, directed that the Section 80HHC deduction should be allowed without reducing the Section 80IB deduction from business profits. Revenue's Contention: The revenue contended that the ITAT was not justified in allowing deduction under Section 80HHC without reducing the deduction under Section 80IB from the profits of the business. The revenue relied on this Court's judgment in Asian Exim International v. Commissioner of Income Tax, Jalandhar, Punjab, ITA No.469 of 2010, decided on 18.4.2011, and the judgments of the Kerala High Court in Olam Exports (India) Limited v. Commissioner of Income Tax, (2010) 34 DTR Judgments 132 and Delhi High Court in Great Eastern Exports v. Commissioner of Income Tax, (2011) 49 DTR Judgments 33.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80HHC,Section 80IB,Section 80I,Section 80-IA(9)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision:10.10.2012 The Commissioner of Income Tax III Ludhiana ...Appellant Versus M/s Preet Forgings Pvt. Limited

...Respondent CORAM: HON'BLE MR.JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE GURMEET SINGH SANDHAWALIA Present: Mr. Rajesh Katoch, Advocate for the appellant. Mr. Pankaj Jain, Advocate for the respondent. Ajay Kumar Mittal,J.

1.

This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 26.12.2007, Annexure A.3 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh (for brevity “the Tribunal”) in ITA No.986/CHANDI/2007, for the assessment year 2004-05, claiming following substantial question of law:- “Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is justified in allowing deduction under Section 80HHC without reducing the deduction under Section 80IB from the profits of the business?”

2.

Briefly, the facts as narrated in the appeal may be noticed. The assessee is a private limit

The order continues below.

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