COMMR. OF ICOME TAX LDH. vs. M/S BIG BEN EXPORTS EXPORTS LDH.

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ITA/476/2006HC Punjab & HaryanaPHHC01075202200611 December 2007Author: MR. JUSTICE M.M. KUMAR,MR JUSTICE RAKESH KUMAR JAIN2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the matter was no longer res integra and was squarely covered by the judgment of the Hon'ble Supreme Court in the case of Hero Exports v. Commissioner of Income Tax (Central), Ludhiana (Civil Appeal No. 5315 of 2007, decided on 20.11.2007). In that judgment, the issue was answered against the revenue and in favour of the assessee. Consequently, the question of law raised in the instant appeal was also answered against the revenue and in favour of the assessee, following the Supreme Court's precedent. The operative direction was to uphold the Tribunal's order, thereby allowing the assessee's claim for deduction. No issue was expressly left undecided.

What were the facts?

The Revenue, Commissioner of Income Tax, Ludhiana-II, filed an appeal under Section 260A of the Income-tax Act, 1961, against an order dated 27.9.2005 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A'. The appeal pertains to assessment year 2002-03 and challenges the Tribunal's decision to uphold the Commissioner (Appeals)'s order. The Commissioner (Appeals) had allowed the assessee, M/s Big Ben Exports, Ludhiana, to claim a deduction of 10% of expenses related to incentives, miscellaneous income, and brokerage from the indirect cost of goods exported. The amount in dispute is not explicitly stated.

What were the issues?

1. Whether, on the facts and in law, the Tribunal was legally right in upholding the order of the CIT (A) who allowed the assessee’s claim of deduction of 10% expenses relating to incentives, miscellaneous income and brokerage from indirect cost of goods exported without appreciating that no such deduction from indirect cost is provided in Section 80HHC(3) of the Income-tax Act, 1961, thereby no deduction was allowable under Section 80HHC of the Income-tax Act, 1961, at all? (Question of law) Assessee's contentions: Not recorded. Revenue's contentions: The Tribunal was not legally right in upholding the CIT(A)'s order allowing the deduction. The revenue argued that Section 80HHC(3) of the Income-tax Act, 1961, does not provide for such a deduction from indirect costs, making the entire deduction under Section 80HHC impermissible.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80HHC,Section 80HHC(3)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 476 of 2006 Date of Decision: 11.12.2007 Commissioner of Income Tax, Ludhiana-II …Appellant Versus M/s Big Ben Exports, Ludhiana …Respondent CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE RAKESH KUMAR JAIN Present: Mr. Vivek Sethi, Advocate, for Mr. Sanjiv Bansal, Advocate, for the appellant-revenue. Ms. Monika Goel, Advocate, for the respondent-assessee.

JUDGMENT M.M. KUMAR, J. This is revenue’s appeal filed under Section 260A of the Income-tax Act, 1961 (for brevity, ‘the Act’), challenging order dated 27.9.2005, passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘A’, Chandigarh (for brevity, ‘the Tribunal’), in I.T.A. No. 667/Chandi/2005, in respect of assessment year 2002-03. It is claimed that following substantial question of law would emerge for determination of this Court:- Whether on the facts and in law, the Tribunal was legally right in upholding the order of the CIT (A), who allowed the assessee’s claim of deduction of 10% expenses

I.T.A. No. 476 of 2006 relating to incentives, miscellaneous income and brokerage from indirect cost of goods exported without appreciating the fact that no such deduction from indirect cost is provided in Section 80HHC(3) of the Income-tax Act, 1961, thereby no deduction was allowable under Section 80HHC of the Income-tax Act, 1961, at all? After hearing learned counsel for the parties and perusing the record we find that the matter is no longer res integra and the same is squarely covered by the judgment of Hon’ble the Supreme Court in the case of Hero Exports v. Commissioner of Income Tax (Central), Ludhiana (Civil Appeal No. 5315 of 2007, decided on 20.11.2007), wherein the issue has been answered against the revenue and in favour of the assessee. In view of above, the question of law raised in the instant appeal is also answered against the revenue and in favour of the assessee in terms of judgment of Hon’ble the Supreme Court in the case of Hero Exports (supra). (M.M. KUMAR) JUDGE (RAKESH KUMAR JAIN) December 11, 2007 JUDGE Pkapoor 2

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