ASST. COMMISSIONER OF INCOME TAX. CIRCLE 4,BARODA vs. VIPRO CHEMICALS PVT. LTD.

Facts

The revenue, Assistant Commissioner of Income Tax, Circle 4, has appealed against an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench 'A', dated August 18, 2006. The appeal pertains to Assessment Year 2002-03. The dispute concerns whether sums relatable to sales tax and excise duty should be included in the total turnover for computing profits derived from exports to claim a deduction under Section 80HHC of the Income Tax Act, 1961. The Assessing Officer held that these receipts should be included, but the CIT (Appeals) reversed this, and the ITAT upheld the CIT(A)'s order. The High Court admitted the appeal for consideration of a substantial question of law.

Held

The High Court held that the substantial question of law raised in the appeal was required to be answered in favour of the assessee. The Court referred to its own prior decision in Tax Appeal No. 678 of 2006, dated March 19, 2014, which had answered an identical question in favour of the assessee. In that earlier judgment, the Court had relied on the Supreme Court's decision in CIT vs. Lakshmi Machine Works and its own subsequent decision in CIT vs. Pogagen AMP Nagarsheth Powertronics Ltd. The Court found no reason to elaborate further as the issue had already been settled. Consequently, the impugned judgment and order passed by the Tribunal were confirmed, and the Tax Appeal was dismissed. The question was answered in the affirmative, meaning against the appellant-revenue and in favour of the assessee.

Key Issues

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in holding that sums relatable to sales tax and excise duty do not form part of the total turnover for the purpose of computing profits derived from export for claiming benefit under Section 80HHC of the Income Tax Act, 1961? Assessee's Contentions: The assessee argued that the issue of excise duty for total turnover computation under Section 80HHC arose prior to the introduction of Section 145A. Therefore, the issue is covered in their favour by the Supreme Court's judgment in CIT vs. Lakshmi Machine Works [2007] 290 ITR 667 (SC). Furthermore, even post-amendment by Section 145A, this Court, in CIT vs. Pogagen AMP Nagarsheth Powertronics Ltd. (dated December 3, 2013), held the issue in favour of assessees. Revenue's Contentions: The revenue's learned advocate was not in a position to dispute the assessee's submissions or point out any contrary decision.