A.C.I.T. vs. MULTIPLE EXPORTS

Facts

The Revenue filed an appeal under Section 260A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT) dated October 22, 2003. The appeal was admitted by the High Court of Gujarat on February 28, 2005, with a substantial question of law formulated. The assessee is Multiple Exports, and the appellant is the Additional Commissioner of Income Tax (ACIT). The assessment year(s) are not explicitly stated but the dispute pertains to deduction under Section 80HHC.

Held

The High Court of Gujarat, considering the amendment to Section 80HHC(3) and the submissions of both parties, decided to remand the matter to the Assessing Officer. The Assessing Officer is directed to consider the issue afresh in light of the amended provision and after hearing both sides. The Assessing Officer is to be uninfluenced by the previous observations of the Tribunal and the High Court. The impugned orders of the Tribunal and the CIT(A) are set aside. The principle is that where subsequent legislative amendments impact the issue, and a party concedes the need for reconsideration, a remand is appropriate to allow for a fresh assessment under the amended law.

Key Issues

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in directing the Assessing Officer to allow deduction under Section 80HHC of the Income Tax Act, even though the assessee has not earned any profit from the export of goods or merchandise? (Question of law) Assessee's contentions: Relied on the decision of the Gujarat High Court in CIT vs. Ravi Exports Ltd. [2014] 41 taxmann.com 489 (Gujarat), which held that for Section 80HHC(3) relief, only profit, not entire sales proceeds from DEPB, needs to be considered for computing the deduction quantum. Revenue's contentions: Submitted that a legislative amendment to Section 80HHC under the Taxation Laws (Amendment) Act, 2005, now covers the issue against the assessee, and therefore, the matter should be remanded to the Assessing Officer for reconsideration.