CIT, AAYAKAR BHAWAN, KARNAL vs. M/S FLORA EXPORTS SEC-29,HUDA, PANIPAT

ITA/510/2010HC Punjab & HaryanaPHHC01093452201022 November 2010Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL3 pages
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What were the facts?

The assessee, M/s Jai Bharat Gum & Chemical Ltd., engaged in the manufacture, trading, and export of guar gum, claimed a deduction under Section 80 HHC of the Income Tax Act, 1961, for the assessment year 1997-98. The claim was for an amount of Rs. 23,45,599/- received as compensation from M/s Pepsico India Holding (P) Ltd. for the non-issue of a disclaimer certificate. The Assessing Officer disallowed the deduction. The CIT(A) allowed the deduction, holding that the compensation did not fall under Section 28(iiia), (iiib), or (iiic) of the Act. The Income Tax Appellate Tribunal dismissed the revenue's appeal. The revenue has filed an appeal before the High Court against the Tribunal's order.

What did the High Court hold?

The High Court held that the question of law raised by the revenue had to be answered in its favour and against the assessee. The Court found that the assessee's counsel was unable to demonstrate how the compensation received would fall under Section 80 HHC of the Act. The Court agreed with the revenue's submission that merely because the income was business income and did not fall under Section 80 HHC(4B) explanation (baa)(1) (which refers to income covered under Section 28(iiia), (iiib), (iiic)), it was not sufficient to attract Section 80 HHC. The Court emphasized that Section 80 HHC is specifically for income derived from export, and the compensation received was not shown to be of that nature. Therefore, the deduction under Section 80 HHC was not admissible. 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 learned ITAT was justified in holding that deduction under Section 80 HHC is admissible on the amount of compensation of Rs. 23,45,599/- received by the assessee from M/s Pepsico India Holding (P) Ltd., in lieu of loss arising from tax payment in the absence of a disclaimer certificate? Assessee's contentions: The judgment does not record any specific contentions made by the assessee's counsel before the High Court, other than a general submission that the income was business income and did not fall under Section 80 HHC(4B) explanation (baa)(1). Revenue's contentions: The revenue argued that the mere fact that the compensation did not fall under Section 28(iiia), (iiib), or (iiic) was insufficient to attract Section 80 HHC. Section 80 HHC is applicable only to income derived from export, as specified therein, and the compensation received was not shown to be covered by Section 80 HHC as it was not from export. The revenue contended that any exemption must specifically fall within the four corners of the provision, and the burden of proof lies on the assessee.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 80 HHC,Section 28(iiia),Section 28(iiib),Section 28(iiic),Section 80 HHC(4B)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

Date of decision: 12.10.2010 Commissioner of Income Tax. -----Appellant. Vs. M/s Jai Bharat Gum & Chemical Ltd. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Sanjeev Kaushik, Sr. Standing Counsel for the Revenue. Mr. Avneesh Jhingan, Advocate for the Assessee. --- ADARSH KUMAR GOEL, J.

1.

This appeal has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order dated 21.9.2004 of the Income Tax Appellate Tribunal, New Delhi in I.T.A. No.3319/D/01 for the assessment year 1997-98 proposing to raise following substantial question of law:- “Whether on the facts and in the circumstances of the case, ld. ITAT was justified in holding that deduction u/s 80 HHC is admissible on the amount of compensation of Rs.23,45,599/- received by the assessee from M/s Pepsico India Holding (P) Ltd., in lieu of loss arising from tax payment in the absence of disclaimer certificate.”

2.

The assessee derived income from manufacture, trading, and export of guar gum. It claim

The order continues below.

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