C.I.T.PATIALA vs. M/S RAI BAHADUR KNITTING WORKS

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ITR/300/1995HC Punjab & HaryanaPHHC01032367199505 October 2009Author: MR. JUSTICE ADARSH KUMAR GOEL,MRS JUSTICE DAYA CHAUDHARY2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court heard the learned counsel for the revenue. The revenue argued that for Section 80HHC, the 'previous year' should encompass the entire year, irrespective of separate assessments made due to a change in partnership. While the court acknowledged that this submission merited consideration, it noted that the scheme of the provision had undergone substantial changes and the question might not arise frequently. Consequently, the Court decided to leave the question open. The reference was disposed of accordingly, without a definitive ruling on the merits of the issue.

What were the facts?

The assessee, M/s Rai Bahadur Knitting Works, Ludhiana, sought deduction under Section 80HHC for assessment year 1985-86. A partner died on March 15, 1984, and his widow joined as a partner from March 16, 1984, to March 31, 1984. The Assessing Officer (AO) made separate assessments for the periods up to March 15, 1984, and from March 16, 1984, to March 31, 1984, under Section 188 of the Income-Tax Act, 1961. For assessment year 1985-86, the assessee claimed 80HHC benefit by comparing its export turnover with the previous year, which included the 15-day period from March 16, 1984, to March 31, 1984. The AO rejected this, stating the entire previous year's turnover should be considered. The CIT(A) allowed the deduction, treating the 15-day period as the previous year, a view upheld by the ITAT.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the order of the CIT(A) allowing deduction under Section 80HHC(1)(b)? Assessee's contentions: The assessee argued that since separate assessments were made for the period from March 16, 1984, to March 31, 1984, this period could be treated as the previous year for the purpose of calculating the export turnover eligible for deduction under Section 80HHC. Revenue's contentions: The revenue contended that for the purposes of Section 80HHC, the 'previous year' should refer to the whole of the previous year, even if separate assessments were made for different periods due to a change in partnership. The revenue argued that this submission merits consideration.

Which sections of the Income-tax Act were involved?

Section 80HHC,Section 188,Section 154

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

I.T.R. No. 300 of 1995 Date of decision: 5.10.2009. The Commissioner of Income-tax, Patiala. ......Applicant. Vs. M/s Rai Bahadur Knitting Works, Ludhiana ...Respondent CORAM:- HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MRS.JUSTICE DAYA CHAUDHARY PRESENT: Mr.Rajesh Sethi, Standing Counsel for revenue. None for the assessee. **** ADARSH KUMAR GOEL, J. (Oral)

1.

Following question of law has been referred for opinion of this Court by the Income-Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dated 27.5.1993 in I.T.A. No.409/Chandi/1989 relating to assessment year 1985-86: “Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the order of the CIT(A) allowing deduction under Section 80HHC(1)(b)?”

2.

One of the partners of the assessee died on 15.3.1984 and in his place his widow was taken as a partner during the period from 16.3.1984 to 31.3.1984. The Assessing Officer made separate assessment for the Assessment Year 1984-85 in respect of period up to 15.3.1984 and period from 16.3.1984 to 31.3.1984. This was done in view of provisions of I.T.R. No. 300 of 1995 [2] Section 188 of the Income-Tax Act, 1961 (for short,”the Act”).

3.

For the next assessment year i.e. 1985-86, the assessee sought benefit under Section 80HHC of the Act by comparing its export turn over with previous year comprising of 15 days from 16.3.1984 to 31.3.1984. The said benefit was sought by moving application under Section 154 of the Act. The Assessing Officer rejected the claim on the ground that even though, technically, two separate assessments were made, export turnover of the previous year, to be taken into account for comparison, has to be for the whole year. The CIT(A), however, held that since there was separate assessment for the period from 16.3.1984 to 31.3.1984, this period could be treated as previous year. This view has been upheld by the Tribunal.

4.

We have heard learned counsel for the revenue.

5.

Learned counsel for the revenue submits that for purposes of Section 80 HHC, the words 'previous year' should refer to whole of the previous year even if separate assessments were made for the period prior to death of a partner and period subsequent thereto. Even though this submission merits consideration, having regard to the fact that scheme of the provision has itself undergone substantial change and this question may not frequently arise, we leave the question open.

6.

The reference is disposed of accordingly. (ADARSH KUMAR GOEL) JUDGE (DAYA CHAUDHARY) October 5, 2009

JUDGE raghav

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