M/S TECHNIQUE DIABRASIVE INDIA LTD. vs. A.C.I.T.CIRCLE-1,UDAIPUR
What did the High Court hold?
The High Court held that the assessee's argument lacked merit. The primary contention for exemption under Section 80-HH was that Village Bhujda was a backward area as per a Rajasthan Government notification. However, upon perusal of the notification, the Court found that Village Bhujda was not a part of a backward area, thus rendering the exemption unavailable. The Court distinguished the Bombay High Court judgment in Commissioner of Income Tax v. Paul Brothers, stating it was irrelevant as that case dealt with the violation of certain conditions where exemption was still granted. In the present case, the factual position was entirely different, as the appellant was not entitled to any exemption as they were not operating in a backward area. Therefore, the ITAT did not err in law by not allowing the deduction under Section 80-HH.
What were the facts?
The assessee, M/s Technique Diabrasive India Limited, filed appeals before the High Court challenging an order dated July 16, 2008, passed by the Income Tax Appellate Tribunal (ITAT), Jodhpur Bench. The ITAT had denied the assessee exemption under Section 80-HH of the Income Tax Act, 1961, on the grounds that Village Bhujda in Udaipur district was not a notified backward area. The assessee had previously been granted this exemption in earlier assessment years. The appeals were filed by the assessee against the respondent, A.C.I.T., Circle-1, Udaipur.
What were the issues?
1. Whether, in the facts and circumstances of the case, the Tribunal has erred in law in not allowing deduction granted to the appellant under Section 80-HH of the Income Tax Act? Assessee's Contention: The appellant argued that the revenue could not withhold the exemption already granted in prior years without a formal withdrawal. They relied on the Bombay High Court judgment in Commissioner of Income Tax v. Paul Brothers, [1995] 216 ITR 548 (Bombay), asserting that the Assessing Officer should not have denied the exemption claimed, as the benefit had been provided in earlier years. The ITAT, according to the assessee, failed to appreciate this legal preposition. Revenue's Contention: The judgment records no specific arguments from the revenue's side.
Which sections of the Income-tax Act were involved?
Section 80-HH
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
Judgment 01/05/2017
These appeals are before us to examine correctness of the order dated 16.7.2008, passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur in four appeals, arriving at the conclusion that the assessee is not entitled to have exemption as per Section 80-HH of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’) being the village Bhujda in District Udaipur not a part of backward area. This Court on 24.4.2009 formulated a substantial question of law for adjudication in following terms:- “Whether in the facts and circumstances of the case, the Tribunal has erred in law in not allowing deduction granted to the appellant under section 80-HH of the Income Tax Act?” It is submitted by learned counsel appearing on behalf of the appellant that in light of the judgment given by Bombay High Court in Commissioner of Income Tax v. Paul Brothers, reported in [1995] 216 ITR 548 (Bombay), the revenue could have not withheld the exemption already granted to the assessee till withdrawal of the same relief granted in earlier years. As per learned counsel, prior to the assessment years in question the (3 of 4) [ITA-42/2009]
benefit of the provisions of Section 80-HH of the Act of 1961 was given to the appellant assessee and without withdrawing that the Assessing Officer could have not denied for the exemption as claimed. It is asserted that the Income Tax Appellate Tribunal under the judgment impugned failed to appreciate this preposition of law. Having considered all aspects of the matter, we do not find any merit with the argument advanced. The appellant assessee is claiming exemption as per provisions of Section 80-HH of the Act of 1961 with a claim that village Bhujda, as per the notification of the Government of Rajasthan, is a part of backward area. From perusal of the notification in question it is apparent that village Bhujda is not a part of backward area and, therefore, the exemption claimed for is not available to the assessee. So far as the judgment of Bombay High Court is concerned, that is having no relevance in the case in hand as in the case aforesaid the issue was with regard to deviation of certain conditions violated and even by considering that violation exemption was granted. In the instant matter the factual position is entirely different as the appellant is not at all entitled for any exemption which is otherwise allowed to the assessees who are operating in backward areas.
(4 of 4) [ITA-42/2009]
In view of whatever stated above, we are of the view that the Income Tax Appellate Tribunal did not commit any error in law by not allowing deduction to the appellant under Section 80- HH of the Income Tax Act, 1961. The appeals are dismissed. (VINIT KUMAR MATHUR)J. (GOVIND MATHUR)J. MathuriaKK/PS
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