THE COMMISSIONER OF INCOME TAX, vs. SUD CHEMIE INDIA LTD.,

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ITA/1454/2009HC KeralaKLHC01026215200905 February 2019Author: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN,HONOURABLE MR. JUSTICE ASHOK MENON4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the issue regarding the inclusion of indirect tax expenses in the computation of the benefit under Section 80HHC stands covered in favour of the assessee by the Supreme Court's decision in Commissioner of Income Tax v. Lakshmi Machine Works, reported in (2007) 290 ITR 667. Regarding the second issue of agency commission, the Court noted that it had been remanded to the Assessing Officer for fresh consideration in earlier and subsequent years by a prior judgment in ITA No. 645/2009 dated September 22, 2010. As the Assessing Officer had not yet re-considered the issue, the Court refused to answer the question of law framed on this point. Instead, it directed the Assessing Officer to re-consider the issue within two months of the assessee producing a certified copy of the present judgment, after hearing the assessee. The appeal was disposed of accordingly, with no costs.

What were the facts?

This appeal by the Revenue challenges an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, dated August 3, 2005. The assessee is Sud Chemie India Ltd. The appeal concerns assessment years not explicitly stated in the provided text. The core dispute revolves around the computation of benefits under Section 80HHC of the Income Tax Act, 1961. Specifically, the appeal raises questions regarding the inclusion of indirect tax expenses and agency commission in this computation. The ITAT's order is under challenge before the High Court of Kerala.

What were the issues?

1. Whether indirect tax expenses should be included in computing the benefit under Section 80HHC of the Income Tax Act, 1961? The Revenue contends that these expenses should not be included. The Assessee argues for their inclusion. 2. Whether agency commission can be included in the computation of the benefit under Section 80HHC of the Income Tax Act, 1961? The Revenue likely argues against its inclusion, while the Assessee would argue for it. The judgment notes that this issue was previously remanded to the Assessing Officer for reconsideration in earlier and subsequent years by a judgment dated September 22, 2010, in ITA No. 645/2009.

Which sections of the Income-tax Act were involved?

Section 80HHC

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY ,THE 05TH DAY OF FEBRUARY 2019 / 16TH MAGHA, 1940 ITA.No. 1454 of 2009 AGAINST THE ORDER/JUDGMENT IN ITA 573/COCH/2004 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 03-08-2005 APPELLANT/APPELLANT/REVENUE: THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADVS. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH SC FOR INCOME TAX RESPONDENT/RESPONDENT/ASSESSEE: SUD CHEMIE INDIA LTD., BINANIPURAM, EDAYAR. BY ADV. SRI.P.BALAKRISHNAN (E) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 05.02.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.VINOD CHANDRAN & ASHOK MENON, JJ. ------------------------------------------- ITA No.1454 of 2009 ------------------------------------------- Dated this the 5th day of February, 2019

J U D G M E N T Vinod Chandran, J.

Two issues arise in the above appeal. One is as to whether indirect tax expenses has to be included in computing the benefit under Section 80HHC of the Income Tax Act, 1961. The issue stands covered in favour of the assessee by the decision of the Honourable Supreme Court reported in (2007) 290 ITR 667 (Commissioner of Income Tax v. Lakshmi Machine Works). The next question is as to whether agency commission can be included in such computation. The said issue has been remanded to the Assessing Officer for fresh consideration with respect to earlier and subsequent years by judgment dated 22.09.2010 in ITA No.645/2009. The learned counsel for the assessee submits that till -3- date, the Assessing Officer has not re-considered the issue. In such circumstances, we refuse to answer the second question of law so framed, and direct the Assessing Officer to re-consider the issue. Considering the fact that the earlier judgment was passed in the year 2010, we direct the assessee to produce certified copy of this judgment before the Assessing Officer on or before 12.03.2019, in which event the Assessing Officer shall consider the issue within a period of two months there-from, after hearing the assessee.

The Income Tax Appeal is disposed of. No costs. K.VINOD CHANDRAN JUDGE ASHOK MENON JUDGE -4-

Appendix — schedule of exhibits
APPENDIX APPELLANT'S EXHIBITS: ANNEXURE-A COPY OF ORDER U/S. 143(3) OF THE INCOME TAX ACT DATED 23/3/2000 FOR THE ASST. YEAR 1997-98. ANNEXURE-B COPY OF THE ORDER DATED 17/3/2004 OF THE COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE-C COPY OF THE ORDER DATED 3/8/2005 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN IN ITA NO. 573/COCH/2004. [True Copy] jg

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