THE COMMISSIONER OF INCOME TAX vs. ABAD EXIM PVT.LTD.,

ITA/197/2010HC KeralaKLHC01026889201007 August 2018Author: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN,HONOURABLE MR. JUSTICE ASHOK MENON7 pages
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What were the facts?

This appeal by the Revenue challenges an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, dated October 30, 2009. The assessee is Abad Exim (P) Ltd. The assessment year(s) are not explicitly stated in this excerpt, nor is the specific order or action under challenge. The amount in dispute is also not mentioned. The procedural history indicates that the ITAT's order in ITA 913/Coch/2007 is the subject of this appeal before the High Court of Kerala.

What did the High Court hold?

The High Court of Kerala, in its judgment dated August 7, 2018, allowed the appeal filed by the Revenue. The Court held that the profits derived from trading in shares and securities are not eligible for deduction under Section 80HHC of the Income Tax Act, 1961. The reasoning was that the section is intended for profits arising from the export of 'goods' or 'merchandise', and shares and securities do not fall within this definition. The Tribunal's decision to allow the deduction on such profits was therefore set aside. The operative direction was to allow the appeal, implying that the deduction claimed by the assessee on share trading profits was disallowed. No issue was expressly left undecided.

What were the issues?

1. Whether the Tribunal erred in holding that the assessee was entitled to claim deduction under Section 80HHC of the Income Tax Act, 1961, on the profit derived from trading in shares and securities, when such profits are not derived from the business of trading in goods or merchandise. Assessee's Contention: The assessee likely argued that profits from trading in shares and securities fall within the ambit of eligible business for deduction under Section 80HHC, as it constitutes a business activity. They may have relied on precedents that interpret 'business' broadly. Revenue's Contention: The Revenue contended that Section 80HHC is specifically for profits derived from the export of 'goods' or 'merchandise'. Trading in shares and securities does not qualify as such, and therefore, the deduction should not be allowed on these profits. They likely argued for a narrower interpretation of the section.

Which sections of the Income-tax Act were involved?

Section 80HHC

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUE AY, THE 7TH DAY OF AUGUST 2018 / 16TH SRAVANA, 1940 ITA.No. 197 of 2010 AGAINST THE ORDER/JUDGMENT IN ITA 913/COCH/2007 of I.T.A.TRIBUNAL, COCHIN BENCH DATED 30-10-2009 APPELLANT(S)/RESPONDENT/REVENUE THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADV.SRI.PKR MENON, SENIOR COUNSEL, GOI (TAXES) ADV.SRI.JOSE JOSEPH, SC, FOR INCOME TAX DEPT. RESPONDENT(S)/APPELLANT/ASSESSEE: ABAD EXIM (P) LTD., ABAD BUILDING, KOCHI - 2. BY ADV. SRI.E.K.NANDAKUMAR (SR.) BY ADV. SRI.P.BENNY THOMAS BY ADV. SRI.P.GOPINATH BY ADV. SRI.K.JOHN MATHAI THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 07-08-2018, ALONG WITH ITA NOS.205 AND 213/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA 197/10

Appendix — schedule of exhibits
APPENDIX APPELLANT'S EXHIBITS ANNEXURE-A : COPY OF ASSESSMENT ORDER 143(3) DATED 9.3.2006 FOR THE ASSESSMENT YEAR 2003-04. ANNEX

The order continues below.

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