THE COMMISSIONER OF INCOME TAX,TVM. vs. M/S.NELLIAMPATHY TEA&PRODUCE CO.LTD.,ALP

PDF · subscribers
ITA/172/2002HC KeralaKLHC01020995200217 August 2012Author: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN,HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN4 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the entitlement for deduction under Section 80HHC is not available to an assessee who suffers a net loss in their export business. The Court relied on the Supreme Court's decisions in IPCA Laboratories Ltd. Vs. Deputy Commissioner of Income Tax [(2004) 266 ITR 521] and A.M. Moosa Vs. Commissioner of Income Tax [(2007) 294 ITR 1]. These precedents established that if the export business itself results in a loss, the deduction under Section 80HHC cannot be claimed. Consequently, the High Court allowed the appeal, answering the questions of law in favour of the revenue and against the assessee. The orders of the ITAT and the first appellate authority were set aside, restoring the order of the Assessing Officer.

What were the facts?

The assessee, M/s. Nelliampathy Tea and Produce Co. Ltd., filed an appeal against the order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench. The appeal was filed by the Commissioner of Income Tax, Trivandrum, for the assessment year 1994-95. The assessee, a company engaged in plantation and local trading, also conducted export business. For the assessment year in question, the assessee claimed a deduction under Section 80HHC. The Assessing Officer (AO) denied this deduction, noting that the assessee's export business resulted in a loss. The Commissioner of Income Tax (Appeals) reversed the AO's decision and granted the deduction, a view upheld by the ITAT. The revenue has challenged the ITAT's order.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the assessee whose export business resulted in a loss is entitled to the deduction under Section 80HHC of the Income Tax Act? 2. Whether, on the facts and in the circumstances of the case and since the benefit or deduction is geared to the profits derived from the export business, does the assessee whose export business resulted in a loss is entitled to deduction under Section 80HHC of the Income-tax Act, 1961? Assessee's Contentions: The judgment does not record any specific contentions made by the assessee before the High Court. However, the procedural history indicates that the assessee's claim for deduction under Section 80HHC was allowed by the first appellate authority and the ITAT. Revenue's Contentions: The revenue contended that since the assessee's export business resulted in a net loss, the assessee is not entitled to the deduction under Section 80HHC, as the deduction is linked to profits derived from export business.

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 THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN FRIDAY, THE 17TH DAY OF AUGUST 2012/26TH SRAVANA 1934 ITA.No. 172 of 2002 ( ) ----------------------- ITA.244/1998 of I.T.A.TRIBUNAL,COCHIN BENCH APPELLANT(S)/APPELLANT: ---------------------- THE COMMISSIONER OF INCOME TAX, TRIVANDRUM. BY ADVS.SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENT(S)/RESPONDENT: ------------------------- M/S.NELLIAMPATHY TEA AND PRODUCE CO.LTD. ALAPPUZHA. BY ADV. SRI.A.K.JAYASANKAR NAMBIAR BY ADV. SRI.ANIL D. NAIR THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 17-08-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA.172/2002 APPENDIX PETITIONERS' EXHIBITS:- ANNEXURE A:- TRUE COPY OF THE ORDER OF THE ASSESSING OFFICER DT.27.12.96 ANNEXURE B:- TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) DT. 24.3.98 ANNEXURE C:- TRUE COPY OF THE ORDER OF THE APPELLATE TRIBUNAL DT.14.1.2002 RESPONDENTS' EXHIBITS:-NIL //TRUE COPY// P.A. TO JUDGE OKB/- THOTTATHIL B. RADHAKRISHNAN & K.VINOD CHANDRAN, JJ. --------------------------------------------- I.T.A. No.172 of 2002 --------------------------------------------- Dated this the 17th day of August, 2012

JUDGMENT Vinod Chandran, J. The above appeal relating to the year 1994-'95 has been filed by the revenue raising the following questions of law:

“1. Whether, on the facts and in the circumstances of the case the assessee whose export business resulted in a loss is entitled to the deduction under section 80HHC of the Income Tax Act ?

2.

Whether, on the facts and in the circumstances of the case and since the benefit or deduction is geared to the profits derived from the export business, does the assessee whose export business resulted in a loss is entitled to deduction under section 80HHC of the Income-tax Act, 1961 ?” The assessee being a company carrying on the business of plantation along with local trading conducts also export. For the relevant assessment year, the assessee claimed deduction under section 80HHC, which was declined by the assessing officer noticing that the result of assessee's export business is a loss. The first appellate authority reversed the finding of the assessing

I.T.A.No.172/2002 -2- officer and granted the deduction claimed, which was confirmed by the Income Tax Appellate Tribunal. The issue is no longer res integra. The Hon'ble Supreme Court in IPCA Laboratories Ltd. Vs. Deputy Commissioner of Income Tax [(2004) 266 ITR 521] and in A.M. Moosa Vs. Commissioner of Income Tax [(2007) 294 ITR 1] held that on an assessee suffering net loss in export business, the entitlement for deduction under section 80HHC is not available. In such circumstances, the above appeal is allowed answering the questions of law in favour of the revenue and against the assessee. The order of the Tribunal and the first appellate authority are set aside restoring the order of the assessing officer. Ordered accordingly. THOTTATHIL B. RADHAKRISHNAN, JUDGE. K.VINOD CHANDRAN, JUDGE. okb.

More judgments on Section 80HHC

All 1,083 judgments and leading authorities on Section 80HHC →

Recent GST High Court judgments

Search GST case law →