M/S TECHNIQUE DIABRASIVE INDIA LTD. vs. A.C.I.T.CIRCLE-1,UDAIPUR

ITA/44/2009HC Rajasthan01 May 20174 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the assessee's argument lacked merit. The court found that the assessee was claiming exemption under Section 80-HH based on the premise that village Bhujda was a backward area as per a Rajasthan Government notification. However, upon perusal of the notification, the court concluded that village Bhujda was not, in fact, part of a backward area, rendering the exemption unavailable to the assessee. Regarding the reliance on the Bombay High Court's judgment in Paul Brothers, the court distinguished it, stating that the cited case dealt with the deviation of certain conditions and the subsequent grant of exemption, whereas the present matter involved a fundamental ineligibility for any exemption due to the factual position of the area. Therefore, the ITAT did not err in law by denying the deduction under Section 80-HH. The appeals were dismissed.

What were the facts?

The assessee, M/s Technique Diabrasive India Limited, appealed against an order dated 16.7.2008 passed by the Income Tax Appellate Tribunal (ITAT), Jodhpur Bench. The ITAT had ruled that the assessee was not entitled to exemption under Section 80-HH of the Income Tax Act, 1961, because village Bhujda in Udaipur district was not considered a backward area as per the relevant notification. The assessee contended that exemption had been granted in earlier years and should not have been withheld without a formal withdrawal. The High Court was examining the correctness of the ITAT's decision.

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 contentions: The assessee argued that the revenue could not withhold the exemption already granted in previous assessment years without a formal withdrawal of that relief. They relied on the Bombay High Court's judgment in Commissioner of Income Tax v. Paul Brothers ([1995] 216 ITR 548) to support the proposition that prior grant of exemption should continue unless withdrawn. The assessee asserted that the ITAT failed to appreciate this legal principle. Revenue's contentions: The judgment does not explicitly record the revenue's contentions. However, the ITAT's decision, which was upheld, implies the revenue argued that the assessee was not eligible for the exemption.

Which sections of the Income-tax Act were involved?

Section 80-HH

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 42 / 2009 M/S Technique Diabrasive India Limited, Village Bhujda, Udaipur (Rajasthan) – through its Director Shri Manvendra Singh s/o Dr. Rajesh Singh, aged about 50 years, r/o Udaipur. ----Appellant Versus A.C.I.T.Circle-1,Udaipur ----Respondent Connected With 1. D.B. Income Tax Appeal No. 41 / 2009 M/S Technique Diabrasive India Ltd. ----Appellant Versus A.C.I.T.Circle-1,Udaipur ----Respondent 2. D.B. Income Tax Appeal No. 43 / 2009 M/S Technique Diabrasive India Ltd. ----Appellant Versus A.C.I.T.Circle-1,Udaipur ----Respondent 3. D.B. Income Tax Appeal No. 44 / 2009 M/S Technique Diabrasive India Ltd. ----Appellant Versus A.C.I.T.Circle-1,Udaipur ----Respondent

_____________________________________________________ For Appellant(s) : Mr. Manoj Bhandari For Respondent(s) : Mr. K.K.Bissa _____________________________________________________ (Uploaded on 07/08/2023 at 03:54:27 PM) (Downloaded on 28/10/2026 at 12:52:47 AM) (2 of 4) [ITA-42/2009]

HON'BLE MR. JUSTICE GOVIND MATHUR HON'BLE MR. JUSTICE VINIT KUMAR MATHUR 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 (Uploaded on 07/08/2023 at 03:54:27 PM) (Downloaded on 28/10/2026 at 12:52:47 AM) (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. (Uploaded on 07/08/2023 at 03:54:27 PM) (Downloaded on 28/10/2026 at 12:52:47 AM) (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 Powered by TCPDF (www.tcpdf.org) Powered by TCPDF (www.tcpdf.org) (Uploaded on 07/08/2023 at 03:54:27 PM) (Downloaded on 28/10/2026 at 12:52:47 AM)

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