V. S. DEMPO AND COMPANY PVT. LTD., vs. THE ASSISTANT COMMISSIONER OF INCOME TAX

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TXA/81/2008HC BombayHCBM05000260200802 April 2019Author: HON'BLE SHRI JUSTICE R. D. DHANUKA,HON'BLE SHRI JUSTICE PRITHVIRAJ K. CHAVAN3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial question of law framed by it was answered in the affirmative, against the assessee and in favour of the revenue. This decision was based on the High Court's own previous judgments. Specifically, the Court referred to its judgment dated 7th May, 2015, in the case of Sesa Goa Ltd. Vs The Commissioner of Income Tax (Tax Appeal No.53 of 2006) and an order dated 7th September, 2015, in the case of V. S. Dempo and Co. Pvt. Ltd. Vs The Assistant Commissioner of Income Tax (Income Tax Appeal No.936 of 2015). By following these precedents, the Court concluded that the Appellate Tribunal was indeed right in excluding the specified items from the computation of profits of business for the purpose of Section 80HHC, as they were considered to have no nexus to export activities. The appeals were disposed of in terms of these judgments.

What were the facts?

These are Tax Appeals filed by V. S. Dempo & Co. Pvt. Ltd. (the assessee) against the Assistant Commissioner of Income Tax (the revenue). The appeals challenge orders from the Income Tax Appellate Tribunal for assessment years not specified in the judgment. The core of the dispute revolves around the computation of profits eligible for deduction under Section 80HHC of the Income Tax Act. The assessee sought to include various income streams in the 'profits of business' for this calculation, which the revenue authorities and the Tribunal had excluded. The procedural history indicates that the appeals were admitted on a substantial question of law.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and on a fair and proper interpretation of Section 80HHC, particularly clause (baa) of the Explanation, the Appellate Tribunal was right in law in excluding certain items from the computation of 'profits of business' on the ground that they have no nexus to export activities, despite the specific wording of the Section as amended from 01.04.1992? Assessee's Contention: The assessee argued that the items in question, namely Leasing Income, Income from Bills Discounting, Income from Transfer Vessel, Barge Freight, Construction Receipts, Stevedoring Income, and Travel Agency Business, admittedly constituted part of business profit and should be included in the computation of 'profits of business' for Section 80HHC, ignoring the Tribunal's reasoning about nexus to export activities and considering the specific wording of the amended Section. Revenue's Contention: The judgment does not record any specific contentions made by the revenue. However, the revenue's position, as upheld by the Tribunal, was that these items lacked a nexus to export activities and were therefore excludable.

Which sections of the Income-tax Act were involved?

Section 80HHC

AI-generated summary — verify with the full judgment below

1 TXA22-07&Orsdt.02.04.2019

IN THE HIGH COURT OF BOMBAY AT GOA

TAX APPEAL NOS. 22 OF 2007, 7 OF 2009, 81 & 82 OF 2008 V. S. Dempo & Co. Pvt. Ltd. …. Appellant Versus The Assistant Commissioner of Income Tax …. Respondent Mr. Mihir Naniwadekar and Ms. V. Palyekar, Advocates for the Appellant. Ms. S. Linhares, Advocate for the Respondent.

Coram : R. D. Dhanuka & Prithviraj K. Chavan, JJ. Date : 2nd April, 2019

P.C.

At the request of the learned counsel for the Appellant, the papers were allowed to be produced at 2.30 p.m.

2.

All these appeals were admitted on the following substantial question of law.

2 TXA22-07&Orsdt.02.04.2019 “Whether on the facts and in the circumstances of the case and on fair and proper interpretation of Section 80HHC and in particular clause (baa) of the Explanation, the Appellate Tribunal was right in law in excluding the following items admittedly constituting part of business profit in computing the “profits of business”, on the ground that they have no nexus to the export activities, ignoring the specific wording of the Section as amended from 01.04.1992: a) Leasing Income; b) Income from Bills Discounting; c) Income from Transfer Vessel; d) Barge Freight; e) Construction Receipts; f) Stevedoring Income; g) Travel Agency Business.” 3. appeals is decided against the assessee in both these judgment/order.

4.

The statement made by the learned counsel for the 3 TXA22-07&Orsdt.02.04.2019 at*

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