CIT, KARNAL vs. SUSHIL KUMAR GUPTA

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ITA/520/2009HC Punjab & HaryanaPHHC01084637200910 September 2009Bench: MR. JUSTICE ADARSH KUMAR GOEL,MRS JUSTICE DAYA CHAUDHARY3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose from the Tribunal's order. The Court found the Tribunal's order to be in consonance with the judgments of the Hon'ble Supreme Court in CIT Vs. Baby Marine Exports and this Court's judgment in CIT Vs. Carpet India & Others. The CIT(A) had allowed deduction under Section 80HHC on duty drawback, following precedents, and this was affirmed by the Tribunal. The reasoning for allowing the deduction on duty drawback was based on the assessee being a supporting manufacturer and exporter, and the facts being similar to prior favorable decisions. The High Court dismissed the appeal filed by the Revenue.

What were the facts?

The assessee, Sh. Sushil Kumar Gupta, proprietor of M/s Aalishan Exports, claimed a deduction under Section 80HHC for income derived from duty drawback. The Assessing Officer disallowed this claim. The Commissioner of Income Tax (Appeals) [CIT(A)] allowed the deduction on duty drawback, following previous decisions for the assessee and ITAT rulings. However, the CIT(A) disallowed deduction on DEPB (Duty Entitlement Pass Book) credit, citing that the assessee's turnover exceeded Rs. 10 crores and the DEPB rate was higher than the duty drawback rate, thus not fulfilling conditions of the proviso to sub-section 3 of Section 80HHC as amended. The Income Tax Appellate Tribunal (ITAT) affirmed the CIT(A)'s order. The Revenue appealed this decision to the High Court.

What were the issues?

1. Whether the assessee is eligible for deduction under Section 80HHC in respect of income derived from duty drawback, as a supporting manufacturer and exporter? (Question of law) Assessee's contention: The assessee argued for eligibility for deduction under Section 80HHC on duty drawback, a plea that was upheld by the CIT(A) and the Tribunal. The CIT(A) specifically noted that the facts were similar to the assessee's own case for Assessment Year 2002-03 and relied on various ITAT decisions. The assessee also relied on the Supreme Court judgment in CIT Vs. Baby Marine Exports and this Court's judgment in CIT Vs. Carpet India & Others. Revenue's contention: The Revenue appealed the High Court against the Tribunal's order which affirmed the CIT(A)'s decision allowing deduction on duty drawback. The Revenue did not record specific arguments against the eligibility for duty drawback in the provided text, but the appeal itself challenges the Tribunal's order.

Which sections of the Income-tax Act were involved?

Section 80HHC

AI-generated summary — verify with the full judgment below

I.T.A. No. 520 of 2009 (O&M) (1) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A. No. 520 of 2009 (O&M) DATE OF DECISION: 10.09.2009 The Commissioner of Income Tax, Karnal ..........Appellant Versus Sh. Sushil Kumar Gupta, ..........Respondent Prop. M/s Aalishan Exports, 509-L, Model Town, Panipat. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:- Mr. Sukant Gupta, Advocate for the appellant. **** ADARSH KUMAR GOEL, J. (Oral) 1. The assessee claimed benefit under Section 80HHC in respect of income derived in the form of duty drawback, which was not allowed. The assessee challenged denial of benefit under Section 80HHC on the duty drawback. His plea has been upheld by the CIT(A) as well by the Tribunal. The Tribunal followed the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Baby Marine Exports (2007) 290 ITR 323 and judgment of this Court in CIT Vs. Carpet India & Others (rendered in ITA No. 544 of 2007 decided on 13.1.2008). 2. We have heard learned counsel for the appellant. 3. The observations of the CIT(A) are as under:- “I have considered the submissions of the assessee and facts of the case. The facts and circumstances of the case are similar to the case of the assessee in A.Y.

I.T.A. No. 520 of 2009 (O&M) (2) 2002-03. Therefore, respectfully following the decisions in Appeal for A.Y. 2002-03 in the case of the assessee and the decision has cited above in various cases by ITAT, Delhi. The assessee is eligible for deduction u/s 80HHC as supporting manufacturer and exporter. Accordingly assessee is allowed deduction u/s 80HHC on the amount of Duty draw back, but no deduction is allowed u/s 80HHC on the amount of DEPB received by the assessee because the turnover of the assessee is more than Rs. 10 crores and the rate of DEPB is also more than the rate of Duty Draw Back, therefore, it does not fulfill the conditions mentioned in the proviso to sub- section 3 of Section 80HHC as introduced by the Taxation Laws (Amendment) Act, 2005 No. 55 of 2005- 06. In result, the ground of appeal of the assessee is partly allowed.” 4. The above observations have been affirmed by the Tribunal 5. The order of the Tribunal, being in consonance with the judgment of the Hon'ble Supreme and this Court, no substantial question of law arises. 6. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE September 10, 2009

(DAYA CHAUDHARY) pooja JUDGE Note:-Whether this case is to be referred to the Reporter .......Yes/No

I.T.A. No. 520 of 2009 (O&M) (3)

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