INCOME TAX OFFICER, BANGALORE vs. M/S. INDUFLEX PRODUCTS (P) LTD

C.A. No.-007307-007307 - 2005Supreme Court08 December 20054 pages
For Petitioner: B. V. BALARAM DAS
AI SummaryRemanded

What did the Supreme Court hold?

The Supreme Court held that the term 'profits' in Section 80HHC implies positive profit, and losses must be considered. The Court found that the High Court did not clearly determine if the assessee had shown any positive profit.

What were the facts?

The assessee claimed deduction under Section 80HHC for export profits, but the Commissioner of Income Tax initiated proceedings under Section 263, stating the assessment order was erroneous. The Tribunal allowed the assessee's appeal, which was then dismissed by the High Court.

What were the issues?

Whether the assessee is entitled to deduction under Section 80HHC when its export profits are negative after considering all business segments, and whether the High Court properly considered the positive profit aspect.

Which sections of the Income-tax Act were involved?

Section 80HHC,Section 263,Section 143(3),Section 260A

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Cause title — parties, addresses and appearances
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4 CASE NO.: Appeal (civil) 7307 of 2005 PETITIONER: Income Tax Officer, Bangalore RESPONDENT: Induflex Products (P) Ltd. DATE OF JUDGMENT: 08/12/2005 BENCH: S.B. Sinha & R.V. Raveendran

JUDGMENT: JUDGMENT S.B. SINHA, J.

Leave granted.

The Respondent is an assessee of Income Tax. It is engaged in the business of expert. It claimed benefit of Section 80HHC of the Income Tax Act, 1961 (Act). A declaration was made by it that its profits out of export of trading goods were ‘negative’ i.e. it incurred loss. The said benefit having been allowed by the assessing officer while making assessment under Section 143(3) of the Act, the Commissioner of Income Tax in exercise of his power conferred upon him under Section 263 thereof issued a notice to the assessee on the premise that the said order of assessment was erroneous and prejudicial to revenue. Upon hearing the assessee, by an order dated 3.3.1999, a direction was issued to the assessing officer to withdraw the said relief. The Respondent preferred an appeal thereagainst before the Income Tax Appellate Tribunal, Bangalore. By an order dead 19.8.2002, the said appeal was allowed foll

The order continues below.

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