M/S. KAUSHLYA EXPORT,AHMEDABAD vs. THE INCOME TAX OFFICER,WARD-11(4), AHMEDABAD

आदेश/O R D E R

PER PRADIP KUMAR KEDIA - AM:

The captioned two appeals have been by the assessee against the respective orders of the Commissioner of Income Tax (Appeals)-5, Ahmedabad (‘CIT(A)’ in short), dated 23.03.2015 arising in rectification order passed under s. 154 of the Income Tax Act, 1961 (the Act) concerning assessment years 2001-02 & 2002-03.

ITA Nos. 1563 & 1564/Ahd/15 [M/s. Kaushalya Export vs. ITO] AYs. 2001-02 &2002-03 - 2 -

ITA No. 1563/Ahd/2015 A.Y. 2001-02

“1. The learned C.I.T.(Appeals) has erred in law in dismissing the appeal thereby confirming the action of A.O. of denying rectification of the mistake which is apparent on the record u/s.154 of I.T. Act, 1961 . 2. The learned C.I. T. (Appeals) has erred in law and on facts in dismissing the appeal of assessee by considering it barred by limitation of time despite the contention of assessee that application u/s.154 was first time filed on 21.08.2012, which well within the time as stipulated by sec. 154 of the I.T. Act, 1961. 2.1 The learned C. I.T. (Appeals) ought to have exercised his wide power given by statute u/s.251 and ought to have conducted the detailed inquiry about the contentions of assessee in the interest of natural justice. 3. The learned C.I.T.(Appeals) has further erred in law by not appreciating the decision of Hon'ble Jurisdictional High Court in the case of Avani Exports and Other vs. CIT reported in 348 ITR 391 (Guj) in proper perspective. 3.1 The learned C.I.T.(Appeals) failed to consider the finding of Hon'ble Jurisdictional High Court that the amendment to sec.80HHC by taxation law (Second Amendment Act, 2005) is discriminating being a case of 'palpable arbitrariness' and failed to satisfy the test of article 1 4 of the constitution and further held that the said amendment is prospective in nature.”

assessee submitted that the CIT(A) is in error in denying the relief

sought. The learned DR, on the other hand, relied upon the order of

the CIT(A).

dispute is with regard to allowability of deduction under s.80HHC of

the Act with reference to export incentives in the form of DEPB

proceeds. In re-assessment proceedings, the AO disregarded the

ITA Nos. 1563 & 1564/Ahd/15 [M/s. Kaushalya Export vs. ITO] AYs. 2001-02 &2002-03 - 3 -

DEPB claim for the purposes of 80HHC of the Act. It is the case on

behalf of the assessee that issue is squarely covered in favour of the

assessee by the decision of the Hon’ble Gujarat High Court in the case

of Avani Exports & Ors. vs. CIT reported in 348 ITR 391 (Guj)

whereby the amendment to Section 80HHC of the Act by Taxation Law (2nd Amendment Act, 2005) was held to be prospective in its

application. However, in the same vain, we notice from the

observation of the CIT(A) that where there is no qualified positive

income in computation of income under s.80HHC of the Act as in the

instant case, the assessee is not entitled for deduction under s.80HHC

of the Act in view of the decision of the Hon’ble Supreme Court in the

case of IPCA Laboratories Ltd. v. Deputy CIT reported in [2004] 266

ITR 521 (SC). We notice from the assessment order that if the profit

on transfer of export incentives (DEPB) was deducted from the profits

of the assessee, the figure would be loss and there will be no positive

income of the assessee from its export and hence, the assessee will not

be entitled to any deduction under s.80HHC of the Act in the light of

the decision of Hon’ble Supreme Court in IPCA Laboratories (supra).

In such circumstances, the action of the CIT(A) appealed against

cannot be assailed in the proceedings under s.154 of the Act.

Consequently, appeal of the assessee is dismissed.

being similar, the observations in ITA No.1563/Ahd/2015 shall apply

ITA Nos. 1563 & 1564/Ahd/15 [M/s. Kaushalya Export vs. ITO] AYs. 2001-02 &2002-03 - 4 -

mutatis mutandis. Accordingly, appeal in ITA No. 1564/Ahd/2015

filed by the assessee is dismissed.

This Order pronounced in Open Court on 19/12/2018

Sd/- Sd/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 19/12/2018 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।