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Income Tax Appellate Tribunal, DELHI BENCH: ‘C’ NEW DELHI
Before: SH. P.K. BANSAL & SH. C.M. GARG
ORDER PER P.K. BANSAL, A.M.: This appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals)-VI, New Delhi, dated 22.01.2014. The grounds no. 1 to 3 since not pressed, stand dismissed as not pressed. 2. Ground no. 4, which survives for our disposal, reads as under:
“4. On the facts and circumstances of case, the learned CIT(A) has erred both on facts and in law in ignoring the contention of the appellant raised in the grounds of appeal that income on account of DEPB ius eligible while computing deduction under Section 80HHC and the issue is squarely covered in favour of the appellant by the judgment of the Hon’ble Apex Court in the case of Topman Exports Vs. CIT, 342 ITR 49 (SC).”
3. The brief facts of the case are that the assessee company is an exporter engaged in manufacturing and trading of hosiery goods, textiles etc. The assessee company filed its return of income on 31.10.2001, declaring nil income after claiming deduction under Section 80HHC. The deduction under Section 80HHC has been claimed at Rs.17,19,287/-. The Assessing Officer completed the assessment by disallowing the deduction under Section 80HHC at Rs. 17,19,287/-. The Assessing Officer disallowed the said deduction as the negative profit of the company from the export of trading goods was more than the export incentives. The assessee went in appeal before the Commissioner of Income Tax (Appeals). The learned Commissioner of Income Tax (Appeals) vide order dated 28.12.2004, upheld the order of the Assessing Officer. The matter travelled to the Tribunal. The Tribunal vide its order 29.06.2007, set aside the order of the Commissioner of Income Tax (Appeals) and restored the matter back to the file of the Assessing Officer, directing the Assessing Officer to pass a fresh assessment order after examining the amendment made to the provisions of Section 80HHC by the Finance Act, 2005. The Assessing Officer in the fresh assessment order, rejected the claim of the assessee. Learned Commissioner of Income Tax (Appeals) also dismissed the appeal of the assessee. Now, the matter has come before us.
4. We heard the rival submissions and carefully considered the same along with the order of the tax authorities below. We noted that the assessee had calculated the claim under Section 80HHC as under:
DEDUCTION u/s 80HHC PROFIT FROM EXPORT OF TRADING GOODS [SINCE NEGATIVE SO TAKEN AS NIL] ADD: 90% OF EXPORT INCENTIVES X EXPORT TURNOVER / TOTAL TURNOVER = 4188081 X 32904456 / 50146532 = 2748077 ________________ DEDUCTION U/S 80HHC Rs. 2748077 _________________ RESTRICTED TO 80% 2190462 __________________
Although the claim was calculated at Rs.21,98,462/- but it was restricted to Rs.17,19,287/- i.e. to the extent of gross income available. We noted that the Hon’ble Supreme Court in the case of ICPA Laboratories Vs. DCIT, (2004) 266 ITR 521 taken the view by interpreting the provisions of Section 80HHC(3)(c) where export is both of self manufactured goods plus profits of export of trading goods, a deduction can be permitted only if there is a positive profit in the export of both self manufactured goods as well as trading goods and if there is a loss in either of the two, then the loss has been taken into account for computing the profit. In view of the said decision of the Hon’ble Supreme court, which is binding the loss incurred by the assessee from export of the trading goods had to be adjusted against 90% of the export incentive. We, therefore, set aside the order of the learned Commissioner of Income Tax (Appeals) and restore this issue to the file of the Assessing Officer with the direction to the Assessing Officer to allow the deduction to the assessee after considering the decision of Hon’ble Supreme Court in the case of M/s. Topman Exports Vs. CIT, (2012) 342 ITR 49 as well as IPCA Laboratories Ltd. Vs. Deputy Commissioner of Income Tax, (2004) 266 ITR 521.
In the result, the appeal filed by the assessee is allowed for - statistical purposes. The decision is pronounced in the open court on 27th Dec., 2016.