INDIAN SUGAR EXIM CORPORATION LTD vs. ADDL. CIT RANGE II,

This appeal was originally decided by the ITAT vide order dated 19th March, 2010. However, the above order was partially recalled vide 23rd order dated May, 2014 in Miscellaneous Application No.89/Del/2013. Accordingly, ground No.1 of the assessee’s appeal was recalled for readjudication on merits.

Ground No.1 of the assessee’s appeal reads as under:-

“1. a) That the learned CIT(A) erred, both on facts and in law in sustaining a disallowance of Rs.4,67,11,767/- on account of deduction u/s 80HHC on DEPB/DFRC. b) The learned CIT(A) has grossly erred in ignoring all the written submissions filed before the ld.CIT(A) and sustaining the disallowance made by Assessing Officer without giving any reasons of whatsoever nature as to how the conditions for claiming of deduction u/s 80HHC on DEPB/DFRC has not been fulfilled by the assessee. c) The learned CIT(A) has further erred in holding that to the extent of increase in income in view of disallowances, deduction u/s 80HHC would not increase as the assessee is not entitled to any deduction u/s 80HHC.”

At the time of hearing before us, the learned counsel for the assessee pointed out that the Assessing Officer had reduced the assessee’s claim of deduction u/s 80HHC on the ground that export incentive income received from sale of DEPB license is not eligible for the purpose of calculation of deduction u/s 80HHC. He submitted that this ground of appeal was not pressed at the time of hearing before the ITAT because there was a retrospective amendment in Section 80HHC. However, Hon’ble Gujarat High Court in the case of Avani Exports & Ors. Vs. CIT & Ors. – [2012] 348 ITR 391 (Guj) has held the amendment to Section 80HHC to be prospective. That the Revenue as well as the assessee both have filed appeals before Hon'ble Supreme Court of India and, the Hon’ble Apex court in Special Leave Appeal Nos.9273/2013, not only upheld the finding of Hon’ble Gujarat High Court in Avani Exports & Ors. (supra) that amendment in Section 80HHC is prospective, but further held that the assessee would be entitled to deduction u/s 80HHC, whether the turnover of the assessee is below `10 crores or above `10 crores. He, therefore, submitted that the Assessing Officer may be directed to allow deduction u/s 80HHC as claimed by the assessee.

Learned DR, on the other hand, stated that the matter may be set aside to the file of the Assessing Officer for re-determination of deduction u/s 80HHC in the light of the above decision of Hon’ble Apex Court.

After considering the arguments of both the sides and the facts of the case, we agree with the submission of the learned DR and set aside the issue of allowability of deduction u/s 80HHC to the Assessing Officer. We direct him to recompute the deduction u/s 80HHC in the light of the decision of Hon’ble Apex Court in the case of Avani Exports & Anr. In Appeal No.9273/2013.

Ground No.1 of the assessee’s appeal is disposed of as above. Decision pronounced in the open Court on 17.03.2016.