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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri Mahavir Singh, JM & Shri Waseem Ahmed, AM]
ORDER Per Mahavir Singh, JM:
These cross appeals by revenue and assessee are arising out of order of CIT(A), Central-III, Kolkata in appeal No. 111/CC-II/CIT(A)C-III/07-08/Kol dated 20.11.2012. Assessment was framed by ACIT, CC-II, Kolkata u/s. 263/143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2002-03 vide its order dated 31.12.2007.
The only inter connected issue in this appeal of revenue is against the order of CIT(A) in allowing the deduction of export incentive u/s. 80HHC(3) of the Act following the judgment of Hon’ble Supreme Court in the case of Topman Exports Vs. CIT (2012) 342 ITR 49 (SC) and retrospectivity of amendment of Taxation Laws (Second Amendment) Act,2005. For this, revenue has raised following ground nos. 1 and 2:
1. That on facts and circumstances of the case and in law, the Ld. CIT (A) erred in allowing appellant's appeal against disallowance of 90% of Export Incentive as deduction u/s 80HHC (3) by considering the judgment in the case of Topman 2 & 351/Kol/2013 M/s. Patton International Ltd. AY 2002-03 Exports vs. CIT 342 ITR 49, whereas assessee did not fulfill the conditions laid down in 3rd and 4th provisos of section 80HHC(3) of the I T Act.
2. That on facts and circumstances of the case and in law, the Ld. CIT (A) erred in allowing appellant's appeal against disallowance of 90% of Export Incentive as deduction u/s 80HHC (3) of the I T Act, whereas Writ Petition filed by the appellant challenging the validity of amendments of Taxation Laws ( Second Amendment) Act, 2005 with retrospective effect, is yet to be disposed of by the jurisdictional High Court.”
Briefly stated facts are that the assessee is a merchant exporter engaged in the business of exporting of trading goods. The assessee claimed deduction u/s. 80HHC of the Act but the AO while completing assessment u/s. 143(3) r.w.s. 263 of the Act reduced the claim of deduction in respect to 10% of export incentive while computing total cost for the purpose of computation of deduction u/s. 80HHC of the Act. The AO disallowed 90% export incentive on the ground that the assessee did not fulfill the conditions laid down in 3rd and 4th proviso to section 80HHC(3) of the act. Aggrieved, assessee preferred appeal before CIT(A), who considering the decision of Hon’ble Supreme Court in the case of Topman Exports, supra, and the decision of Hon’ble Gujarat High Court in the case of Avni Exports & Ors. Vs. CIT (2012) 348 ITR 391 (Guj) allowed the claim of assessee by observing as under: “Even during the appellate proceedings the appellant has not adduced necessary and sufficient evidence to prove that it fulfilled the conditions laid down in the 3rd and the 4th proviso to section 80HHC(3), therefore, he does not get the benefit of addition of ninety percent of export incentive under clause (iiid) of section 28 to his export profits. However, as held by the Hon’ble Supreme Court in Topman Exports v. CIT (supra), even though the appellant does not fulfill the conditions laid down in the 3rd and 4th proviso but it will get the benefit of exclusion of a smaller figure from “profits of the business” under explanation (baa) to Section 80HHC of the Act. Hence, the AO is directed reduce the profits of the business as computed under the head “Profit and gains of business or profession” by ninety percent of any sum referred to in clause (iiia), (iiib), (iiic), (iiid) and (iiie) of section 28 of the Act or of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits while computing deduction u/s. 80HHC.” Aggrieved, revenue is in appeal before us.
We have heard rival submissions and gone through facts and circumstances of the case. We find that this issue stands covered in favour of assessee by the decision of Hon’ble Supreme Court in the case of Topman Exports, Supra, wherein incentives are to be considered for claim of deduction u/s. 80HHC of the Act
3 & 351/Kol/2013 M/s. Patton International Ltd. AY 2002-03 wherein assessee having turnover of more than Rs. 10 cr. deduction under explanation (baa) of sec. 80HHC of the Act cannot denied. Secondly, Hon’ble Gujarat High Court in the case of Avni Exports & Ors., supra, has held that the second amendment to Taxation Laws (second amendment) Act, 2005 wherein 3rd and 4th proviso was inserted wherein the conditions in respect of export turnover of more than Rs. 10 cr. is to be considered for claiming deduction u/s. 80HHC of the Act. Hon’ble Gujarat High Court on the direction of Hon’ble Supreme Court has heard this matter and held the amendment to be retrospective and classification based on export turnover for capping Rs. 10 cr. limit is held to be invalid. Hon’ble Gujarat High Court held that the amendment has been made at a point of time when application of section 80HHC of the Act has already been exhausted and it was not even in the statute book. According to Hon’ble High Court, in such a situation, it is not permissible to take away the benefit already granted through a clubbed scheme by introducing a fresh amendment by virtue of which an expired has been revived with benefit conferred upon only a limited section and snatching it away from some other sections. The amendment was quashed to the extent that the operation of the section could be given effect from the date of amendment and not in respect of earlier assessment years in the case of assessee whose turnover is above Rs. 10 cr. In term of the above, we uphold the order of CIT(A) and hence, this issue of revenue’s appeal is dismissed.
Coming to assessee’s appeal in which is only supporting of the order of CIT(A) and hence, needs no adjudication. This appeal of assessee is dismissed.
In the result, appeal of revenue is dismissed and that of the assessee is also dismissed as infructuous.
Order is pronounced in the open court on 07.10.2015 Sd/- Sd/- (Waseem Ahmed) (Mahavir Singh) Accountant Member Judicial Member
Dated : 07th October, 2015 Jd. Sr. P.S Copy of the order forwarded to: