PATTON INTL LTD.,KOLKATA vs. A.C.I.T CC - II,KOLKATA., KOLKATA

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:

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.