HIGH COURT OF PUNJAB AND HARYANA
Monte International
Versus
Commissioner of Income-tax, Ludhiana
IT APPEAL NO. 98 OF 2007†
AUGUST 20, 2007
JUDGMENT
Ajay Kumar Mittal, J.
This appeal is filed by the assessee under Section 260A of the Income Tax Act, 1961 (for short “the Act”) against the order of the Income Tax Appellate Tribunal, Chandigarh Bench “B”, Chandigarh (hereinafter referred to as “the Tribunal”) passed in ITA No. 1231/Chandi/2005 on 31.7.2006 for the assessment year 2001-02. According to the learned counsel for the assessee, the following substantial questions of law arise for consideration of this Court:-
“1. Whether, on the facts and circumstances of the case, the ITAT was justified in confirming the action of CIT (A) in not allowing legal deduction as claimed by the appellant u/s 80HHC of the Income Tax Act, 1961 by completely ignoring the established principles of law regarding deeming provisions which provide for applicability of all the enabling provisions once an income is held to be business income either on the basis of its accrual, arising on receipt and/or under deeming provisions?
2. Whether, on the facts and circumstances of the case, the ITAT was justified in confirming the action of CIT (A) in not allowing legal deduction as claimed by the appellant u/s 80HHC of the Income Tax Act, 1961 by completely ignoring the established principles of law regarding deeming provisions though applying the provisions of section 41(1)(a) of the Income Tax Act, 1961 while on the other hand completely ignoring the true nature of the impugned amount of cessation of liabilities which had resulted in the reduction of purchase price of the raw material and thereby resulting into more Export Profits and thus cannot be denied the impugned deduction u/s 80HHC of the Income Tax Act, 1961?
3. Whether, on the facts and circumstances of the case, the findings of ITAT are perverse and against the evidence on record and, thus, unsustainable in law?”
2. Briefly noticed the facts are that the assessee is a partnership firm dealing in Export of thread bar and it filed its income tax return for the assessment year 2001-02 on 30.10.2001 declaring its income as Rs.5,28,855/-. The assessee claimed deduction under section 80HHC of the Act amounting to Rs.19,65,168/-. The details of export sales as well as other incentives including Duty Draw Back are given as under:-
