Income Tax : Supreme Court clarifies Section 80HHC deduction for Export-Oriented Units, emphasizing that profits eligible for deduction must be...
Income Tax : In the last quarter of the financial year 2000-0 1, a serious controversy arose in the Income-Tax Department and export circles of...
Income Tax : In the present case, according to the Finance Minister presenting the Bill, a valid piece of legislation has been wrongly interpre...
Income Tax : The dispute concerned whether deduction under Section 80IB should be reduced by the amount already allowed under Section 80HHC. IT...
Income Tax : The Madras High Court held that taxable income was not properly computed where deduction under Section 80IB was reduced before cal...
Income Tax : The court examined whether reassessment could be initiated after four years based on existing records. It held that reopening foun...
Income Tax : The issue was whether reassessment could be initiated after four years without fresh evidence. The court held such reopening inval...
Income Tax : The court held that electricity tariff for determining market value must include all components, including duty. It ruled that exc...
CIT vs. Bhari Information Tech Systems (Supreme Court of India)- Deduction under Section 80HHC (Section 80HHE also falls in Chapter VI‐A) is to be worked out not on the basis of regular income tax profits but it has to be worked out on the basis of the adjusted book profits in a case where Section 115JA is applicable. In the said judgment the dichotomy between regular income tax profits and adjusted book profits under Section 115JA is clearly brought out.
Systematic Exports Vs ACIT (ITAT Mumbai) – S. 80-IA (9) cannot be interpreted to mean that s. 80-IA deduction has to be reduced for computing s. 80HHC deduction. S. 80-IA (9) inserted w. e. f. 1.4.1989 provides that where any amount of profits and gains of an undertaking is claimed and allowed under s. 80-IA for any assessment year, deduction to the extent of such profits and gains shall not be allowed under any other provisions of Chapter VI-A (C) and shall in no case exceed the profits and gains of such eligible business. The Court had to consider whether the deduction allowed u/s 80-IA had to be reduced from the profits for computing deduction u/s 80HHC. HELD dissenting from Rogini Garments 108 ITD 49 (Che)(SB), Hindustan Mint & Agro Products 119 ITD 107 (Del) (SB), Great Eastern Exports (Del) & Olam Exports (India) Ltd 184 TM 373 (Ker) & deciding in favour of the assessee
Duncans Industries Limited Vs CIT (Calcutta High Court)- Under S. 80-HHC (1) the deduction is to be given in computing the total income of the assessee. In computing the total income of the assessee both profits as well as losses will have to be taken into consideration. Section 80-AB is relevant.
Jai Mica Supply Co Pvt Ltd Vs CIT (Kolkata High Court)- We do not find any substance in the contention of Mr. Khaitan that there were conflicting views on this point when the notice under Section 263 of the Act was issued.
Merck Ltd Vs ACIT (ITAT Mumbai) – Provisions of sec. 94 are very much clear and it cannot be said that there is any ambiguity in the provisions and therefore, appellant should not have claimed the aforesaid loss knowing fully well that the provisions of sec. 94 are applicable to such transactions. Appellant has adjusted the aforesaid loss against the profit on sale of short term capital gains which is illegal. Appellant being a reputed company, advised by reputed and learned counsels for the past many years cannot be said to be not aware of the said provisions of the Act. For the above reasons, appellant’s submissions on this issue are rejected and it is held that AO is right in levying penalty u/s 271(1) and holding that the appellant has furnished inaccurate particulars of its income. – Assessee’s appeal partly allowed.
Addl. CIT v Weizmann Ltd. ITAT, Mumbai * As long as the assessee has sufficient interest free funds, the presumption to be taken is that the investments are made out of such interest free funds. Mere fact of allowing interest free advance at a rate lower than the rate on which borrowings are made, cannot justify the disallowance of interest on borrowed funds. The CIT(A) was justified in making ad-hoc disallowance on account of foreign travelling expenses since the complete details of expenses were not provided by the assessee.
We hold that Section 80IA(9) does not affect the computability of deduction under various provisions under heading ‘C’ of Chapter VIA, but it affects the allowability of deductions computed under various provisions under heading ‘C’ of Chapter VIA, so that the aggregate deduction under Section 80IA and other provisions under heading ‘C’ of Chapter VIA do not exceed 100% of the profits of the business of the assessee. Our above view is also supported by the C.B.D.T. Circular No.772 dated 23121998, wherein it is stated that Section 80IA(9) has been introduced with a view to prevent the taxpayers from claiming repeated deductions in respect of the same amount of eligible income and that too in excess of the eligible profits.
Whether on the facts and in the circumstances of the case and in law, the Tribunal was erred in holding that while computing direct cost attributable to export the freight and insurance amounting to Rs.1,71,87,614/should be excluded for arriving at export profits while computing the deductions u/s. 80HHC.
These appeals were heard together and are being disposed of by this common judgment inasmuch as the question of law framed in both the appeals is identical and the circumstances are also virtually identical. The question of law that has been framed in these appeals is as under
CIT Vs. Kalpataru Colours and Chemicals – section 28(iiid) covers only the “profit” (difference between sale consideration and face value of the DEPB credit) and that the “face value” is assessable u/s 28(iiib) is not correct. The entire amount received on transfer of the DEPB credit is “profits” and falls under s. 28(iiid). There was no basis or justification for the Tribunal to hold that the face value of the DEPB credit can be reduced from the sale consideration. It is not permissible to bifurcate the proceeds of the DEPB into “face value” and “excess of face value”. The approach of the Tribunal is misconceived and unsustainable. As the assessee had an export turnover exceeding Rs.10 crores and did not fulfill the conditions set out in the third proviso to s. 80HHC (3), it was not entitled to a deduction u/s 80HHC on the amount received on transfer of DEPB.
