Commissioner of Income Tax vs Rolcon Engineering Co. Ltd.

D.A. Mehta, J.—The Income Tax Appellate Tribunal, Ahmedabad Bench "C", has referred the following two questions u/s 256(1) of the Income Tax Act, 1961 ("the Act") at the instance of the Commissioner of income tax:

Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that, while computing the export development allowance u/s 80HHC, the total sales, export sales and net profit should be taken into consideration as per para. 5 of the order of the Tribunal and the allowance should be computed at Rs. 94,510 instead of Rs. 12,100 ?

Whether, the Tribunal is right in holding that in working out the export development allowance u/s 80HHC, the Assessing Officer was not right in taking into consideration the loss of some of the units of the assessee ?

The assessment year is 1986-87 and the relevant accounting period is the calendar year 1985. The assessee-company claimed u/s 80HHC of the Act relief at a sum of Rs. 94,100, but the Assessing Officer reduced the claim to Rs. 12,100 by considering loss incurred in some of the units. The assessment order on this count came to be confirmed by the Commissioner of Income Tax (Appeals). The assessee carried the matter in appeal before the Tribunal who, vide its impugned order, accepted the claim of the assessee.

Heard Mr. M. R. Bhatt, learned senior standing counsel for the applicant-Revenue. It was submitted that the Tribunal had committed an error in granting relief to the assessee and for this purpose he placed reliance on the apex court decision in the case of IPCA Laboratory Ltd. Vs. Deputy Commissioner of Income Tax, Mumbai, . When his attention was invited to the fact that the apex court was considering the provision which was not on the statute book in the relevant assessment year, he raised an alternative contention on the basis of the provisions of Section 80HHC(3)(b) of the Act to submit that for the purpose of ascertaining whether the amount of relief had been rightly computed or not, the matter may be sent back.

Though served, there is no appearance on behalf of the respondent-assessee.

As can be seen from the impugned order of the Tribunal it has taken into consideration the provision of Section 80HHC of the Act as it was in force and applicable for the relevant assessment year. Sub-section (3) of Section 80HHC of the Act lays down as to how profits derived from export of goods or merchandise out of India have to be computed for the purpose of working out the relief to which an assessee is entitled under Sub-section (1) of Section 80HHC of the Act. Under Clause (b) of Sub-section (3) of Section 80HHC of the Act the parameters that are required to be taken into consideration are the profits and gains of business, the export turnover and the total turnover in a case where the business carried on by the assessee does not consist exclusively of the export of goods outside India. The Tribunal has noted, as a matter of fact, that the assessee''s claim was based on these parameters and hence, it has found that the working adopted by the assessee was quite correct. It has further been found by the Tribunal that the departmental representative had nothing to state except relying on the orders of the lower authorities.

In this fact scenario, it is apparent that the Tribunal has not committed any error in law as it has not only applied the relevant provisions as applicable to the assessment year under consideration but also taken note of the basis of working submitted by the assessee in terms of the provisions and found the same to be correct.

In so far as the alternative plea is concerned, it is clear from the impugned order of the Tribunal that the working of the relief was very much there before the Tribunal and it has found the same to be correct. Therefore, the alternative plea also does not merit acceptance.

In the result, in the absence of any infirmity in the impugned order of the Tribunal, both the questions are answered in the affirmative, i.e., in favour of the assessee and against the Revenue. The reference stands disposed of accordingly. There shall be no order as to costs.