Rashtra Udyog Ltd. vs Commissioner of Income Tax

Mr. Khaitan, learned senior advocate submitted that in terms of the order passed by the Court, the notice was served but no one appeared. Hence we take up this matter.

The appeal was admitted on the following substantial questions of law:

(a) Whether on a proper interpretation of the provisions of Section 80HHC of the Income Tax Act, 1961, the Tribunal was justified in law in holding that profit in Clause (a) of Sub-section (3) included losses and that losses could not be ignored and a negative figure had to be worked out for the purpose of the said clause in respect of profits derived from export ?

(b) Whether on a proper interpretation of the provisions of Section 80HHC of the Income Tax Act, 1961, the Tribunal was justified in upholding the action of the assessing officer in determining a negative figure under Clause (a) of Sub-section (3) and allowing deduction under the said section after deducting such negative figure from the amount computed under the proviso contained in Sub-section (3) ?

(c) Whether and in any event the Tribunal was justified in law in upholding the action of the assessing officer in adopting the figure of loss at Rs. 13,13,035 instead of Rs. 9,73,345 claimed by the appellant when the said issue was not subject-matter of the appeal before the Tribunal since the Commissioner (Appeals) had not decided the same and no submissions were made thereon by the parties ?

Amendment of Section 80HHC, fifth proviso, which has been specifically stated as follows:

Provided also that in case the computation under Clause (a) or Clause (b) or Clause (c) of this Sub-section is a loss, such loss shall be set off against the amount which bears to ninety per cent of--

(a) any sum referred to in Clause (iiia) or Clause (iiib) or Clause (iiic), as the case may be, or

(b) any sum referred to in Clause (iiid) or Clause (iiie), as the case may be, of Section 28, as applicable in the case of an assessee referred to in the second or the third or the fourth proviso, as the case may be, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee.

The said amendment came into effect on and from 1-4-1992.

Therefore, Mr. Khaitan did not press the question No. 1 on behalf of the appellant. This should be answered in favour of the department.

Similarly, the question No. 2 is also not pressed before us since it is covered by such amendment and answered in favour of the department.

So far the question No. 3 is concerned, Mr. Khaitan presses before us that since the question was not decided, the matter may be remanded back before the Commissioner (Appeals). Accordingly, this question should be gone into by the Commissioner (Appeals) after giving a chance of hearing to the assessee.

The appeal is thus disposed of.