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2005 (1) TMI 67 - HC - Income TaxAppellant-exporter of cut and processed granite and wanted the benefit of section 80HHC claiming that the processed granite is not mineral excluded from the benefit of section 80HHC - apex court also dismissed the appeal of assessee holding that up to April 1 1991 the provision of section 80HHC restricted the benefit to goods other than minerals and ores and this benefit was prospectively made available to cut and polished minerals with effect from April 1, 1991 due to the amendment of the section in that year SO we hold that the benefit of the amendment made in section 80HHC by the Finance (No. 2) Act of 1991 could not have been extended to the assessee in relation to the assessment year 1984-85 Whether Tribunal was right in law in holding that the question of deduction under section 80HHC was a debatable issue and could not be rectified under section 154? - Held that the order passed by the Assessing Officer to rectify the mistake committed earlier by allowing deduction to the assessee on the basis of the amended section 80HHC does not suffer from any legal infirmity.
Issues:
1. Whether the Tribunal was right in allowing deduction under section 80HHC of the Income-tax Act, 1961, considering the amendment made by the Finance Act of 1991? 2. Whether the Tribunal was correct in holding that the deduction under section 80HHC was a debatable issue and could not be rectified under section 154 of the Act? Issue 1: The case involved an assessee, a Government company engaged in mining, seeking deduction under section 80HHC of the Income-tax Act, 1961. The assessee initially declared a loss but later revised the return to show income. The Assessing Officer allowed a deduction under section 80HHG and later, the assessee claimed a deduction under section 80HHC. The Assessing Officer initially accepted the claim but later withdrew it entirely. The Commissioner of Income-tax (Appeals) set aside the order of the Assessing Officer, and the Tribunal confirmed this decision. The Revenue appealed, but the Tribunal dismissed the reference application under section 256(1) of the Act. Issue 1 Analysis: The High Court analyzed the case in light of a Supreme Court judgment in Gem Granites v. CIT, where it was held that the benefit of the amendment made in section 80HHC by the Finance Act of 1991 could not be extended to the assessee for the assessment year 1984-85. The Court applied the interpretation of the Supreme Court to the facts of the case and concluded that the amendment could not be applied to the assessee. Issue 2: The second issue revolved around whether the provisions of the amended section 80HHC were applicable to the case of the assessee and if the amendment was retrospective. The Commissioner of Income-tax (Appeals) and the Tribunal treated the provisions of the amended section 80HHC as if the amendment made by the Finance Act of 1991 was retrospective. The Court found this treatment legally unsustainable based on the Supreme Court's ruling in Gem Granites v. CIT. Issue 2 Analysis: The High Court held that the treatment of the provisions of the amended section 80HHC as retrospective was legally unsustainable, following the precedent set by the Supreme Court. Consequently, the order passed by the Assessing Officer to rectify the mistake by allowing deduction to the assessee based on the amended section 80HHC was deemed legally sound. Therefore, both questions were answered in favor of the Revenue and against the assessee based on the legal interpretations provided by the Supreme Court's judgment.
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