2002 (12) TMI 76 - HC - Income Tax

(1) Whether, on the facts and in the circumstances of the case and in the absence of a certificate from the Export House being filed along with the return, the assessee is entitled to the deduction under section 80HHC with regard to the foreign sales made? - (2) Whether, on the facts and in the circumstances of the case and on an interpretation of sub-section (4A) of section 80HHC read with State Level Committee v. Morgardshammar India Ltd. and Dr. Mrs. Renuka Datla v. CIT is not the provision mandatory and does not non-compliance of the provision result in disallowance of the deduction? - (3) Whether, on the facts and in the circumstances of the case and in the light of the Supreme Court decision in Keshavji Ravji and Co. v. CIT and also in the absence of a statutory requirement like the one in subsection (4A) of section 80HHC, the Tribunal is justified in relying on CIT v. Malayalam Plantations Ltd. and does the same have application in the case on hand? - the questions of law framed for the decision of this court are answered against the Revenue and in favour of the assessee. In other words, questions Nos. 1 and 3 are answered in the affirmative and question No. 2 in the negative. Accordingly, the appeal fails and it is dismissed.

Issues:
1. Interpretation of the requirement to file a certificate under sub-section (4A) of section 80HHC along with the return as mandatory or directory.
2. Entitlement of the assessee to deduction under section 80HHC without filing the certificate along with the return.
3. Applicability of previous court decisions in interpreting the provisions of sub-section (4A) of section 80HHC.

Analysis:
The judgment pertains to an appeal by the Revenue against the decision of the Income-tax Appellate Tribunal affirming the first appellate authority's ruling that the requirement to file the certificate under sub-section (4A) of section 80HHC along with the return is directory. The court considered three questions of law:
1. Whether the assessee is entitled to deduction under section 80HHC without filing the certificate from the Export House along with the return.
2. Whether non-compliance with the provision of sub-section (4A) of section 80HHC results in disallowance of the deduction.
3. Whether previous court decisions on similar provisions are applicable in the present case.

The respondent, a cashew exporter, claimed deduction under section 80HHC for the assessment year 1992-93 but did not file the certificate along with the return. The assessing authority disallowed a portion of the deduction, which was later reversed by the Commissioner of Income-tax (Appeals). The Revenue contended that the certificate should accompany the return as mandated by sub-section (4A) and failure to do so renders the assessee ineligible for the deduction. However, the respondent argued that while the requirement to file the certificate is mandatory, the time limit for filing it is directory.

The court analyzed relevant statutory provisions under section 80HHC, emphasizing the necessity of filing a certificate from the export house/trading house to claim the deduction under sub-section (1A). The court referred to previous decisions to determine the nature of the requirement, with the Revenue arguing for a strict interpretation while the assessee advocated for a liberal construction. The court held that the requirement to file the declaration is mandatory, but the timing of filing is directory. Citing legal principles, the court concluded that the provision under sub-section (4A) of section 80HHC is directory, allowing the assessee to file the certificate before the completion of the assessment. Consequently, the questions of law were answered against the Revenue, affirming the entitlement of the assessee to the deduction under section 80HHC. The appeal was dismissed in favor of the assessee.

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