1998 (3) TMI 115 - HC - Income Tax

Summary

Issues:
1. Interpretation of deduction under section 80HHC of the Income-tax Act, 1961.
2. Disallowance of deduction by the assessing authority.
3. Appeal to the Commissioner of Income-tax (Appeals) and subsequent decision.
4. Appeal to the Income-tax Appellate Tribunal and its decision.
5. Controversy over the interpretation of section 80HHC(3)(b).
6. Plea raised by the Revenue regarding exclusion of income from other sources.
7. Jurisdiction of the High Court under section 256 of the Act.
8. Legal precedent on raising new questions during appeals.

Analysis:

The case involved a petition under section 256(2) of the Income-tax Act, 1961, where the Revenue sought a mandamus to the Tribunal to refer a question of law regarding the correctness of allowing deduction under section 80HHC to the assessee-company for the assessment years 1986-87 and 1987-88. The Tribunal rejected the petition under section 256(1) stating that the question did not arise as a question of law. The assessing authority disallowed the deduction under section 80HHC, leading to appeals by the assessee to the Commissioner of Income-tax (Appeals), where the deduction was allowed based on the interpretation of section 80HHC(3)(b) and the ratio of turnover. The Revenue's appeals to the Income-tax Appellate Tribunal were dismissed, upholding the interpretation of "total turnover" as including both export and domestic turnover.

The controversy before the Tribunal centered around the interpretation of section 80HHC(3)(b) and whether "total turnover" included domestic turnover. The Tribunal relied on a Special Bench decision to support its interpretation. The Revenue argued that income from sources other than business should be excluded, as it would render the income from export business negative. However, the High Court held that the plea raised by the Revenue at that stage was not raised before any lower authorities and could not be considered at that point. The High Court cited legal precedent to emphasize that new questions cannot be raised during appeals if not raised before the Tribunal.

The High Court rejected the Revenue's petition under section 256(2) as the plea regarding the exclusion of income from other sources was not raised before lower authorities. The Court emphasized that parties cannot introduce new questions during appeals that were not raised before the Tribunal. The judgment highlighted the importance of maintaining consistency in the issues raised throughout the appeal process and cited legal precedent to support its decision. Ultimately, the petition was dismissed without any order as to costs.