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2013 (1) TMI 43 - HC - Income TaxDeduction u/s 80HHC - Assessee is an exporter of cashew kernels - Profit on sale of Duty Entitlement Pass Book (DEPB) - Issue raised by the assessee and considered by the Tribunal only with respect to the reopening of the assessment u/s 147 Assessee file appeal u/s 260A with High Court challenging retrospective amendment made by the Finance Act 2005 in Section 80HHC Held that - The validity of a provision cannot be considered or adjudicated upon by the Tribunal constituted under the Act. Section 260A provides for an appeal from every order passed by the Appellate Tribunal; if it involves a substantial question of law. Such question of law should arise from the order of the Tribunal. If the Tribunal cannot consider the validity of a retrospective amendment no doubt such question does not arise from its order and the jurisdiction conferred on the High Court under Section 260A cannot also enable the High Court to consider such validity or otherwise. Decides against assessee
Issues:
1. Disallowance of deduction claimed under Section 80 HHC for profit on sale of DEPB. 2. Validity of retrospective amendment of Section 80 HHC. 3. Jurisdiction of Tribunal to consider validity of retrospective amendments. 4. Interpretation of Supreme Court decision on treatment of profit on sale of DEPB. 5. Constitutional validity of retrospective amendment of 2005. Issue 1: Disallowance of deduction claimed under Section 80 HHC for profit on sale of DEPB: The appellant, an exporter of cashew kernels, claimed deduction under Section 80 HHC for profit on sale of DEPB. The assessing authority disallowed the claim as the appellant failed to satisfy conditions for claiming entitlement of profits on sale of DEPB. The first appellate authority upheld the disallowance based on retrospective amendment, which was considered valid. The Tribunal affirmed the assessing officer's action under Section 147, and the appellant did not challenge this finding. Issue 2: Validity of retrospective amendment of Section 80 HHC: The appellant contended that retrospective amendment of Section 80 HHC, specifically on profit derived from sale of DEPB, was struck down by the High Court of Gujarat. However, the Tribunal cannot consider the validity of a retrospective amendment, and such a question does not arise from its order. The jurisdiction conferred on the High Court under Section 260A also does not enable it to consider the validity of the amendment. Issue 3: Jurisdiction of Tribunal to consider validity of retrospective amendments: The Tribunal's jurisdiction is limited to assessing income and tax under the provisions of the Act. It cannot decide on the validity of provisions or amendments. The Tribunal's scope is strictly confined to resolving disputes between the assessee and the Commissioner as per the Act's provisions. Questions of ultra vires or constitutional validity are beyond the Tribunal's jurisdiction. Issue 4: Interpretation of Supreme Court decision on treatment of profit on sale of DEPB: The Supreme Court decision in M/s. Topman Exports Vs. Commissioner of Income Tax addressed the treatment of profit on sale of DEPB under Section 28. The Court held that profit on transfer of DEPB is the sale value less the face value, rejecting the argument of double taxation. This issue was not raised before the Tribunal or considered in the appeal. Issue 5: Constitutional validity of retrospective amendment of 2005: By following or dissenting from the High Court of Gujarat's judgment, the constitutional validity of the 2005 amendment would be determined. However, this would exceed the Tribunal's jurisdiction under Section 260A. As the appellant did not raise this question in the appeal, the Tribunal rejected the appeals filed by the assessee. In conclusion, the High Court dismissed the appeals filed by the assessee, emphasizing the limitations of the Tribunal's jurisdiction in considering the validity of retrospective amendments and constitutional issues beyond the scope of its authority under the Income Tax Act.
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