2014 (1) TMI 435 - AT - Income Tax

Deduction u/s 80HHC Held that - Hon ble High Courts of Gujarat and Bombay have quashed the amendment and which is affirmed by Hon ble Supreme Court and the assessee being member of the Association was under the impression that it is pursuing the alternative remedy - Necessary details in respect to deduction u/s. 80HHC of the Act are not available on records and are also to be verified by the AO The issue was restored for fresh decision.

Summary

Issues:
Delay in filing appeal, Condonation of delay, Validity of amendment u/s. 80HHC, Quashing of amendment by High Courts, Merits of the case regarding deduction u/s. 80HHC.

Delay in Filing Appeal & Condonation of Delay:
The appeal by the assessee was delayed by 2078 days. The reasons for delay included the rejection of a claim for deduction u/s. 80HHC leading to a demand of Rs.4,12,221. The CIT(A) dismissed the appeal, citing lack of authority to examine the validity of amendments. The partners discussed the issue and decided not to file a second appeal due to a pending writ petition challenging the amendment. The delay was attributed to a misunderstanding of legal provisions and the pendency of the writ petition. The assessee sought condonation of the delay, emphasizing the genuine hardship it would face. The Tribunal, considering the circumstances, condoned the delay and admitted the appeal.

Validity of Amendment u/s. 80HHC & Quashing by High Courts:
The assessee, a member of an exporters forum, argued that the amendment to section 80HHC was quashed by the High Courts of Gujarat and Bombay. The High Court held that the retrospective operation of the amendment was violative and affected a class of assessees unfairly. The High Courts quashed the amendment to the extent that it affected assessees with export turnover above Rs. 10 Crore. The assessee contended that the High Courts' decisions, affirmed by the Supreme Court, provided a reasonable cause for the delay in filing the appeal. The Tribunal acknowledged the High Courts' rulings and admitted the appeal.

Merits of the Case Regarding Deduction u/s. 80HHC:
The CIT(A) had considered the issue of deduction u/s. 80HHC in light of the amendment made by the Taxation Law Amendment Act 2005. The appellant had challenged the assessment as arbitrary and bad in law, citing the pending writ petition. The CIT(A) noted that the High Court had not granted a stay order against the assessment or appeal proceedings. The Tribunal, in view of these circumstances, admitted the appeal and remitted the issue of deduction u/s. 80HHC back to the Assessing Officer for verification and decision based on available details. The appeal was partly allowed for statistical purposes.

In conclusion, the Tribunal addressed the delay in filing the appeal, the validity of the amendment u/s. 80HHC, the quashing of the amendment by the High Courts, and the merits of the case regarding deduction u/s. 80HHC, ultimately admitting the appeal and remitting the issue back to the Assessing Officer for further verification and decision.