2014 (9) TMI 730 - HC - Income Tax

Rejection of claim of higher deduction u/s 80HHC Held that - Following the decision in Goetze (India) Ltd. Vs. Commissioner of Income Tax 2006 (3) TMI 75 - SUPREME Court - the question of law is answered in favour of the assessee, but with an order of remand as the claim u/s 80HHC will have to be examined by the AO as is requested by the counsel for the Revenue - The entire claim including the question whether the assessee was a manufacturer and was entitled to claim deduction at a higher rate u/s 80HHC can be examined by the AO - the matter relates to AY 1993-94 but notwithstanding the time gap, the assessee will have to produce and prove their claim along with necessary documents Decided in favour of assessee.

Summary

Issues:
Claim for higher deduction under Section 80-HHC of the Income Tax Act, 1961.

Analysis:
The appellant-assessee, a firm engaged in the business of manufacturing and exporting goods, filed a return for the assessment year 1993-94 claiming a deduction under Section 80HHC of the Income Tax Act. During the assessment proceedings, the appellant revised the claim from Rs. 3,57,90,698 to Rs. 3,64,68,255 due to an oversight in the classification of goods. The Assessing Officer rejected the revised claim stating that the time for filing a revised return had lapsed. The Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal upheld this decision, citing the Supreme Court case of Goetze (India) Ltd. vs. Commissioner of Income Tax.

A similar issue was addressed in the case of Commissioner of Income Tax vs. Sam Global Securities Ltd., where the decision in Goetze (India) Ltd. was distinguished. The High Court referred to the Supreme Court's decision in National Thermal Power Co. Ltd. vs. CIT and Jute Corporation of India Ltd. vs. CIT, emphasizing that the appellate authority has the power to entertain additional grounds subject to statutory provisions. Previous cases like CIT vs. Natraj Stationery Products (P) Ltd. and Commissioner of Income Tax vs. Rose Services Apartment India P. Ltd. supported the view that the Tribunal could entertain claims for re-computation of deductions.

The High Court ruled in favor of the appellant-assessee, stating that the claim for higher deduction under Section 80HHC should be examined by the Assessing Officer. The court ordered a remand for further examination of the claim, including determining if the assessee was entitled to claim a higher deduction rate under Section 80HHC. Despite the time gap, the assessee was directed to provide necessary documents to support their claim. The appeal was disposed of without costs.