2014 (11) TMI 811 - HC - Income Tax

Admission of appeal Five questions of law formulated which can be termed as substantial question or not Held that - The matters in appeal is already decided in favour of assessee by the Tribunal the only question which can be termed as substantial question is whether the Tribunal erred in law in directing to allow deduction u/s80HHC on labour charges, since in assessee s case there was no direct nexus between labour charges receipt and export business of the assessee which can be termed as substantial question - Decided partly in favour of revenue.

Summary

Issues:
1. Challenge to order passed by the Income Tax Appellate Tribunal
2. Five substantial questions of law raised for consideration

Analysis:

1. Challenge to ITAT Order:
The appeal challenges the order passed by the Income Tax Appellate Tribunal, Mumbai, dated 28 December 2011 in Income Tax Appeal No.6009 of 2010.

2. Substantial Questions of Law:
a. Question 1: The first question pertains to the deletion of an addition of a specific amount by the ITAT. The appellant argues that the ITAT erred in relying on previous court orders without considering the merits of the case.
b. Question 2: This question involves the invocation of section 145(3) of the Income Tax Act due to the assessee's failure to provide evidence regarding invoice rates. The AO's action was not upheld by the ITAT.
c. Question 3: The ITAT deleted an addition ignoring the alleged diversion of profits to a related party, which was challenged by the appellant.
d. Question 4: The ITAT directed to allow a deduction under section 80HHC on labor charges, which the appellant argues was not justified due to the lack of a direct nexus with the export business.
e. Question 5: The ITAT deleted an addition related to sales tax subsidy, considering it a capital receipt. The appellant contests this decision based on pending legal proceedings against a similar case.

3. Agreed Position and Admittance of Appeal:
The appellant's counsel acknowledged that questions 1 to 3 and 5 have been decided against the Revenue and in favor of the Assessee by the Tribunal and the High Court. Consequently, this appeal is admitted only on the substantial question of law related to the deduction under section 80HHC on labor charges.

4. Further Proceedings:
The Registrar is directed to summon the original record from the Tribunal for inspection. The paper book submitted is deemed sufficient for admission, with instructions for the preparation of a complete paper book as per the Rules.

This detailed analysis outlines the key issues raised in the judgment, including challenges to the ITAT order, substantial questions of law, agreed positions, and the procedural steps following the admission of the appeal.