2015 (1) TMI 106 - HC - Income Tax

Non-speaking order by Tribunal - Deduction u/s 80HHC - Whether the Tribunal is right in reversing the order of the CIT(A) and directing the AO to exclude the excise duty from the total turnover for computing deduction u/s 80HHC when the net result in the export business is a loss Held that - While reversing the findings of the CIT(A), the Tribunal has not assigned detailed reasons and has straightway stated that there is considerable force in the contention of the counsel of the assessee that refund of excise duty amounting to ₹ 21,41,462/- appearing in the credit side of the profit and loss account should reduce cost of purchases - The Tribunal as an appellate Court was required to look into the matter and was to give its independent findings on the issue - while determining the issue of adjustment of freight and computation for deduction u/s 80HHC of the Act, the Tribunal again relied on the calculation given by the assessee, without given any reason for relying on the same, and directed the AO to verify the assessee s claim and to grant him deduction u/s 80HHC thus, the matter is to be remitted back to the Tribunal for fresh consideration Decided in favour of revenue.

Summary

Issues:
1. Appeal against the order of the ITAT for A.Y. 1995-96 allowing the appeal of the respondent-assessee for statistical purpose.
2. Questions of law regarding the exclusion of excise duty from total turnover for computing deduction u/s 80 HHC and allowing deduction when the net result in the export business is a loss.

Analysis:

Issue 1:
The appeal by the appellant-revenue challenges the ITAT's order allowing the appeal of the respondent-assessee for statistical purpose. The case involved the assessee claiming deduction under Section 80HHC of the Income Tax Act, which was disallowed by the AO and CIT(A). The Tribunal directed the AO to verify the calculation given by the assessee and allow the deduction. The High Court observed that the Tribunal did not provide detailed reasons for its decision, merely stating that there was "considerable force" in the assessee's contention without independent findings. Consequently, the High Court remanded the matter to the Tribunal for fresh consideration on merits and in accordance with the law.

Issue 2:
The questions of law raised for consideration were whether the ITAT was correct in directing the exclusion of excise duty from total turnover for computing deduction under Section 80 HHC and allowing the deduction when the net result in the export business is a loss. The appellant argued that the Tribunal erred in its decision, while the respondent supported the Tribunal's order based on relevant case laws. The High Court noted that the Tribunal's decision lacked detailed reasoning and remanded the matter for fresh consideration. The High Court partly allowed the appeal, quashed the Tribunal's order, and instructed a reconsideration by the Tribunal with detailed reasons after hearing the parties.

In conclusion, the High Court's judgment emphasized the importance of providing detailed reasons for decisions, especially in tax matters, and ordered a fresh consideration by the Tribunal to ensure justice and compliance with the law.