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Issues involved:
The issue involves the jurisdiction of the Deputy Commissioner of Income-tax to pass a rectification order u/s 154 of the Income-tax Act, 1961 regarding the computation of deduction u/s 80HHC, specifically in relation to the deduction of unabsorbed depreciation and unabsorbed losses from the profits of the business. Summary: Facts of the case: The assessee computed the income under normal provisions of the Income-tax Act, adjusting against brought forward losses and depreciation. The Deputy Commissioner of Income-tax initially computed the income at a certain amount under normal provisions. Subsequently, rectification orders were passed adjusting the carried forward unabsorbed depreciation and losses, leading to a dispute regarding the deduction under section 80HHC. Contentions: The assessee contended that the issue of deducting unabsorbed depreciation and losses while computing deduction u/s 80HHC was debatable, citing precedents and High Court judgments supporting their stance. The High Court's interpretation emphasized the legislative intent behind section 80HHC to encourage exports and maximize benefits for exporters. Legal arguments: The learned Counsel for the assessee argued that the issue was debatable, referencing the criteria for a mistake apparent on record as per Supreme Court precedents. It was highlighted that various High Courts had supported the interpretation similar to the Bombay High Court's judgment in a related case. Decision: The High Court concluded that the Deputy Commissioner of Income-tax lacked jurisdiction to pass the order under section 154 as the issue regarding deduction u/s 80HHC was debatable. The judgment favored the assessee, emphasizing the debatable nature of the issue and the lack of clarity in the legal interpretation.
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