2012 (6) TMI 906 - HC - Income Tax

Summary

Issues involved: The judgment involves appeals related to assessment years 1999-2000, 1997-98, 2000-01, and 2001-02 concerning the computation of profits earned from export business u/s 80HHC of the Income Tax Act, 1961.

ITA 793 of 2006: The issue was whether conversion charges could be treated as income of the assessee from business and if such income should be excluded for the purpose of deduction under section 80HHC of the Act. The tribunal's decision was questioned.

ITA 794 of 2006: Similar to ITA 793, the question was whether conversion charges could be considered as part of eligible profit for deduction under section 80HHC of the Act. Additionally, it was debated if other income received by the assessee should be included in the computation of eligible profits.

ITA 795 of 2006: This appeal also focused on the treatment of conversion charges as income of the assessee from business and whether such charges should be excluded for the purpose of deduction under section 80HHC of the Act.

ITA 796 of 2006: The issue in this appeal mirrored the previous ones, questioning the treatment of conversion charges as income of the assessee from business and their exclusion for the purpose of deduction under section 80HHC of the Act.

The Court clarified that the reference to Section 41(1) of the Act was unnecessary and reframed the common question for all appeals regarding the treatment of conversion charges for deduction under section 80HHC.

During the hearing, the revenue argued that previous court judgments supported their stance on the treatment of conversion charges, while the assessee's counsel referenced relevant case law to support their position.

The Court noted that the computation of profits for deduction under section 80HHC should consider conversion charges based on the law declared by the Supreme Court, necessitating a re-computation by the assessing officer.

Despite objections from the revenue, the Court held that conversion charges fell within the purview of Explanation(baa) to section 80HHC, requiring application of the Supreme Court's principles for computing such profits.

In conclusion, the Court allowed the appeals, overturned the tribunal's orders, and directed the assessing officer to recompute the deduction amount under section 80HHC by considering the profits attributable to conversion charges in accordance with the Supreme Court's judgment.