2008 (9) TMI 30 - HC - Income Tax

Export - in respect of sale to Jordan Co. benefit u/s 80HHC was denied by AO on ground that sale didn t constitute part of the assessee s trading activity in respect of sales to non-Jordan Co. benefit was denied holding that sales were ultimately for the benefit of Jordan Co. - Tribunal rightly hold that impugned exports was as a result of fresh purchase orders & were not in connection with earlier contracts sale proceeds is in convertible foreign exchange - hence benefit can t be denied

Summary

Issues:
1. Disallowance of deductions under Section 80HHC for exports made to General Specialised Steel Manufacturing Company (GSSMC) in Jordan.
2. Disallowance of deductions under Section 80HHC for exports made to non-Jordan companies.
3. Appeals filed against the order of the Income Tax Appellate Tribunal.

Analysis:
1. The assessee exported goods to GSSMC in Jordan and claimed deductions under Section 80HHC. The Assessing Officer disallowed the claim, stating the sales were part of a contract and not trading activity. The Commissioner of Income-tax (Appeals) confirmed this disallowance. However, the Tribunal found that the exports were independent of the contracts with GSSMC, satisfying the conditions for deductions under Section 80HHC. The Tribunal set aside the Commissioner's order and directed the Assessing Officer to allow the deductions.

2. Regarding exports to non-Jordan companies, the Assessing Officer believed these were ultimately for the benefit of GSSMC and denied deductions under Section 80HHC. The Commissioner of Income-tax (Appeals) disagreed, stating the sales were independent, and allowed the deductions. The Tribunal upheld this decision, noting the sales were based on orders received and proceeds were in convertible foreign exchange, similar to previous years' allowances.

3. The Tribunal's detailed analysis found no fault in the decisions based on facts presented. It concluded that no substantial question of law arose for consideration, leading to the dismissal of the appeals. Justices Badar Durrez Ahmed and Rajiv Shakdher delivered the judgment, affirming the Tribunal's findings and upholding the allowance of deductions under Section 80HHC for both sets of exports.