2008 (7) TMI 112 - HC - Income Tax

Assessee a supporting manufacturer - Income from the manufacturing & sale of textile goods to Export House - assessee is claiming deduction under Section 80HHC claiming itself as a supporting manufacturer at par with the direct exporter - in the case of the assessee itself similar question of law raised by the revenue for the earlier assessment year has been answered against the revenue and the appeal filed by the revenue has been dismissed revenue appeal dismissed assessee s claim allowed

Summary

Issues:
1. Interpretation of Section 80HHC of the Income Tax Act, 1961 for a supporting manufacturer claiming deductions.
2. Whether a supporting manufacturer is entitled to deductions under Section 80HHC at par with a direct exporter.

Analysis:
1. The assessee, a supporting manufacturer, claimed deductions under Section 80HHC of the Income Tax Act, 1961, based on a judgment by the Income Tax Appellate Tribunal. However, the Assessing Officer disallowed the deductions, leading to an appeal by the assessee.

2. The Commissioner of Income Tax (Appeals) ruled in favor of the assessee, stating that the deductions under Section 80HHC should be allowed to the supporting manufacturer similar to a direct exporter. This decision was challenged by the revenue before the Tribunal.

3. The Tribunal upheld the claim of the assessee for deduction under Section 80HHC as a supporting manufacturer. The revenue's appeal was partly allowed on other issues not relevant to this appeal.

4. The revenue filed an appeal under Section 260A of the Act against the Tribunal's order, questioning the treatment of the supporting manufacturer at par with a direct exporter for deductions under Section 80HHC. The substantial question of law raised was whether the Tribunal was correct in directing the Assessing Officer to allow such deductions.

5. The revenue contended that the deductions under Section 80HHC were already computed and allowed by the Assessing Officer, and the provision of Explanation (baa) to Section 80HHC was not applicable to the assessee. The revenue argued that the Tribunal erred in upholding the claim of the assessee.

6. The High Court examined the submissions and referred to a previous judgment where a similar question of law was decided in favor of the assessee. The Court upheld the claim of the assessee as a supporting manufacturer at par with a direct exporter, citing relevant legal precedents.

7. Consequently, the High Court found no merit in the revenue's appeal, stating that no substantial question of law remained for determination. The appeal was dismissed, affirming the treatment of the supporting manufacturer for deductions under Section 80HHC in line with the direct exporter.