2007 (8) TMI 334 - HC - Income Tax

Deduction u/s 80HHC - Merchandise exported - minerals and ores tribunal held that merchandise exported by the assessee do not constitute minerals and ores within the meaning of section 80HHC(2)(b)(ii) Moreover tribunal held that the provisions of section 80HHC(2)(b)(ii) are retrospective in nature HC has answered in favor of revenue and against the assessee

Summary

Issues:
Challenge to order of Income-tax Appellate Tribunal under section 256(2) of the Income-tax Act, 1961 - Refusal to refer questions of law to High Court - Interpretation of section 80HHC(2)(b)(ii) - Retrospective effect of amendment by Finance (No. 2) Act, 1991.

Analysis:
1. The petition challenges the order of the Income-tax Appellate Tribunal, Delhi Bench, dismissing the Revenue's application under section 256(1) of the Income-tax Act, 1961. The Revenue sought referral of two questions of law arising from the Tribunal's order in respect of the assessment year 1988-89.

2. The counsel for the Revenue highlighted that in a previous case of the same assessee for the assessment year 1984-85, the Tribunal had also refused to refer the same questions. However, a Division Bench later decided in favor of the Revenue in a separate case. The assessee did not appear for the current proceedings.

3. Despite the absence of the assessee, after hearing the Revenue's counsel, the court found that the first question was answered in favor of the Revenue based on a judgment of the Supreme Court in Gem Granites v. CIT. The court held that treating the amendment as retrospective was legally unsustainable.

4. The second question was also decided in favor of the Revenue based on the same judgment in Gem Granites. The court held that the benefit of the amendment by the Finance (No. 2) Act of 1991 could not be extended to the assessee for the assessment year 1988-89.

5. The court acknowledged that it could have directed the Tribunal to refer the questions for its opinion. However, since the questions were already answered in favor of the Revenue in a previous case involving the same assessee for the assessment year 1984-85, the court followed the previous decision and ruled in favor of the Revenue.

6. Consequently, the court disposed of the petition, upholding the decisions in Haryana Minerals Ltd.'s case [2005] 276 ITR 399, which favored the Revenue and ruled against the assessee regarding the interpretation of section 80HHC(2)(b)(ii) and the retrospective effect of the amendment by the Finance (No. 2) Act, 1991.