2020 (5) TMI 632 - HC - Income Tax

Revision u/s 263 - Computation of taxation of profits of the Industrial Undertaking u/s 80-I - amounts of duty draw back received for the manufactured goods exported by it - HELD THAT - It is a matter of record that the Assessing Officer while restricting the deduction under Section 80-I allowed deduction on duty draw back in respect of the goods manufactured and exported. The 1st Appellate Authority noted the contention of the assessee that the dispute was that the assessee claimed deduction under Section 80-I on the goods bought from market and exported. The Appellate Authority held that the assessee is entitled to deduction under Section 80-I proportionately on the goods manufactured and exported. The dis-allowance of deduction under Section 80-I on the goods purchased from market and exported was upheld. Tribunal rightly observed that the issue whether deduction under Section 80-I is available on duty draw back on manufactured goods was never specifically dealt in appeal. There was no occasion for raising the issue as the deduction was allowed by the AO. There is no quibble that the Commissioner (Appeals) as per the explanation to Section 251 of the Act can consider the matter arising out of the proceedings in which the appeal is filed irrespective of the fact that the said matter has not been raised by the appellant. There is also no dispute/ that as per explanation 1(c) to Section 263(1) the revision cannot be done of the issue which has been considered and decided in appeal. In the present case the issue whether the assessee was entitled to deduction under Section 80-I of the Act on duty draw back with regard to goods manufactured and exported was neither considered nor decided in appeal. The reliance on certain part of the order by learned counsel for the appellant is not well founded. The said observations were vis-a-vis the proportionate deduction under Section 80-I qua the goods manufactured and exported. The reliance on the decision of Gujarat High Court in 2003 (4) TMI 77 - GUJARAT HIGH COURT does not enhance the case of the assessee as already discussed the issue taken up in revision was not subject matter of appeal - Decided against assessee. Disallowing the exemption in respect of duty draw back while computing the tax free profit u/s 80-I - HELD THAT - As decided in M/s Nahar Spinning Mills Ltd. 2010 (11) TMI 1099 - PUNJAB AND HARYANA HIGH COURT in the case of the assessee itself deciding the following question in favour of the revenue.

Summary

Issues:
1. Jurisdiction of CIT to revise assessment under Section 260A of the Income Tax Act, 1961.
2. Disallowance of exemption in respect of duty draw back while computing tax-free profit under Section 80-I of the Income Tax Act.
3. Erroneous assessment order for the assessment year 1989-90 invoking jurisdiction under Section 263 of the Act.

Analysis:

Issue 1:
The primary issue addressed in the judgment pertains to the jurisdiction of the Commissioner of Income Tax (CIT) to revise an assessment made by the Assessing Officer (AO) under Section 260A of the Income Tax Act, 1961. The case involved a dispute regarding the deduction under Section 80-I of the Act on duty draw back received for goods exported by the assessee. The appellant contended that the revisional authority had no jurisdiction to revise the assessment order as the issue was already subject to appeal. The appellant relied on relevant explanations to Sections 251 and 263 of the Act to support their argument. However, the court held that since the issue of deduction on duty draw back was not specifically dealt with in the appeal, the revisional authority had the jurisdiction to address it. The court emphasized that the matter must be considered and decided in appeal for it to be exempt from revision under Section 263.

Issue 2:
The second issue revolved around the disallowance of exemption in respect of duty draw back while computing tax-free profit under Section 80-I of the Income Tax Act. The court examined whether the assessee was entitled to deduction under Section 80-I on duty draw back received for goods manufactured and exported. The Assessing Officer had restricted the deduction to goods manufactured and exported only. The 1st Appellate Authority upheld this restriction, denying the deduction for goods purchased from the market and exported. The Tribunal concurred with this decision, noting that the issue of duty draw back on manufactured goods was not specifically raised during the appeal process. Therefore, the court dismissed the appellant's argument and upheld the decision to disallow the exemption on duty draw back for traded goods.

Issue 3:
The final issue addressed in the judgment pertained to the assessment order for the assessment year 1989-90 and the invocation of jurisdiction under Section 263 of the Act. The revisional authority had set aside the assessment order, directing the withdrawal of relief allowed under Section 80-I on duty draw back for goods manufactured and exported. The appellant challenged this revision, arguing that the issue was already under appeal. However, the court found that since the issue was not considered or decided in the appeal, the revisional authority had the power to address it. The court emphasized that the revision cannot be done on issues that have been considered and decided in appeal, which was not the case in this instance. Consequently, the court dismissed the appeal, affirming the revisional order.

In conclusion, the judgment provides a detailed analysis of the issues related to the jurisdiction of the CIT, the disallowance of exemption on duty draw back, and the invocation of jurisdiction under Section 263 of the Income Tax Act for the assessment year 1989-90. The court's decision was based on a thorough examination of the relevant legal provisions and factual circumstances surrounding the case.