2023 (9) TMI 1045 - SCH - Income Tax

Deduction of income from export of cashew kernels u/s 80HHC - question that fell for consideration before the High Court was, whether, the Revenue was justified in holding that the retrospective amendment to Section 80-HHC(3) of the Act entitled the Assessing Officer to invoke the powers of rectification u/s 154 of the Act to bring the assessment orders in tune with the amendment - as per HC 2010 (3) TMI 1281 - KERALA HIGH COURT while considering the amendment to Section 80HHC(3) by the Taxation Laws (Amendment) Act, 2005 with retrospective effect from 01.04.1992 and the fact that the assessments pertained to the years 1999-2000 and 2000-2001, although the assessments and reassessments were completed, held that the power of rectification under Section 154 of the Act was rightly exercised by the Assessing Officer. Therefore, the appeals filed by the Revenue were allowed and consequently the matter(s) were remanded to the Tribunal for reconsideration of the appeals on other grounds. HELD THAT - This Court in Avani Exports and Anr. 2015 (4) TMI 193 - SUPREME COURT held essence the High Court has quashed the severable part of third and fourth proviso to Section 80-HHC(3) and it becomes clear therefrom that challenge which was laid to the conditions contained in the said provisos by the respondent has succeeded. To make the position crystal clear, we substitute the direction of the High Court with the following direction that having seen the twin conditions and since Section 80-HHC benefit is not available after 1-4-2005, we are satisfied that cases of exporters having a turnover below and those above Rs.10 crores should be treated similarly. This order is in substitution of the Judgment in appeal This position has been clarified by this Court in Union of India vs. Paliwal Overseas Private Limited 2016 (12) TMI 615 - SUPREME COURT as far as issue relating to turnover below 10 crores and above 10 crores is concerned, the same has already been answered by this Court in the recent order dated 30-3-2015 in CIT v. Avani Exports making it clear that it applied to both categories. In terms of the said order, these appeals are also disposed of. Order dated 30-3-2015, as mentioned above, shall form part of this judgment . Having regard to the fact that this Court accepted the judgment of the High Court impugned therein except to the aforesaid extracted portion wherein this Court stated that the twin conditions under Section 80-HHC(3) which have been quashed by the High Court would apply to both categories of exporters having a turnover above Rs.10 crores and those having a turnover below Rs.10 crores and sustaining the impugned judgment of the High Court in all other respects, we find that the direction for remand after the judgment of this Court in the aforecited case would be otiose and wholly unnecessary. In fact, the issue having been settled, the remand has become redundant. In the circumstances, we set aside the impugned order(s) of the High Court. The appeals are, accordingly, allowed.

Summary

Issues Involved:
The judgment involves the retrospective amendment to Section 80-HHC(3) of the Income Tax Act, 1961, and the validity of rectification orders under Section 154 in relation to cashew exporters claiming deductions.

Retrospective Amendment to Section 80-HHC(3):
The Supreme Court heard appeals filed by cashew exporters aggrieved by the order of remand passed by the Kerala High Court regarding the retrospective amendment to Section 80-HHC(3) of the Income Tax Act, 1961. The High Court had held that the retrospective amendments were valid, and the power of rectification under Section 154 was rightly exercised by the Assessing Officer. The appeals filed by the Revenue were allowed, and the matter was remanded to the Tribunal for reconsideration on other grounds.

Validity of Rectification Orders under Section 154:
The appellant-assessees, cashew exporters, had claimed deductions under Section 80-HHC(3) of the Act. The Taxation Laws (Second Amendment) Act, 2005 introduced amendments with retrospective effect from 01.04.1992. The Assessing Officer rectified the assessments to align with the amendments, which were challenged before the CIT (Appeals) and the Tribunal. The High Court upheld the rectification orders, leading to the remand of the matter to the Tribunal. However, the Supreme Court set aside the High Court's remand order, stating that it had become redundant after the clarification provided in previous judgments regarding the retrospective amendment.

Conclusion:
The Supreme Court allowed the appeals, setting aside the High Court's orders and restoring the original assessment orders. The Court emphasized that the issue had been settled, making the remand unnecessary. The judgment clarified the application of the retrospective amendment to Section 80-HHC(3) and established that the rectification orders were valid in light of the amendments.