2002 (11) TMI 254 - AT - Income Tax

Summary

Issues Involved:
1. Deduction u/s 80HHC in respect of export incentives when there is a loss from export of goods.
2. Binding nature of High Court judgments on Tribunals outside their jurisdiction.

Summary:

Issue 1: Deduction u/s 80HHC in respect of export incentives when there is a loss from export of goods.
The Assessing Officer noted that the assessee showed nil profits from the export of both manufacturing and trading goods due to losses but claimed a deduction u/s 80HHC for 90% of the export incentive. The CIT(A) allowed the appeal, directing that losses should be ignored while computing the deduction. The Revenue appealed, citing the Bombay High Court judgment in IPCA Laboratories Ltd. v. Dy. CIT, which held that losses should be considered. The Tribunal, however, found that the Bombay High Court judgment was not binding outside its jurisdiction and that the issue in IPCA Laboratories was not directly applicable to the present case. The Tribunal concluded that the proviso to section 80HHC(3) should be read independently, meaning that losses computed under section 80HHC(3)(a) to (c) should not be set off against 90% of the export incentives. The Tribunal upheld the CIT(A)'s order, allowing the deduction without considering the losses.

Issue 2: Binding nature of High Court judgments on Tribunals outside their jurisdiction.
The Tribunal addressed whether the Bombay High Court's judgment in IPCA Laboratories Ltd. was binding on it. It referred to the Bombay High Court's decision in Thana Electricity Supply Ltd., which stated that a High Court's decision is binding only within its territorial jurisdiction. The Tribunal concluded that the Bombay High Court's judgment was not binding on it, as it falls under the jurisdiction of the Punjab & Haryana High Court. The Tribunal emphasized that only the Supreme Court's judgments are binding on all courts and Tribunals across India.

Conclusion:
The Tribunal dismissed the Revenue's appeal, confirming that the assessee is entitled to the deduction u/s 80HHC without considering the losses from the export of goods. The Tribunal also clarified that the Bombay High Court's judgment is not binding on Tribunals outside its jurisdiction.