2001 (7) TMI 271 - AT - Income Tax

Summary

Issues:
Jurisdiction under section 263 of the Income-tax Act, 1961 regarding intimation made under section 143(1)(a) for assessment years 1986-87 and 1987-88. Interpretation of section 80HHC deduction in relation to profits arising from sales of goods imported under import license. Whether intimation under section 143(1)(a) constitutes an 'order' and falls under revisionary jurisdiction of the Commissioner of Income-tax.

Analysis:
The appeals were filed against the order of the Commissioner of Income-tax invoking jurisdiction under section 263 of the Income-tax Act, 1961, for the assessment years 1986-87 and 1987-88. The issue revolved around the treatment of profits arising from sales of goods imported under an import license in relation to section 80HHC deduction. The Commissioner held that such profits from sales in India cannot be considered for section 80HHC deduction, leading to the setting aside of the intimation under section 143(1)(a) for both years.

The assessee contended that profits from the sale of import entitlements should be considered part of export business income for section 80HHC deduction. The assessee relied on a decision by the Patna Bench of the Income-tax Appellate Tribunal, arguing that an intimation under section 143(1)(a) does not constitute an 'order' and is beyond the revisionary jurisdiction of the Commissioner under section 263.

The departmental representative argued that an intimation under section 143(1)(a) is indeed an order, and the Commissioner can invoke jurisdiction under section 263 if the interest of Revenue is at stake. However, the Tribunal disagreed with the department's interpretation, emphasizing that matters like the treatment of income from sales of imported goods should be decided after due consideration and cannot be determined through an intimation under section 143(1)(a).

Ultimately, the Tribunal held that the Commissioner was not justified in setting aside the intimation proceedings under section 263. The decision emphasized that what could not be considered under section 143(1)(a) cannot be insisted upon for consideration under section 263. Consequently, the assessee succeeded in the appeal, and the appeals were allowed.