1997 (9) TMI 154 - AT - Income Tax

Summary

Issues:
Prima facie adjustments under section 143(1)(a) of the IT Act regarding the deduction claimed under section 80HHC.

Analysis:
The appeal was against the CIT(A)'s order for the assessment year 1993-94. The assessee, a government-owned corporation, earned profits from exporting iron ore through MMTC Ltd. The AO made adjustments to the deduction claimed under section 80HHC, excluding the premium in REP licenses from total turnover. The assessee contended that as a supporting manufacturer, REP license benefits were part of the sale consideration, not to be excluded. The CIT(A) upheld the adjustments, citing sections 80HHC(1A), (3A), (4A), and cl. (baa) of the Explanation to section 80HHC as clear. The assessee appealed, arguing against the adjustments, relying on legal precedents and circulars. The Departmental Representative supported the CIT(A)'s decision, stating clarity in section 80HHC provisions. The Tribunal considered the dispute, noting the AO's recomputation of the deduction claimed under section 80HHC, reducing it based on REP license value exclusion. The assessee's contention, supported by legal precedents and circulars, highlighted the inadmissibility of such adjustments during processing under section 143(1)(a). The Tribunal agreed with the assessee, citing the Bombay High Court's decision and CBDT's clarification, directing the AO to rectify the intimation, deleting the adjustment and additional tax levied. The appeal was allowed, ruling in favor of the assessee.