2005 (12) TMI 72 - HC - Income Tax

Export development allowance under section 80HHC - 1. Whether Tribunal is right in law in holding that, while computing the export development allowance under section 80HHC, the total sales, export sales and net profit should be taken into consideration and the allowance should be computed at Rs. 94,510 instead of Rs. 12,100? 2. Whether, the Tribunal is right in holding that in working out the export development allowance under section 80HHC, the Assessing Officer was not right in taking into consideration the loss of some of the units of the assessee? - in the absence of any infirmity in the impugned order of the Tribunal, both the questions are answered in the affirmative, i.e., in favour of the assessee and against the Revenue

Summary

Issues:
1. Interpretation of provisions under section 80HHC of the Income-tax Act, 1961 for computing export development allowance.
2. Consideration of loss incurred in some units while working out export development allowance under section 80HHC.

Analysis:
The High Court of Gujarat addressed two key issues referred by the Income-tax Appellate Tribunal regarding the computation of export development allowance under section 80HHC of the Income-tax Act, 1961 for the assessment year 1986-87. The first issue revolved around whether the Tribunal correctly considered total sales, export sales, and net profit while computing the allowance, leading to a higher amount compared to the one initially claimed by the assessee. The second issue questioned the Assessing Officer's decision to include losses from certain units of the assessee when determining the export development allowance.

Upon review, the Court noted that the Tribunal appropriately applied the provisions of section 80HHC as applicable for the relevant assessment year. Specifically, sub-section (3) of section 80HHC outlined the parameters for computing profits derived from exports, including profits and gains of business, export turnover, and total turnover. The Tribunal found that the assessee's claim aligned with these parameters, leading to a correct computation of the allowance. The Court highlighted that the departmental representative failed to provide substantial arguments beyond referring to lower authorities' orders, reinforcing the correctness of the Tribunal's decision.

Regarding the alternative contention raised by the Revenue, the Court determined that the Tribunal's assessment of the relief calculation was accurate and in line with the provisions of section 80HHC. Consequently, the alternative plea was dismissed as the Tribunal had already considered and validated the working of the relief amount. Ultimately, the Court upheld the Tribunal's decision, ruling in favor of the assessee and against the Revenue on both issues. As a result, the reference was disposed of without any costs incurred by either party.