2012 (8) TMI 454 - AT - Income Tax

Treatment to sales tax set-off/refund & interest refund - part of business profit or not while calculating deduction u/s 80HHC ? - Held that - As decided in Alfa Laval India Ltd. Versus Deputy Commissioner of Income-Tax 2003 (9) TMI 43 - BOMBAY HIGH COURT the interest from customers and sales tax set off received by the assessee being assessed as part of the business profits under the head profits and gains of business or profession , the same could not be excluded while calculating deduction under section 80 HHC - in the absence of any distinguishing feature brought on record by the Revenue direction to the AO not to exclude the sales tax refund while calculating the deduction under section 80HHC of the Act - no mistake in the order of the Tribunal in terms of section 254(2) of the Act and accordingly the Misc. Petition filed by the Revenue is rejected - in favour of assessee.

Summary

Issues:
- Interpretation of judicial pronouncements in relation to sales tax refund and its treatment as part of business profit for deduction u/s 80HHC of the Income Tax Act, 1961.

Analysis:
1. The main issue in this case revolves around the treatment of sales tax refund in the calculation of deduction under section 80HHC of the Income Tax Act, 1961. The Revenue filed a Misc. Petition challenging the Tribunal's order favoring the assessee and not excluding the sales tax refund while calculating the deduction. The Revenue argued that subsequent judicial pronouncements, specifically the case of Dresser Rand India Pvt. Ltd., should have been considered by the Tribunal. The Revenue sought rectification of the order under section 254(2) of the Act.

2. During the hearing, the Revenue cited the decision of the Hon'ble jurisdictional High Court in CIT vs. Dresser Rand India Pvt. Ltd. to support their argument for recalling the Tribunal's order. On the other hand, the counsel for the assessee contended that the Tribunal's decision, based on their own previous order and supported by relevant judicial precedents, did not warrant any interference. The counsel highlighted that the case of Dresser Rand India Pvt. Ltd. was distinguishable and not conclusive, as observed by the Hon'ble jurisdictional High Court in another case.

3. The Tribunal, after considering the arguments presented by both parties, upheld its original decision not to exclude the sales tax refund while calculating the deduction under section 80HHC. The Tribunal relied on its previous order in the assessee's own case and the judgments of the Hon'ble Supreme Court and the Hon'ble Jurisdictional High Court. The Tribunal found no mistake in its order and rejected the Misc. Petition filed by the Revenue, thereby dismissing the application.

This detailed analysis showcases the thorough examination of the legal issues involved in the judgment, emphasizing the interpretation of relevant judicial pronouncements and their application to the specific case of sales tax refund treatment under the Income Tax Act.