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2012 (8) TMI 669 - AT - Income TaxDenial of benefit of deduction u/s 80HHC on the DEPB/DFRC Licenses Held that - While disallowing the deduction the Assessing Officer, in view of amendment to section 80HHC with retrospective effect from 1.4.1998 held that the profit on transfer of DEPB received by the assessee is covered under clause (iiid) of section 28 of Income Tax Act - As regards DEPB CIT upheld the action of the Assessing Officer observing that the assessee had not fulfilled the relevant conditions contained in 3rd provision inserted by Taxation Laws(Amendment) Act, 2005 matter remanded to AO - appeal is allowed for statistical purposes
Issues involved:
1. Disallowance of deduction u/s 80HHC on DEPB/DFRC Licenses. 2. Exceeding jurisdiction by following the order of Bombay High Court against the Tribunal's direction. 3. Allowance of deduction u/s 80HHC on duty drawback and sale of quota license. 4. Appeal for assessment years 2000-01 & 2001-02. Issue 1: Disallowance of deduction u/s 80HHC on DEPB/DFRC Licenses: The appellant contested the disallowance of deduction u/s 80HHC on DEPB/DFRC Licenses. Initially, the Assessing Officer disallowed the deduction based on retrospective amendments to the Income Tax Act. The CIT(A) upheld this decision, leading to an appeal before the ITAT. The ITAT remanded the issue back to the Assessing Officer twice, directing consideration of the retrospective amendments. The CIT(A) subsequently rejected the claim, citing agreement with the Bombay High Court decision. However, the ITAT allowed the appeal, referring to a Supreme Court judgment that set aside the Bombay High Court decision and directed the Assessing Officer to decide the issue afresh in accordance with the Supreme Court's ruling. Issue 2: Exceeding jurisdiction by following the order of Bombay High Court against the Tribunal's direction: The appellant argued that the CIT(A) erred by upholding the Assessing Officer's decision based on the Bombay High Court order, despite specific directions from the Tribunal to consider the issue based on a Special Bench's judgment. The ITAT acknowledged the Supreme Court's decision that overruled the Bombay High Court judgment and directed the Assessing Officer to reevaluate the deduction u/s 80HHC on DEPB/DFRC Licenses in line with the Supreme Court's ruling. Issue 3: Allowance of deduction u/s 80HHC on duty drawback and sale of quota license: Regarding duty drawback and sale of quota license, the CIT(A) directed the Assessing Officer to allow deductions u/s 80HHC for these items based on relevant provisions and precedents. The ITAT upheld the CIT(A)'s decision, instructing the Assessing Officer to grant deductions for duty drawback and sale of quota license, aligning with the ITAT's previous rulings. Issue 4: Appeal for assessment years 2000-01 & 2001-02: The appeals for assessment years 2000-01 & 2001-02 were filed by the assessee against separate orders of the CIT(A) relating to disallowance of deductions u/s 80HHC. The ITAT considered the appeals, addressing common grounds raised by the assessee for both assessment years. The ITAT allowed the appeals for statistical purposes, setting aside the CIT(A)'s decisions and remanding the issues to the Assessing Officer for fresh consideration following the Supreme Court's ruling and relevant legal provisions. This detailed analysis of the judgment highlights the key issues involved, the arguments presented by the parties, and the final decisions rendered by the ITAT, providing a comprehensive overview of the legal proceedings and outcomes.
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