2013 (11) TMI 122 - AT - Income Tax

Deduction u/s 80HHC Held that - In view of the retrospective amendments made to section 80HHC allowing deduction in respect of incentives even in case of losses, the claim of the assessee requires fresh examination As per amended provisions deduction under section 80HHC was allowable in respect of incentives even if there was loss from export business - The amended provisions did not cover computation of indirect cost in relation to export of trading goods under section 80HHC(3). The Assessing Officer in the original assessment had computed the direct and indirect cost in a particular manner while computing profit/loss from the export of trading goods which had become final as this aspect had not been disputed by the Revenue before the Tribunal - The Assessing Officer is not empowered to disturb the indirect cost computed in the original assessment Decided in favour of assessee. Additional Ground - Deduction u/s 80HHE - such claim had neither been made in the return of income nor at the time of original assessment or in appeal against the original assessment - Such claim cannot be made in fresh proceedings Decided against assessee. Computation of indirect expenses for export business Held that - Tribunal had restored the matter to the Assessing Officer for the limited purpose of considering deduction under section 80HHC - The Assessing Officer was not justified in going beyond the scope of direction given by the Tribunal Following Sri Vindhya Vasini Prasad Gupta v. CIT 1990 (4) TMI 24 - ALLAHABAD High Court - When the Tribunal had remanded the matter to consider one issue, the Appellate Assistant Commissioner was not empowered to go into other questions.

Summary

Issues:
Claim of deduction under section 80HHC and under section 80HHE; computation of indirect expenses in relation to the export business for deduction under section 80HHC.

Analysis:
The appeal involved disputes regarding the claim of deduction under sections 80HHC and 80HHE, as well as the computation of indirect expenses related to the export business for deduction under section 80HHC. The assessee had initially declared nil income for the assessment year 2001-02 after claiming a deduction under section 80HHC. The Assessing Officer rejected the claim, leading to subsequent appeals and tribunal orders. The Tribunal directed a fresh examination of the claim under section 80HHC in light of retrospective amendments allowing deductions even in cases of losses from export business.

In the fresh assessment proceedings, the Assessing Officer recalculated the indirect expenses for trading exports, leading to a denial of the deduction under section 80HHC. The assessee contested this decision, arguing that the Assessing Officer exceeded the tribunal's mandate by recomputing indirect costs that had already been finalized. Additionally, the assessee raised an additional ground for deduction under section 80HHE, which was rejected by the Commissioner of Income-tax (Appeals).

During the appeal before the Tribunal, the authorized representative for the assessee argued that the Assessing Officer's actions went beyond the tribunal's directions and cited relevant case law to support their position. The Departmental Representative, however, contended that the Assessing Officer was entitled to reexamine the computation of indirect costs in light of the tribunal's directions. The Tribunal carefully considered these arguments and previous orders before delivering its judgment.

The Tribunal found that the limited issue restored by the Tribunal was the computation of deduction under section 80HHC in terms of the amended provisions, specifically related to incentives like DEPB. The Tribunal clarified that the amended provisions did not cover the computation of indirect costs for trading goods under section 80HHC(3). As the indirect costs had been finalized and undisputed in the original assessment, the Assessing Officer was not empowered to disturb them in the fresh assessment. Therefore, the Tribunal set aside the Commissioner of Income-tax (Appeals)'s decision and allowed the assessee's claim under section 80HHC.

Regarding the additional ground raised for deduction under section 80HHE, the Tribunal noted that this claim was not made during the original assessment or appeals and could not be introduced in the fresh proceedings. As a result, the Tribunal rejected this ground. The appeal of the assessee was partly allowed based on these findings.