2018 (11) TMI 1494 - HC - Income Tax

Deduction u/s 10A - order of Remand passed by the Tribunal - Tribunal not dealing with the relief granted by the CIT(Appeals) under Section 10A under the amendment provision to that Section - Held that - Tribunal opined that the issue must go back to the file of the CITA for reconsideration to adjudicate the issue, on merits. The Tribunal came to such a conclusion, since, the CIT(A) has summarily dismissed the relief sought for by the assessee under Section 80HHC, though it granted relief to the assessee under Section 10A of the Act. Thus, the Tribunal was of the opinion that the matter requires to be re-examined. The assessee need not have any apprehension in this regard, as the order passed by the Tribunal is very clear, since this appeal is filed by the assessee and not by the Revenue. Therefore, in the assessee s appeal they cannot be worse of than they were before CITA. Therefore, in the facts and circumstances, it would suffice to clarify that the Remand to the CIT(A) is only to adjudicate the submission of the assessee with regard to their entitlement for the relief under Section 80HHC alone. The other portions of the order passed by the CIT(A) which were decided in favour of the assessee shall remain intact. With the above observations, the appeal stands disposed of confirming the order of Remand passed by the Tribunal and making the scope of remand clear as indicated in the preceding paragraph.

Summary

Issues:
1. Failure to deal with relief granted by CIT(Appeals) under Section 10A
2. Inclusion of job work charges in total turnover for deduction under Section 10A

Analysis:

Issue 1: Failure to deal with relief granted by CIT(Appeals) under Section 10A
The appeal before the Madras High Court was filed under Section 260A of the Income Tax Act, 1961 against the order passed by the Income-Tax Appellate Tribunal. The High Court admitted the appeal on two Substantial Questions of Law. The first question was whether the Tribunal erred in not addressing the relief granted by the CIT(Appeals) under Section 10A. The Tribunal had remanded the issue back to the CIT(A) for reconsideration, as the CIT(A) had summarily dismissed the relief sought under Section 80HHC, despite granting relief under Section 10A. The High Court clarified that the remand was only for adjudicating the submission regarding relief under Section 80HHC, and the other favorable portions of the CIT(A)'s order would remain intact. The High Court disposed of the appeal, confirming the Tribunal's remand order.

Issue 2: Inclusion of job work charges in total turnover for deduction under Section 10A
The second question raised in the appeal was whether job work charges should be included in the total turnover for the purpose of computing deduction under Section 10A. The High Court did not delve into this issue as the appeal was disposed of based on the first issue. Therefore, the High Court did not provide a specific ruling on whether job work charges should be considered in the total turnover for Section 10A deduction.

In conclusion, the High Court's judgment focused on the failure to address the relief granted under Section 10A by the CIT(A) and the subsequent remand by the Tribunal for reconsideration. The High Court clarified the scope of the remand and upheld the Tribunal's decision. The issue regarding the inclusion of job work charges in the total turnover for Section 10A deduction was not directly addressed in the judgment due to the disposal of the appeal based on the first issue.