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TMI Blog2015 (5) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance made, the question as to whether the assessments could have been made under Section 153A is rendered academic; the same is accordingly kept open - ITA 263/2015, C.M. APPL.7337/2015, ITA 264/2015, C.M. APPL.7349/2015, ITA 265/2015, C.M. APPL.7351/2015 - - - Dated:- 28-4-2015 - S. Ravindra Bhat And R.K. Gauba JJ. For the Appellant : Sh. Salil Aggarwal, Sh. Prakash Kumar and Sh. Ravi Pratap Mall, Advocate For the Respondent : Ms. Suruchii Aggarwal, Sr. Standing Counsel and Sh. Abhishek Sharma MR. Justice S. Ravindra Bhat (OPEN COURT) Issue notice. 1. Ms. Suruchii Aggarwal, Sr. Standing Counsel accepts notice. With consent of learned counsel for the parties, the matter was heard finally. 2. The following two questions of law are sought to be urged by the assessee in this appeal under Section 260-A of the Income Tax Act, 1961 (hereafter referred to as the Act ): (a) Whether in the given facts of the case, the assessment could have been completed by invoking 153A of the Income Tax Act; (b) Whether the amendment to Section 80HHC(3) by inserting three provisos with retrospective effect from 01.04.1998 could have been invoked to disallow the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerned. Learned counsel submits that the ruling of the Gujarat High Court was carried in appeal to the Supreme Court which by its order dated 30.03.2015 in CIT-5 and Anr. v. M/s. Avani Exports and Anr. (SLP(C) 9273/2013 decided on 30.03.2015) upheld the reasoning. 6. Learned counsel for the Revenue did not dispute the legal position but submitted that the first question of law, i.e. as to the completion of the assessment, does not arise. It was submitted that since the ruling of the Gujarat High Court has been indeed allowed with some modification by the Supreme Court, the decision in this appeal should be confined to that question alone. 7. Section 80HHC to the extent it is relevant is as follows: [Deduction in respect of profits retained for export business. 6980HHC. 70[(1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, [a deduction to the extent of profits, referred to in sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are sold from such branch, office, warehouse or establishment, then, such transfer shall be deemed to be export out of India of such goods and merchandise and the value of such goods or merchandise declared in the shipping bill or bill of export as referred to in sub-section (1) of section 5087 of the Customs Act, 1962 (52 of 1962), shall, for the purposes of this section, be deemed to be the sale proceeds thereof.] 88[(3) For the purposes of sub-section (1),- (a) where the export out of India is of goods or merchandise manufactured 89[or processed] by the assessee, the profits90 derived from such export shall be the amount which bears to the profits90 of the business90, the same proportion as the export turnover in respect of such goods bears to the total turnover of the business carried on by the assessee; (b) where the export out of India is of trading goods, the profits derived from such export shall be the export turnover90 in respect of such trading goods as reduced by the direct costs and indirect costs attributable to such export; (c) where the export out of India is of goods or merchandise manufactured 91[or processed] by the assessee and of trading goods, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowable under the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme : Provided also that in the case of an assessee having export turnover exceeding rupees ten crores during the previous year, the profits computed under clause (a) or clause (b) or clause (c) of this sub-section or after giving effect to the first proviso, as the case may be, shall be further increased by the amount which bears to ninety per cent of any sum referred to in clause (iiie) of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee, if the assessee has necessary and sufficient evidence to prove that,- (a) he had an option to choose either the duty drawback or the Duty Free Replenishment Certificate, being the Duty Remission Scheme; and (b) the rate of drawback credit attributable to the customs duty was higher than the rate of credit allowable under the Duty Free Replenishment Certificate, being the Duty Remission Scheme. Explanation.-For the purposes of this clause, rate of credit allowable means the rate of credit allowable under the Duty Free Replenishment Certificate, being the Duty Remission Scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lassification in terms of both, the basis of taxation and the rate of tax, and on this ground, the same cannot be said to be arbitrary. In this connection, we may profitably refer to the following observations of the Supreme Court in the case of KERALA HOTEL AND RESTURANT ASSOCIATION VS. STATE OF KERALA reported in MANU/SC/0170/1990 : AIR 1990 SC 913 dealing with the question in detail: XXXXXX XXXXXX XXXXXX 12. After hearing the learned counsel for the parties, we are of the view that the benefit based on pendency of the proceedings of assessment and discrimination based thereon definitely violates Article 14 of the Constitution of India. In the matter of completion of assessment, the assessees have little role to pay. After the assessees have submitted their returns within the time fixed by law, if for any reason the respondent delays in making the assessment, taking advantage of their own delay, the Revenue cannot deprive a class of the assessees of the benefit whereas other assessees of the same class whose assessment have already been completed would get the benefit. We, therefore, find that discrimination based on two classes, first, whose assessments have become final a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endment, incorporating a new provisions in the Statute from an anterior date. According to the existing law enacted by the Parliament itself, wrong orders passed by a Tribunal should be challenged by the aggrieved party before the appropriate High Court and if such party is still aggrieved by the order of the High Court, he should move the Supreme Court. 10. The Court thereafter noticed that the legislation was not just an amendment of the taxing statute creating a new provision retrospectively. Recognising that the legislature could confer benefits prospectively or retrospectively and noticing several past judgments, the Court held as follows: 24. In the case before us, it is not one where the executive has failed to carry out the object of the Parliament necessitating exercise of control by retrospective amendment what the executive ought to have achieved. In the present case, according to the Finance Minister presenting the Bill, a valid piece of legislation has been wrongly interpreted by the Tribunal. We have already pointed out that according to the existing law, if a valid piece of legislation is wrongly interpreted by the Tribunal, the aggrieved party should move ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th turnover of more than ₹ 10 crores was premised upon the conditions spelt out in the third and fourth proviso brought in through amendments. The Court discussed these aspects as follows: ..................the amendment also carved out two categories of exporters, namely, those whose export is less than ₹ 10 crores per year and those exporters whose exports turn over is more than ₹ 10 crores per annum. Insofar as entitlement of these benefits to the exporter having turn over of more than ₹ 10 crores p.a. is concerned, two conditions contained in third and fourth proviso to the said amendment were to be satisfied for claiming the benefits. Those were: (a) He had an option to choose either the duty drawback or the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme; and (b) The rate of drawback credit attributable to the customs duty was higher than the rate of credit allowable under the Duty Entitlement Pass Book Scheme, being Duty Remission Scheme. All the respondents in these SLPs, who are the exporters, belong to the second category. They filed the writ petitions challenging conditions mentioned in third and fourth proviso to S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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