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TMI Blog2019 (5) TMI 1263X X X X Extracts X X X X X X X X Extracts X X X X ..... once it is brought to their notice. 18. With this view of the matter, we find force in the submissions of the Ld. AR that the deduction u/s 80HHC has to be computed by giving benefit of the decisions of the Hon ble Apex Court in the case of Avani Exports (Supra). The assessee to provide the working for such a re-computation before the Ld. A.O and the Ld. A.O will verify and extend the benefit of the decision of the Hon ble Apex Court in thecae of Avani Export (Supra) to the case of the assessee.- Decided in favour of assessee. - ITA No-4683/Del/2016 - - - Dated:- 17-5-2019 - Shri N. K. Billaiya, Accountant Member And Shri K.N. Chary, Judicial Member For the Assessee : Sh. Abhishek Arora, Sr. DR For the Revenue : Sh. Sunil Arora, CA ORDER PER K. NARSIMHA CHARY, J.M. Challenging the order dated 29/06/2016 in Appeal No. 191/14-15 passed by the Ld. Commissioner of Income Tax (Appeals)-II, New Delhi ( CIT(A) ) for A.Y. 2012-13, assessee preferred this appeal. 2. Brief facts of the case are that the assessee is a partnership firm which is engaged in the business of manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the tribunal deciding the question/issue will be treated as set aside. 6. On remained, the Tribunal, after considering the submissions on either side and taking note of the amendments in question, by order dated 16/3/2012 set aside the issue to the file of the Ld. Assessing Officer with a direction to compute the deduction u/s 80HHC of the Act, with the following observations: 3. We have heard both the parties and gone through the material available on record. In this case the AO passed assessment order on 16.03.2004. The learned CIT(A) upheld the order of the AO vide her order dated 15.09.2004.ITAT disposed of assessee s appeal vide order dated 28th February, 2005. Taxation laws (Amendment) Act, 2005 inserted clause(iiid) to sec.28 with retrospective effect from 01.04.1998. As per clause (iiid), any profit on transfer of the Duty Entitlement Pass Book (DEPB) is taxable as business profit. The Taxation Laws (Amendment) Act, 2005 also inserted third and fourth provisos to sec. 80HHC(3) with retrospective effect from 01.04.1992. Since amended provisions of sec.28(iiid) and second to fifth Provisos were not available on Statute w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 80HHC read with the words used in clauses (iiid) and (iiid) of Section 28, the assessee was entitled to a deduction under Section 80HHC on export profits, the benefit of such deduction cannot be denied to the assessee. In view of the amended provisions of law and the decision of Hon.ble Supreme Court in the case of M/s. Topman Exports (Supra), we set aside the issue to the file of the Assessing officer and direct him to compute deduction u/s 80HHC of the Act accordingly. 7. Pursuant to the directions of the ITAT, while remitting the matter, Ld. A.O passed the order dated 28/3/2014 by considering the Taxation Law Amendment Act, 2005 in the light of the decision of the Hon ble Apex Court in the case of Topman Exports (2012) 18 taxmann.com 120 (SC). In doing so, the Ld. A.O observed that though the assessee relied on the decision of the Hon ble Gujrat High Court in case of Avani Export Vs. CIT(A) 2012 23 Taxman.com 62 (Gujrat) wherein retrospective amendments in the Act for held to be invalid, since the Hon'ble High Court while restoring the matter to the Tribunal directed the Tribunal to adjudicate the issue of deduction of 80HHC after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Topman Export (Supra). 11. We have gone through the record in the light of the submissions made on either side. At the outset it is noticed that though originally in the grounds of appeal the assessee challenged the deduction u/s 80HHC of the Act at ₹ 1,40,41,961/- instead of deduction of ₹ 1,56,83,432/- by way of modification, theysubstituted figures ₹ 1,56,83,432/- with ₹ 1,57,75,985/- on the ground that as per the CBDT Circular No. 37/2016 deduction under Chapter VIA shall be allowed on enhanced income, i.e. income assessed after making additions and such income eligible for deduction u/s 80HHC, according to the assessee is ₹ 1,57,75,985/. 12. It is an admitted fact that the assessee is an exporter of leather goods and has been claiming examination u/s 80HHC for several years and during the relevant previous year i.e. Financial Year 2000-01 relevant for the Assessment Year 2001-02, the export incentives, which the assessee was entitled to were changed from duty draw back to the DEPB license; that though the assessee claimed deduction u/s 80HHC on the profit from transfer of said license, such a claim was rejected by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd or fourth proviso to sub-section (3) of Section 80HHC, but he would get the benefit of exclusion of a smaller figure from profits of the business under Explanation (baa) to Section 80HHC of the Act and there is nothing in Explanation (baa) to Section 80HHC to show that this benefit of exclusion of a smaller figure from profits of the business will not be available to an assessee having an export turnover exceeding ₹ 10 crores. In other words, where the export turnover of an assessee exceeds ₹ 10 crores, he does not get the benefit of addition of ninety per cent of export incentive under clause (iiid) of Section 28 to his export profits, but he gets a higher figure of profits of the business, which ultimately results in computation of a bigger export profit. The High Court, therefore, was not right in coming to the conclusion that as the assessee did not have the export turnover exceeding ₹ 10 crores and as the assessee did not fulfill the conditions set out in the third proviso to Section 80HHC (iii), the assessee was not entitled to a deduction under Section 80HHC on the amount received on transfer of DEPB and with a view to get over this difficulty the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above 10 crores should be treated similarly, and even the exporters with turnover exceeding 10 crores would be entitled to claim the benefit of 3rd Proviso to 80HHC (3) without complying with any conditions laid down therein. 17. In the facts and circumstances involved in this matter, we have no hesitation to hold that this case is squarely covered by the decision of the Hon ble Apex Court in the case of Avani Exports (Supra) and, therefore, the deduction u/s 80HHC of the Act shall be calculated in accordance with this decision. Decision of the Hon ble Apex Court is the law of the land and the authorities cannot refuse to follow the same, when once it is brought to their notice. 18. With this view of the matter, we find force in the submissions of the Ld. AR that the deduction u/s 80HHC has to be computed by giving benefit of the decisions of the Hon ble Apex Court in the case of Avani Exports (Supra). The assessee to provide the working for such a re-computation before the Ld. A.O and the Ld. A.O will verify and extend the benefit of the decision of the Hon ble Apex Court in thecae of Avani Export (Supra) to the case of the assessee. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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