AUTO IGNITION LTD V. U.O.I & ORS

W.P.(C)/147/2007

AI Insights

The case involves Auto Ignition Ltd., the petitioner, challenging an assessment order from 2006 concerning deductions disallowed under Section 80HHC for the Assessment Year 2003-04. The core legal issue was the retrospective application of Section 80HHC of the Income Tax Act, 1961, which had been previously deemed ultra vires by the Gujarat High Court and affirmed by the Supreme Court in the case of Avani Exports. The Delhi High Court, referencing the Supreme Court's decision and its own earlier judgment in Saroj Dassani v. UOI, ruled in favor of the petitioner, quashing the disallowance made under Section 80HHC.

• Counselvise Citation: [] 140 COUNSELVISE.COM (IT) 834710 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 07-02-2026
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax v. Avani Exports, Saroj Dassani v. UOI
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: VIPUL AGRAWAL; GAORAANG RANJAN
• Assessee Lawyers: KANIKA SETHI
• Keywords: Assessment Order; Deduction disallowed; Retrospectivity; Ultra Vires; Exporters turnover
• Section: 80HHC

Judgement Text

"$~4 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 147/2007 AUTO IGNITION LTD .....Petitioner Through: Ms. Kanika Sethi, Advocate. versus U.O.I & ORS .....Respondents Through: Mr. Vipul Agrawal, SSC with Mr. Gaoraang Ranjan, Advocate. CORAM: HON'BLE MR. JUSTICE DINESH MEHTA HON'BLE MR. JUSTICE VINOD KUMAR O R D E R % 07.02.2026 1. By way of present writ petition, the petitioner has challenged the assessment order dated 23.02.2006 for the Assessment Year (AY) 2003-04 to the extent of deduction disallowed under Section 80HHC of the Income Tax Act, 1961 (hereinafter referred to as „the Act of 1961‟). 2. Retrospectivity given to Section 80HHC of the Act of 1961 has been held to be ultra vires by the Gujarat High Court and affirmed by Hon’ble the Supreme Court in the case of Commissioner of Income Tax v. Avani Exports reported in (2015) 232 Taxman 357 (SC). 3. Following the same in W.P.(C) No. 16816/2006 (Saroj Dassani v. UOI), this Court has held thus :- “5. If the judgment dated 30.03.2015 passed by Hon‟ble the Supreme Court in Avani Exports (supra) is read in conjunction with the judgement of the Gujarat High Court dated 02.07.2012, it is clear that the finding recorded in para 26, reproduced This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 11/02/2026 at 11:39:47 Printed from counselvise.com hereinabove, was upheld with some alteration in para 27 of the said judgment, that too in favour of the assessees and direction given in para 27 of aforesaid judgment was substituted by the following: “Having seen the twin conditions and since 80HHC benefit is not available after 1.4.05, we are satisfied that cases of exporters having a turnover below and those above 10 cr. Should be treated similarly. This order is in substitution of the judgment in Appeal”. 6. The consequence of the judgment dated 30.03.2015 of Hon‟ble the Supreme Court, is that irrespective of the amount involved, the amendment brought in Section 80HHC of the Act of 1961 cannot be given retrospective effect.” 4. In the light of the judgment of Avani Exports (supra) by Hon’ble the Supreme Court and reasoning given by this Court in Saroj Dassani (supra), the impugned order dated 23.02.2006 is hereby quashed to the extent of addition/disallowance under Section 80HHC. The petition is allowed to the limited extent, consequence to follow. 5. Pending applications (if any) are disposed of. DINESH MEHTA, J. VINOD KUMAR, J. FEBRUARY 7, 2026/MR This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 11/02/2026 at 11:39:47 Printed from counselvise.com "