COMMR. OF INCOME TAX, LDH. V. M/S DEE KAY KNITWEARS,

ITA/172/2006

AI Insights

The case revolves around the inclusion of premium on export quota sales in the total turnover for computing deductions under Section 80HHC of the Income Tax Act, 1961. The Commissioner of Income Tax, Ludhiana, appealed against the order of the Income Tax Appellate Tribunal, which had reversed the decision of the Assessing Officer and the Commissioner of Income Tax (Appeals) that had disallowed the deduction. The Tribunal's decision was based on a previous ruling in a similar case (ACIT v. M/s Greatways Ltd.) and a circular issued by the Income Tax Department in 1998, which clarified that such premiums are to be treated like profits on the sale of import licenses, cash assistance, and duty draw back. The High Court, after reviewing the arguments and the relevant legal provisions, dismissed the appeal, affirming the Tribunal's decision.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 678153 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 18-07-2013
• Assessment Year: misc
• Other Referred Cases: ACIT v. M/s Greatways Ltd., Commissioner of Income Tax, Ludhiana-II v. M/s Greatways Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SUNIL KUMAR MUKHI
• Assessee Lawyers: RAJESH KATOCH
• Keywords: Business income; Deduction under section 80HHC; Income from other sources; Premium on export quota
• Section: 80HHC; 28(iiic); 28(iiib); 28(iiia)

Judgement Text

"ITA No.172 of 2006 -: 1 :- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.172 of 2006 Date of decision: July 18, 2013. Commissioner of Income Tax, Ludhiana ... Appellant v. M/s Dee Kay Knitwears ... Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present: Shri Rajesh Katoch, Advocate, for the appellant. Shri Sunil Kumar Mukhi, Advocate for the respondent. Rajive Bhalla , J. (Oral): The revenue has come up in appeal against order dated 11.8.2005 passed by the Income Tax Appellate Tribunal, Chandigarh Bench-A, Chandigarh by raising following questions of law:- “Whether on the facts and law, the Hon'ble Income Tax Appellate Tribunal was legally justified to include the premium on export quota sales in the total turnover for computing the deductions u/s 80HHC of I.T. Act, when the same was not covered under the provisions of Sections 28 (iiia), (iiib) and (iiic) of I.T. Act?” Counsel for the appellant submits that as Sections 28(iiia), (iiib) and (iiic) of the Income Tax Act, 1961 (hereinafter referred to as Kadyan Vinod Kumar 2013.09.25 10:33 I attest to the accuracy and integrity of this document Chandigarh ITA No.172 of 2006 -: 2 :- the 1961 Act) refers to premium on sale of export quota, deduction could not have been allowed by the Income Tax Appellate Tribunal under Section 80-HHC of the 1961 Act. In support of his argument, counsel for the appellant states that the said statutory provisions cannot be read to include, whether by inference or by implication, words that are not included, whether for the purpose of taxation or for the purpose of deduction. The Income Tax Appellate Tribunal has, therefore, committed an error in reversing the order passed by the Assessing Officer as well as the Commissioner of Income Tax (Appeals) whereby the appellant's claim for deduction of premium on export quota sales was disallowed. Counsel for the respondent submits that the Income Tax Department has itself issued a circular dated 23.2.1998 clarifying that premium on sale of export quota statutorily receives the same treatment as profit on sale of import licences, cash assistance and duty draw back, as provided by Section 28 (iiia), (iiib) and (iiic) of I.T. Act. It is further submitted that a perusal of the order passed by the Income Tax Appellate Tribunal would reveal that it has relied upon its order in ITA No.577 and C.O. No.28/Chandi/2003 for the assessment year 1999- 2000 in the case of ACIT v. M/s Greatways Ltd., decided on 29.7.2005. It is further submitted that the said order has been affirmed by dismissal of the appeal filed by the revenue in ITA No.181 of 2006, Commissioner of Income Tax, Ludhiana-II v. M/s Greatways Ltd. It is Kadyan Vinod Kumar 2013.09.25 10:33 I attest to the accuracy and integrity of this document Chandigarh ITA No.172 of 2006 -: 3 :- contended that in this view of the matter, the question of law framed by the revenue having already been answered against the revenue, does not arise for determination and as a consequent, the appeal should be dismissed. We have heard counsel for the parties, perused the impugned order as well as the orders passed by the Assessing Officer and the Commissioner of Income Tax (Appeals). The revenue seeks to raise a plea that the premium on sale of export quota does not fall within definition of business income as it falls within the definition of income from other sources and, therefore, has to be excluded from deductions claimed by the assessee and as a consequence, order passed by the Income Tax Appellate Tribunal to the contrary is violative of Sections 28(iiia), (iiib) and (iiic) of the 1961 Act. A due consideration of the arguments as well as the question of law framed, leaves no ambiguity that a similar issue came up for consideration before the Income Tax Appellate Tribunal in ITA No.577 and C.O. No.28/Chandi/2003 for the assessment year 1999-2000 in case of ACIT v. M/s Greatways Ltd., decided on 29.7.2005 and was answered against the revenue by holding that premium on sale of export quota would be included within the business income of an assessee and, therefore, eligible for deduction under Section 80 HHC of the 1961 Act. The revenue came up in appeal before this Court in ITA No.180 of 2006, Commissioner of Income Tax, Ludhiana-II v. M/s Kadyan Vinod Kumar 2013.09.25 10:33 I attest to the accuracy and integrity of this document Chandigarh ITA No.172 of 2006 -: 4 :- Greatways Pvt. Ltd., which was decided against the revenue and the question of law, framed in the present petition has been answered against the revenue. Counsel for the appellant, despite his valiant attempt to distinguish the aforesaid judgment, is unable to refer to any statutory provisions, much less any principle of construction of a taxing statute that would enable us to differ from the opinion recorded in Commissioner of Income Tax Ludhiana-II v. M/s Greatways Pvt. Ltd., Ludhiana (supra). This apart, since the Department has itself issued circular dated 23.4.1996 clarifying that premium on export quota statutorily receives the same treatment as profit on sale of import licences, cash assistance and duty draw back, we are rather mystified at the reason for filing the present appeal without withdrawing the circular or referring to any circular that may have recorded an opinion to the contrary. In view of what has been stated hereinabove, as the question of law has already been answered, the appeal is dismissed. [ Rajive Bhalla ] Judge [Dr. Bharat Bhushan Parsoon] July 18, 2013. Judge kadyan Kadyan Vinod Kumar 2013.09.25 10:33 I attest to the accuracy and integrity of this document Chandigarh "