M/S.ASPINWALL & CO.(TRAV) LTD., KOCHI V. ITAMISSIONER OF INCOME TAX, COCHIN

ITA/203/2000

AI Insights

The case involves M/S Aspinwall & Co. (Travancore) Ltd., Cochin, the appellant, challenging the orders of the Income Tax Appellate Tribunal for the assessment years 1990-91 and 1992-93. The primary contention was whether the godown rent received by the assessee could be included as export profit for the computation of deduction under Section 80HHC of the Income Tax Act, 1961. The Tribunal had previously ruled against the assessee on this matter, leading to the current appeal. The High Court also addressed the exclusion of interest income from the computation under Section 80HHC, which the assessee had conceded.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 699528 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 24-07-2012
• Assessment Year: misc
• Other Referred Cases: Mercantile and Marine Services v. CIT (233 ITR 257)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: P K R MENON; JOSE JOSEPH
• Assessee Lawyers: A K NAMBIAR; ANIL NAIR
• Keywords: Deduction; Export Profit; Godown Rent; Income Tax; Interest income
• Section: 80HHC

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN TUESDAY, THE 24TH DAY OF JULY 2012/2ND SRAVANA 1934 I.T.A.No.203 of 2000 ------------------------------------ [AGAINST THE ORDER IN I.T.A.NO.694 (COCH)/1995 (A.Y.1990-91) DATED 24.9.1999 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH. ----------------------- APPELLANT/RESPONDENT IN I.T.A.:- ---------------------------------------------------- M/S.ASPINWALL & CO. (TRAVANCORE) LTD., COCHIN. BY ADVS.SRI.A.K.JAYASANKAR NAMBIAR (SENIOR ADVOCATE) SRI.ANIL D. NAIR. RESPONDENT/APPELLANT IN I.T.A.:- ----------------------------------------------------- COMMISSIONER OF INCOME TAX, COCHIN. BY SENIOR COUNSEL FOR GOVERNMENT OF INDIA (TAXES) SRI.P.K.R.MENON STANDING COUNSEL FOR I.T. SRI.JOSE JOSEPH. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 24-07-2012, ALONG WITH I.T.A.NO.210 OF 2000, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:- Thottathil B.Radhakrishnan & K.Vinod Chandran, JJ. ------------------------------------------- I.T.A.Nos.203 of 2000 & 210 of 2000 ------------------------------------------- Dated this, the 24th day of July, 2012 JUDGMENT K.Vinod Chandran,J: The assessee is in appeal, challenging the orders of the Tribunal for the assessment years 1990-91 and 1992-93. In both the years, the assessee had claimed deduction of interest income received from the sister company as also from two banks and godown rent as export profit for computation of deduction under Section 80HHC of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). Though the said claims were rejected by the assessing officer, the first appellate authority allowed it, against which the Revenue was in appeal before the Tribunal. Before the Tribunal, for both the years, the assessee conceded that interest income could not be included in the computation of income under Section 80HHC and confined the arguments to the rent on godown. The appellate Tribunal found the said issue also against the assessee. ITA.Nos.203 & 210 of 2000 - 2 - 2. While admitting the above appeals, this Court has raised the following two questions of law in both the appeals, which are identical: i) Whether on the facts and circumstances of the case was the Income tax tribunal justified in confirming the exclusion of interest income referred above for computation of eligible relief under Section 80HHC of the Income Tax Act? ii) Whether on the facts and circumstances of the case was the Income tax Tribunal justified in confirming the exclusion of rent referred above in the computation of eligible deduction under Section 80HHC of the Income Tax Act? 3. The first question regarding the exclusion of interest income for computation of eligible income under Section 80HHC, as has been noticed above, was not an issue before the Tribunal, the assessee having conceded to it specifically. Since the same was not an issue before the Tribunal, we refuse to answer question No.(i). 4. The only issue argued before the Tribunal was with respect to the eligibility of the godown rent received by the assessee to be treated as export profit for computing the relief under Section 80HHC. The assessee relied upon the decision of this Court in ITA.Nos.203 & 210 of 2000 - 3 - Mercantile and Marine Services v. CIT (233 ITR 257), to contend that godown rent paid by the assessee has to be held to be income eligible for deduction under Section 80HHC. The Tribunal rightly found that the said case was one in which the godown rent paid by the assessee therein for storage of goods pending despatch by a clearing and forwarding agent handling exports and imports of Government Bodies is business income; and it was not a case in which computation of relief under Section 80HHC, meaning export profit, arose. Section 80HHC is a deduction in respect of profits derived from export business. Where an assessee, being an Indian company or a person, is engaged in the business of export out of India of any goods or merchandise to which the section applies, a deduction was allowed to the extent of profits referred thereunder for computing the total income of the assessee. The computation provided thereunder though subject to certain amendments, essentially it stood as, being that proportion; the export turnover in respect of such goods bears to the total turnover of the business carried on by the assessee as applied to the total business profits of the assessee disclosed under the head “profits and gains of business or profession”. The export profit to be taken into account is that ITA.Nos.203 & 210 of 2000 - 4 - derived by the assessee from the export of such goods or merchandise. The assessee's claim relates to the use of its godown by other exporters for storing goods till despatch. This cannot at all be termed to be a profit derived by the assessee from the export of such goods or merchandise coming within Section 80HHC. We are of the opinion that the Tribunal has correctly decided the issue and the 2nd question of law raised by the assessee is answered against the assessee and in favour of the Revenue. Accordingly, both the appeals are rejected. Sd/- Thottathil B.Radhakrishnan Judge Sd/- K.Vinod Chandran vku/ Judge. - true copy - "