M/S. Ushodaya Enterprises Ltd. V. The Asst. Commissioner of Income Tax

ITTA/136/2008

AI Insights

The case involves M/s. Ushodaya Enterprises Ltd., which appealed against the orders of the Income Tax Appellate Tribunal, Hyderabad, concerning the assessment year 1999-2000. The primary issue was the interpretation and application of Section 80HHC of the Income Tax Act, 1961, specifically regarding the treatment of certain receipts as profits of business eligible for deductions. The Tribunal and lower authorities had treated these receipts as miscellaneous income, not qualifying for the deduction under Section 80HHC, leading to the appeal in the High Court of Telangana.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 752697 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 18-12-2024
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax, Mumbai v. M/s. Bangalore Clothing Co., Mumbai, Aurobinda Pharma Ltd. v. Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: J V PRASAD
• Assessee Lawyers: M SRIDHAR
• Keywords: Assessment year 1999-2000; Deductions; Export business; Income Tax; Miscellaneous Receipts
• Section: 142(1); 143(2); 143(1); 80HHC; 80G; 260A

Judgement Text

"[ 34{81 IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD WEDNESDAY ,THE EIGHTEENTH DAY OF DECEMBER TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE THE CHIEF JUSTICE ALOK ARADHE AND THE HONOURABLE SRI JUSTICE J. SREENIVAS RAO INCOME TAX TRIBUNAL APPEAL NO: 136 OF 2008 The Asst. Commissioner of Income Tax, Circle 3 (4) Hyderabad. ...ResPondent Counsel for the Appellant : Mr. M. Sridhar representing M/s. CKR Associates Counsel for the Respondent : Mr. J.V. Prasad, Sr. SC for lncome Tax The Court delivered the following: JUDGMENT Appeal filed under Section 260,4 of the lncome Tax Act, 1961 against the Order dated 28.O2.2OO7 passed in ITA No. 142lHYDlO3 for the Assessment year 1999-2000 on the file of the lncome Tax Appellate Tribunal Hyderabad Bench 'B' Hyderabad preferred against the Order dated 02.12.2002 passed in.Appeal No- 065/DC-3(4)/C|T(A)-|V/02-03 on the file of the Commissioner of lncome Tax (Appeals)'- lV, Hyderabad preferred against the Order dated 26.03.2002 passed in PAttlCtn No. U-32 on the file of the Assistant Commissioner of lncome Tax Circle - 3(4), Hyderabad. Between: M/s. Ushodaya Enterprises Ltd., Rep. by its Managing Director, 6-3-570' Eenadu Compound, Somajiguda, Hyderabad - 500 082. ...Appellant AND THE HON'BLETHE CHIEF IUSTICE AIOK HE AND HEH BLE USTI .SRE VAS I.T.T .A.No.136 of 2008 JUDGMENT, ,?tr ihe I lan'bb ttte CbieJ lastue Alok Aradbe) MI i {.Sridhar, learned counsel represents M/s. CKR Associates for: the appellant. Mr. J. '.Prasad, learned Senior Standing Counsel for Income Tax f)epartment appears for the respondent 2. This appeal under Secrion 260A of the Income Tax Act, 1961 (fc,r short the 'Act) has been fiied agamst order dated 28.02.2007, passed by the Income Tax Appellate Tribunal, Bench 'B', Hyderabad (for short .the Tribunal) in I.T.A.No.142 /Ijryd/03. J The subject matter o[ the appeal pertains to the assessment year 1.999-200Ct 4 The appeal was admirred on the following substandal question of law: 2 \" X/hether the ITAT is correct in law in intelpreting and applying the ptovisions of clarses (baa) of explanation U/s.80HHC of IT Act only to interest income of Rs.7,92,836/- 'rgnotng the other receipt of Rs.552.60 lakhs comprising of as many as about 40 items of income?\" 5. Facts grving rise to filing of this appeal in a nutshell are that the assessee company flled the return of income or 31.12.1999 for the assessment year 1999-2000. In the return of income, the assessee had declared the income o[ Rs.47,94,40,392/ - before claiming deductions under Section 80HHC and Section 80G of the Act. The assessee claimed deduction of Rs.1,12,37,088/- under Section 80HHC of the Act, which was computed by treating various heads of amounting to Rs.552.60 lakhs as profits of business. lncome The return of income was processed under Section 143(1) of the Act. The case of the assessee was selected for scrutiny and notices under Sections 143(2) and 142(l) of the Act were issued. In response to the aforesaid notices, the representative of the 3 assessee appeared and furnished the information. The assessing officer, by order dated 26.03.2002, did nor fteat the amount of Rs.552.60 lakhs as profits of business and treared rhem as miscellaneous receipts under Explanation (b\"^) of Section 80HHC of the Act. The assessing officer, rherefore, reduced 90% of Rs.5511.60 lakhs, while compuring the profits of business. The aforesaid deduction claimed by the assessee under Secdon 80HHC was reduced to Rs.1,05,55,308/- 6. The assessee thereupon filed at appeal before the Commissioner of Income Tax (Appeals) (hereinafter referred to as 'CIT(A)), v,ho by order dared 02.12.2002, inter alia held that miscellaneous receipts ought to be reduced by 90oio as per Explanation (baa) of Secdon 80HHC of the Act. Accordingly, the appeal was dismissed. The assessee thereupon filed an appeal before dre Tribunal. The Tribunal, by the impugned order dated 28.02.2007, affrmed rhe order passed by the CIT(A) and dismissed the appeal. Hence, this appeal. 4 7. Learned counsel for the assessee has submitted that the Tribunal as well as CIT(A) have mechanically treated the amount as receipts on the bare nomenclature of the receipts without enquiring whether the same fotms part of the business ptofits of the assessee. It is further submitted that the assessee at no point of time was given any opportuniry to submit any evidence as to whether the amount in question related to export business. In support of aforesaid submission, reliance has been placed on a decision of the Bombay Hrgh Court in Comrnissioner of Income Tax, Murnbai v. M/s. Bangalore Clothing Co., Mumbail and a decision of the Division Bench of this Court in Aurobinda Pharma Ltd. v. Commissioner of IncomeTa*- 8. On the other hand, learned Standing Counsel for the Revenue has supported the order passed by the authorities under the Act and submitted that the assessee has failed to establish that the amount of Rs.5,52,60,467/- was received from the t lzoo:; zoo Irn ttr 2 1zot s1 no rcxztc 5 export business. It is also urged that the matter stands concluded by E.ndings of fact against the assessee 9. We have considered the rival submissions made by both sides and have perused the record. 10. The assessee was claiming deducrion under Section 80HHC of the , ct. Therefore, burden was on the assessee to prove its eligibrlity to claim such deducrion. In the instant case, the assessee had received a sum of Rs.5,52,60,467 /- frcrr. orher soufces. Howevet, dre assessee did not lead any er,rdence to show that dre amount in question was received from the exPort business. Therefore, the Tribunal held that a sum of Rs.5,52,60,467/'- cannot be treated as income from exports. Thus, it is evident that Section 80HHC of the Act, in the facts and circumstances of the case, did not apply. The authoritie, under the Act have, therefore, rghdy treated the aforesaid amount as miscellaneous income and excluded 90ok of the said T income in view of Explanarion (baa) of Section 80HHC of the Act. 1'1,. The Ending recorded by the authorities under the Act neither suffers from any inftmity nor can the same be termed as Perverse. 12. For the aforementioned reasons, the substantial question of law ftamed by this Court is answered in the negative and against the assessee. 13. In the result, the appeal fails and is, hereby, dismissed. No costs. As a sequel, miscellaneous petitions, pending if any, stand closed sd/. K. SRINIVASA RAO JOIN REG RAR /TTRUE COPY// TION OFFICER To, 1 2 3 4 5 6 @* . The lncome Tax Appellate Tribunal Hyderabad.Bench 'B'Hyderabad' . ii;; boil ;;.iiot'.i 5r r ncom\" r'itaripe3ls) -. lV' Hvderabad' . The Assistant commissio-n'eioi'in\"o'iEi'i cit\"ls;, stot' Hyderabad' . One CC to M/s- CKR Associates, Advocale lulu '/l- . one CC to Mr. J.V. pta.al\",\"dtl56 ilincoh'\" Tax' Advocate toPUCI Two CD CoP'tes Njb/gh , HIGH COURT DATED:1811212024 JUDGMENT lTTA.No.136 of 2008 DISMISSING THE ITTA WITHOUT COSTS 01 I 0 "