Oswal Woollen Mills Limited V. Commissioner of Income Tax (Central) Ludhiana

ITA/166/2002

AI Insights

The case involves Oswal Woollen Mills Limited appealing against an order by the Income Tax Appellate Tribunal, which denied them a deduction under Section 80HHC of the Income Tax Act for the assessment year 1992-93. The primary legal question was whether the appellant was entitled to a deduction when the profits of the business were negative. The High Court of Punjab and Haryana, referencing a Supreme Court decision, upheld the Tribunal's decision, stating that the word 'profit' in Section 80HHC clearly indicates a positive profit, and thus no deduction can be granted if there is a loss.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 795951 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 22-05-2013
• Assessment Year: misc
• Other Referred Cases: IPCA Laboratory Ltd. Vs. Deputy Commissioner of Income Tax (2004) 266 ITR 521
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: RAJESH KATOCH
• Keywords: Export incentive; ITAT decision; Negative Profit; Deduction entitlement
• Section: 80HHC; 260-A

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A. No.166 of 2002 Date of Decision:22.05.2013 Oswal Woollen Mills Limited .....Appellant Vs. Commissioner of Income Tax (Central) Ludhiana .....Respondent CORAM:- HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MS. JUSTICE RITU BAHRI Present:- None for the appellant. Mr. Rajesh Katoch, Advocate, for the respondent. HEMANT GUPTA, J.(Oral) The present appeal under Section 260-A of the Income Tax Act, 1961 (for short, 'the Act') arises out of an order passed by Income Tax Appellate Tribunal, Chandigarh Bench `A', Chandigarh (for short 'the Tribunal') for the assessment year 1992-93. After going through the record, we find that the following substantial question of law arises for consideration of this Court: “Whether on a proper interpretation of the provisions of Section 80HHC of the Act, the Ld. ITAT was, on facts and circumstances in the case of the appellant, justified in holding that appellant, herein, was not entitled to deduction when the figure of profits of business was negative? The issue; whether the assessee is entitled to deduction when figure of profit of business is in negative, has been subject to consideration before Hon'ble the Supreme Court in judgment reported as IPCA Laboratory Ltd. Vs. Deputy Commissioner of Income Tax (2004) 266 ITR 521, wherein Kumar Vimal 2013.05.27 13:07 I attest to the accuracy and integrity of this document Chandigarh I.T.A. No.166 of 2002 -2- it was held to the following effect: “We are unable to accept the submission of Mr. Dastur. Undoubtedly section 80HHC has been incorporated with a view to providing incentive to export houses. Even though a liberal interpretation has to be given to such a provision the interpretation has to be as per the working of this section. If the wordings of the section are clear then benefits, which are not available under the section, cannot be conferred by ignoring or misinterpreting words in the section. In this case we are concerned with the wordings of sub-section (3)(c) of section 80HHC. As noted earlier sub-section (3)(a) deals with the case where the export is only of self manufactured goods. Sub- section 3(b) deals with the case where the export is only of trading goods. Thus when the Legislature wanted to take exports from self manufactured goods or trading goods separately, it has already so provided in sub-sections (3)(a) and (3)(b). It would not be denied that the word “profit” in section 80HHC(1) and sections 80HHC(3) (a) and (3)(b) means a positive profit. In other words if there is a loss then no deduction would be available under section 80HHC(1) or (3)(a) or loss then no deduction would be available under section 80HHC(1) or (3)(a) or (3)(b)......” In view of the said judgment, we do not find that the assessee is entitled to deduction in the facts and circumstances of the case. Consequently, the question of law is answered against the assessee. ( HEMANT GUPTA ) JUDGE May 22, 2013 ( RITU BAHRI ) renu/Vimal JUDGE Kumar Vimal 2013.05.27 13:07 I attest to the accuracy and integrity of this document Chandigarh "