M/S.PRASHANT PROTEINS LTD. V. DY.COMMISSIONER OF INCOME TAX

TAXAP/289/2002

AI Insights

M/S Prashant Proteins Ltd., engaged in oil extraction and manufacturing, appealed against the decision of the Income Tax Appellate Tribunal, which had dismissed their claim for a deduction under Section 80HHC of the Income Tax Act, 1961. The company argued that the deduction should be calculated separately for trading and manufacturing exports. However, the Tribunal and the High Court found that the deduction should be computed based on the total turnover of the business, as per the statutory provisions. The case hinged on the interpretation of Section 80HHC, particularly whether deductions for export incentives could be claimed separately for different business activities.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 753897 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 01-12-2014
• Assessment Year: misc
• Other Referred Cases: CIT v. Rathore Brothers, IPCA Laboratory Ltd. v. Dy. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: PRANAV DESAI
• Assessee Lawyers: R K PATEL
• Keywords: Deduction; Export incentive; Income Tax; Manufacturing Export; Trading Export
• Section: 143(3); 260A; 80 HHC

Judgement Text

"O/TAXAP/289/2002 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 289 of 2002 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ M/S.PRASHANT PROTEINS LTD.....Appellant(s) Versus DY.COMMISSIONER OF INCOME TAX....Opponent(s) ================================================================ Appearance: MR RK PATEL, ADVOCATE for the Appellant(s) No. 1 MR PRANAV G DESAI, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Page 1 of 6 O/TAXAP/289/2002 JUDGMENT Date : 01/12/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. This appeal u/s.260A of the Income Tax Act, 1961 is filed against the judgment and order dated 23.05.2002 passed by the Income Tax Appellate Tribunal, Rajkot Bench in ITA No.5632/AHD/94 for the A.Y. 1992-93 whereby, the appeal filed by the assessee is dismissed. 2. Briefly stated, the assessee is a Company engaged in the business of manufacturing of oil extraction by the process of solvent extraction whereby, it produces De-oiled cakes and vegetable oil. The assessee-company filed its return of income on 30.12.1992 declaring total income of Rs.68,35,740/- along with other relevant documents. The assessee had claimed deduction u/s.80-HHC of the Income Tax Act on export incentive. It furnished details regarding export turnover and total turnover in the prescribed form. The assessee had claimed deduction separately on the trading export and manufacturing export and trading turnover and manufacturing turnover. Assessment scrutiny was undertaken and ultimately, the A.O passed the order dated 18.03.1994 u/s.143(3) of the Act. Page 2 of 6 O/TAXAP/289/2002 JUDGMENT 3. Against the aforesaid order of the A.O., appeal was filed before the CIT(A). The CIT(A) dismissed the appeal filed by the assessee vide order dated 01.11.1994. Being aggrieved by the order of CIT(A), the assessee filed an appeal before the ITAT. The ITAT dismissed the appeal filed by the assessee vide impugned judgment and order dated 23.05.2002. Hence, this appeal. 4. This appeal was admitted on 13.09.2002 on the following substantial question of law; “Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that deduction u/s.80HHC is to be computed as a whole as done by the Assessing Officer and not activity wise as claimed by the appellant?” 5. Mr. Bhargav Karia learned counsel appearing for the assessee submitted that the ITAT has seriously erred in interpreting the provision of Section 80HHC of the Act. He submitted that the decision of Madras High Court in the case of CIT v. Rathore Brothers, [2002] 254 ITR 656 squarely governs the issue on hand and that when two views are possible on interpretation of a statute, the view favouring the assessee should be preferred. Page 3 of 6 O/TAXAP/289/2002 JUDGMENT 6. Mr. Pranav Desai learned Standing Counsel appearing for the Revenue placed reliance upon the decision of Apex Court in the case of IPCA Laboratory Ltd. v. Dy. CIT, [2004] 266 ITR 520 wherein it is held that a reading of Section 80HHC makes it clear that in arriving at profits earned from export of both self manufactured goods and trading goods, the profits and losses in both trades have to be taken into consideration and if after such adjustments, there is a positive profit, the assessee would be entitled to deduction u/s.80HHC(1) and if there is a loss, the assessee would not be entitled to deduction. 7. We have heard learned counsel for both the sides and have perused the record of the case. After verifying the documents available on record, the Assessing Officer came to the conclusion that the computation made by the assessee regarding deduction u/s.80HHC of the Act was not correct inasmuch as the deduction for export incentives had been claimed separately for manufacturing turnover and total turnover, which was erroneous. 8. In this case, under the provisions of Section 80HHC of the Act, deduction in respect of export incentives is allowable at 90% of any sum Page 4 of 6 O/TAXAP/289/2002 JUDGMENT referred to in Section 28(iiia), (iiib) and (iiic) to the same proportion as the export turnover bears to the total turnover of the business. Therefore, the A.O rightly mentioned the working of the deduction allowable at Rs.33,28,575/- as against the separate claim for trading export and manufacturing export and trading turnover and manufacturing turnover made by the assessee-company at Rs.58,20,894/-. In para-8 of the impugned judgment, the Appellate Tribunal observed as under; “8. From the above discussion, it is clear that the AO has strictly followed the language of the proviso. The proviso mandates that the profits computed under clause (a) or clause (b) or clause (c) shall be increased by the amount which bears to 90% of the export incentives, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee. It would be quite far-fetched to accept the argument of the learned counsel that the assessee carries on two distinct businesses, that of trading exports and that of manufacturing exports. If the intention of the legislature was to compute the deduction on incentives, it could have provided for it in sub-clause (i) and (ii) separately itself. But that not being the intention, it is provided separately in the proviso by talking about export turnover and total turnover. Total turnover can mean nothing else but total turnover of the entire business of the assessee, of course, excluding freight and insurance as defined in clause (ba) of the Explanation to Section 80HHC...” Page 5 of 6 O/TAXAP/289/2002 JUDGMENT 9. It is a well settled position of law that in a taxing statute one has to merely look at what is said and there is no room for any intent. In other words, there is no presumption while interpreting the provisions of a taxing statute. We do not find any illegality or impropriety with the interpretation made by the authorities below to the provision of Section 80HHC of the Act. 10. Considering the facts and circumstances of the case and the principle rendered in IPCA Laboratory’s case (supra), we are of the opinion that the ITAT was completely justified in dismissing the appeal of the assessee. Accordingly, we answer the question raised in favour of the Revenue and against the assessee. Consequently, the appeal is rejected. (K.S.JHAVERI, J.) (K.J.THAKER, J) Pravin/* Page 6 of 6 "