COMMISSIONER OF INCOME TAX V. M/S SPARTAN TRENDS INC. MAHAJAN HOUSE PANIPAT

ITA/148/2008

AI Insights

The case revolves around the eligibility of M/s Spartan Trends Inc., a supporting manufacturer of woolen blankets, to claim deductions under Section 80 HHC of the Income Tax Act, 1961, akin to direct exporters. Initially, the Assessing Officer denied the claim, but the Commissioner of Income Tax (Appeals) and subsequently the Income Tax Appellate Tribunal, relying on the precedent set in Eastern Leather Products (P) Ltd. vs. DCIT, reversed this decision. The revenue's appeal to the High Court contested this interpretation, arguing that the specific provisions of Section 80 HHC (1A) and (3A) along with clause (baa) of explanation to Section 80 HHC were not adequately considered. However, the court found no merit in this argument, citing a similar case where the Supreme Court had upheld the deduction for supporting manufacturers.

• Counselvise Citation: [2008] 140 COUNSELVISE.COM (IT) 684568 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 17-07-2008
• Assessment Year: misc
• Other Referred Cases: Eastern Leather Products (P) Ltd. vs. DCIT, Commissioner of Income tax, Thiruvanantapuram v. Baby Marine Exports
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: SANJEEV KAUSHIK
• Keywords: Deduction; Direct Exporter; Income Tax; Supporting manufacturer; Section 80 HHC
• Section: 80 HHC; 80 HHC (1A); 80 HHC (3A); baa

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No. 148 of 2008 DATE OF DECISION : 17.07.2008 The Commissioner of Income-tax, Karnal .... APPELLANT Versus M/s Spartan Trends Inc. Mahajan House, Lake Road, Panipat ..... RESPONDENT CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTAL HON'BLE MR. JUSTICE AUGUSTINE GEORGE MASIH Present: Mr. Sanjeev Kaushik, Advocate, for the appellant-revenue. * * * SATISH KUMAR MITTAL , J. The assessee, who is supporting manufacturer, is deriving income from manufacturing and export of woolen blankets etc. In its return of income, the assessee claimed deduction under Section 80 HHC of the Income Tax Act, 1961 (hereinafter referred to as `the Act') claiming itself at par with the direct exporter on the basis of a judgment of the Income Tax Appellate Tribunal, Delhi Bench-I, Delhi in Eastern Leather Products (P) Ltd. vs. DCIT, 68 ITD 358 (1998). However, the Assessing Officer did not accept the contention of the assessee and disallowed the deductions under section 80 HHC of the Act. On appeal by the assessee, the Commissioner of Income Tax (Appeals), while relying upon the aforesaid decision in the case of Eastern Leather Products (P) Ltd. vs. DCIT, 68 ITD 358 (1998), held that the assessee was entitled to the deduction under Section 80 HHC of the Act ITA No. 148 of 2008 -2- as a supporting manufacturer in the same manner as in the case of a direct exporter. Feeling aggrieved by the said order, the revenue filed an appeal before the Income Tax Appellate Tribunal, which was dismissed and the claim of the assessee for deduction under Section 80 HHC of the Act as a supporting manufacturer was upheld. However, on the other issues (which are not relevant for the purpose of decision of this appeal), the appeal of the revenue was partly allowed. Feeling aggrieved against the aforesaid order of the Tribunal, the revenue has filed the instant appeal under Section 260-A of the Act, against the order dated 31.5.207, passed by the Tribunal in ITA No. 1226 (DEL)/2006 dated 31.5.2007 for the assessment year 2002-03, raising the following substantial question of law : “Whether on the facts and in the circumstances of the case, the learned ITAT was right in law in upholding the order of the CIT (Appeals), directing the Assessing Officer to allow deduction u/s 80 HHC to the assessee, who is a supporting manufacturer in the same manner, as in the case of direct exporter, treating the supporting manufacturer at par with the direct exporter and ignoring the provisions of section 80 HHC (1A) read with section 80 HHC (3A) read with clause (baa) of explanation to section 80 HHC of the Act?” Mr. Sanjeev Kaushik, learned counsel for the revenue has argued that the deductions allowable to the assessee under Section 80 HHC ITA No. 148 of 2008 -3- of the Act had already been computed and allowed by the Assessing Officer and the Explanation (baa) to Section 80 HHC of the Act is not applicable in the case of the assessee and therefore, the Tribunal has erred in law while upholding the claim of the assessee. We have heard learned counsel for the revenue and perused the record. However, we are unable to find any force in his submissions. In ITA No. 544 of 2007, decided on 13.5.2008, titled as Commissioner of Income tax, Karnal versus Carpet India, Sector 29, HUDA, Panipat, this Court while relying upon the judgment of the Hon'ble Apex Court in Commissioner of Income tax, Thiruvanantapuram v. Baby Marine Exports (2007) 290 ITR 323 (SC) has upheld the claim of the assessee under Section 80 HHC as a supporting manufacturer at par with the direct exporter as a similar question of law raised by the revenue for the earlier assessment year has been answered against the revenue and in favour of the assessee and the appeal filed by the revenue has been dismissed. Sh. Sanjeev Kaushik, learned counsel for the revenue could not dispute the said proposition of law as settled by this Court in ITA No. 544 of 2007. In view of the above, no substantial question of law survives for our determination. We find no merit in the appeal and the same is dismissed. ( SATISH KUMAR MITTAL ) JUDGE July 17, 2008 ( AUGUSTINE GEORGE MASIH ) ndj JUDGE "