I.T.A No. 331 of 2008 ::1::
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
I.T.A No. 331 of 2008
Date of decision : September 16, 2008
The Commissioner of Income-tax, Karnal
...... Appellant
through Mr.Sanjeev Kaushik, Advocate
v.
M/S Sheena Industries
...... Respondent
CORAM : HON'BLE MR.JUSTICE ADARSH KUMAR GOEL
HON'BLE MR.JUSTICE AJAY TEWARI
***
1. Whether Reporters of Local Newspapers may be allowed to see the
judgment ?
2. To be referred to the Reporters or not ?
3. Whether the judgment should be reported in the Digest ?
***
AJAY TEWARI, J
This appeal has been filed under Section 260A of the Income
Tax Act, 1961 (for short “the Act”) by the revenue proposing the following
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 direct exporter and ignoring the
provisions of section 80 HHC(1A) read with section 80
HHC (3A) read with clause (baa) of explanation to
I.T.A No. 331 of 2008 ::2::
section 80 HHC of the Act.”
The respondent-assessee is a partnership firm deriving income
from the manufacturing and sale of textile goods to M/S IKEA Trading
(India) Ltd (Export House/Trading House) as supporting manufacturer. The
assessee filed return declaring total income as nil on 30.10.2001, which was
subsequently assessed under Section 143(3) of the Act at an income of
Rs.2,55,13,910/- by computing deduction under Section 80HHC as per the
provisions of Section 80HHC(1A) read with Section 80 HHC(3A) read with
clause (baa) of explanation to Section 80HHC of the Act as the assessee is a
supporting manufacturer. The assessee has made total sales amounting to
Rs.37,63,87,161/- as a supporting manufacturer to M/S IKEA Trading
(India) Ltd. It received total export incentives of Rs.2,95,37,033/-, which
included duty draw back of Rs.2,94,33,244/-, Duty Entitlement Pass Book
(DEPB) premium of Rs.1,03,789/- and claimed deduction under Section
80HHC of the Act amounting to Rs.5,14,65,193/- out of the total profits of
Rs.6,44,08,903/-. The assessee computed the deduction under Section
80HHC of the Act treating itself at par with the direct exporter and relied
upon a judgment of the learned ITAT Delhi-Bench `A’ in the case of Eastern
Leather Products (P) Ltd vs DCIT 68 ITD 358 (1998).
The Assessing Officer did not accept the contentions of the
assessee, as the facts narrated by the assessee were different from those as
quoted in the case law cited by it, and re-computed the deduction allowable
to the assessee under Section 80HHC of the Act as per the provisions of
Section 80HHC(1A) read with Section 80HHC(3A) read with clause (baa)
of explanation to Section 80HHC of the Act, as the assessee is a supporting
manufacturer and allowed deduction of Rs.3,70,48,161/- under Section
I.T.A No. 331 of 2008 ::3::
80HHC of the Act instead of Rs.5,14,65,193/- as claimed by the assessee.
In appeal, the Commissioner of Income Tax (A) held that the
assessee was entitled to the deduction under Section 80HHC of the Act as a
supporting manufacturer in the same manner as in the case of direct
exporter.
The learned Tribunal before which the matter was carried by
the department in appeal also concurred with the view of the Commissioner
and dismissed the appeal.
The matter is not res integra. This Court, vide order 7.7.2008
passed in ITA No.296 of 2008, The Commissioner of Income Tax, Karnal
vs M/S Carpet India, Sector 29 HUDA, Panipat, decided the same question
against the revenue. The present appeal is, thus, dismissed in view of the
decision of this Court rendered in the aforesaid case.
No costs.
( AJAY TEWARI )
JUDGE
( ADARSH KUMAR GOEL )
JUDGE
September 16, 2008
'kk'