2001 (6) TMI 57 - HC - Income Tax

Export deduction claim under s. 80HHC raised only in revision, despite accepted return; rejection quashed, case remanded for merits.

The dominant issue was whether the revisional authority could reject a revision seeking deduction under s. 80HHC merely because the assessee's returned ... Deductions under the provisions of s. 80HHC - denial of the revision application on the ground that the AO had accepted income of the assessee as returned - Not Justified - HELD THAT:- The revisional authority was more impressed by the fact that the assessment orders were passed by the AO under the provisions of s. 143(1)(a) and s. 143(3) of the Act. It was found by the revisional authority that the income returned by the assessee had been accepted by the AO and, therefore, according to the revisional authority, no fault could have been found with the orders of assessment. In the circumstances, without going into the merits of the deductions claimed under the provisions of s. 80HHC, the revisional authority had rejected the revisional application. In the instant case, it is very clear that, without going into the merits of the claim made by the assessee in the returns for the assessment years referred to hereinabove, the revisional authority became technical and rejected the revision application merely on the ground that the deductions, which had been claimed before the revisional authority, were not claimed before the AO. We need not go into all the details with regard to the interest earned or paid by the assessee as we do not desire to go into the merits of the case. It would be for the revisional authority to look into all the claims which the assessee is to make before the revisional authority. As the respondent revisional authority did not look into the merits of the case and rejected the revision application, we quash and set aside the order passed by the revisional authority and direct the revisional authority to reconsider the revision application on merits after hearing the assessee or its representative. Petition is disposed. Issues involved: The petitioner-assessee claimed deductions under section 80HHC of the Income Tax Act for the assessment years 1996-97 and 1997-98. The revision application was rejected by the respondent, leading the assessee to approach the High Court with a grievance.Details of the Judgment:Issue 1: Eligibility for Deductions under Section 80HHC The petitioner-assessee filed returns for the relevant assessment years but did not claim certain deductions under section 80HHC initially. The revision application was submitted later to request the deductions, which was rejected by the respondent. The High Court noted that the revisional authority did not consider the merits of the deductions claimed and rejected the application solely based on the fact that the deductions were not claimed before the Assessing Officer (AO).Issue 2: Jurisdiction of Revisional Authority The High Court emphasized that the revisional authority has the jurisdiction to consider deductions claimed by the assessee, even if not initially mentioned in the returns. Citing previous judgments, the Court clarified that if an assessee becomes aware of mistakes or additional deductions after the assessment, they can approach the revisional authority under section 264 of the Act. The Court criticized the revisional authority for not exercising its jurisdiction in this case.Issue 3: Treatment of Interest Income The petitioner-assessee earned interest on advances given to a commercial concern and on fixed deposits made for bank guarantees. The assessee argued that the interest earned was eligible for deduction under section 80HHC. The Court refrained from delving into the specifics of the interest transactions but directed the revisional authority to thoroughly examine all claims made by the assessee during reconsideration.Conclusion: The High Court quashed the order of the revisional authority and directed a reevaluation of the revision application on its merits after giving the assessee an opportunity to present their case. The impugned order was set aside, and the petition was disposed of accordingly, with no costs imposed.