Tribunal Upholds Deduction Rules, Dismisses Revenue Appeals

The Tribunal dismissed the Revenue's appeals challenging the applicability of the 3rd proviso to section 80HHC(3) of the Act, following decisions by the Hon'ble Gujarat and Bombay High Courts. It upheld the aggregation of profits for all export units for the purpose of deduction under section 80HHC, reversing the CIT(A)'s order. Duplicate appeals by the Revenue were dismissed as infructuous, and Cross Appeals by the assessee were also dismissed. The final outcome resulted in the dismissal of certain appeals, partial allowance of others, and dismissal of Cross Objections.

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Issues Involved:
1. Applicability of 3rd proviso to section 80HHC(3) of the Act.
2. Computation of deduction u/s 80HHC for Unit-A and Unit-B.
3. Duplicate appeals filed by the Revenue.
4. Cross Appeals filed by the assessee.

Summary:

1. Applicability of 3rd proviso to section 80HHC(3) of the Act:
The Revenue challenged the CIT(A)'s decision that the assessee is entitled to the benefit of the 3rd proviso to section 80HHC(3). The Departmental Representative conceded that the issue is decided against the Revenue by the Hon'ble Gujarat High Court in Avani Exports v. CIT, which held that the retrospective amendment inserting the 3rd and 4th proviso to sec.80HHC is violative of Article 14 of the Constitution of India. The Hon'ble Gujarat High Court found that the amendment discriminates between assessees whose assessments are pending and those whose assessments are final. Following this decision, the Hon'ble Bombay High Court in Vijaya Silk House (Bangalore) Ltd. v. Union of India also took a similar view. Respectfully following these decisions, the Tribunal dismissed the Revenue's grounds of appeal on this issue.

2. Computation of deduction u/s 80HHC for Unit-A and Unit-B:
The Revenue contended that the CIT(A) erred in holding that the deduction u/s 80HHC should be computed separately for Unit-A and Unit-B. The Departmental Representative argued that, as per the Hon'ble Supreme Court in IPCA Laboratory Ltd. v. DCIT and A.M. Moosa v. CIT, the profits of all export units should be aggregated for the purpose of allowing deduction u/s 80HHC. The Tribunal referred to its earlier decision in the assessee's own case, where it was held that there is no prescription in law for computing the deduction unit-wise. The Tribunal upheld the aggregation of profits for all export units and reversed the CIT(A)'s order on this issue.

3. Duplicate appeals filed by the Revenue:
The appeals filed by the Revenue in ITA Nos.1419/Mds/2012 to 1423/Mds/2012 were identified as duplicates of the original appeals in ITA Nos.1390/Mds/2012 to 1394/Mds/2012. Since the original appeals were decided, these duplicate appeals were dismissed as infructuous.

4. Cross Appeals filed by the assessee:
The Cross Appeals filed by the assessee in C.O. Nos.136/Mds/2012 to 140/Mds/2012 were intended to support the orders of the CIT(A). As the Tribunal had already decided the Revenue's appeals, these Cross Appeals were dismissed as infructuous.

Conclusion:
In the result, ITA Nos. 1390/Mds/2012 & 1391/Mds/2012 were dismissed, ITA Nos.1392/Mds/2012 to 1394/Mds/2012 were partly allowed, ITA Nos.1419/Mds/2012 to 1423/Mds/2012 were dismissed as infructuous being duplicate appeals, and the Cross Objections filed by the assessee in CO Nos.136/Mds/2012 to 140/Mds/2012 were dismissed. The order was pronounced in the open Court on 13th September 2012.

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