2009 (1) TMI 63 - HC - Income Tax

Interpretation of Tax Appeal Limits & Export Turnover Deduction Computation

The court interpreted the tax effect for filing appeals under Section 268A of the Income Tax Act, emphasizing appeals should be based on the tax effect ... Whether I.T.A.T. is right in directing A.O. to compute the deduction u/s 80HHC after the books of accounts having been made up with the total export turnover ascertained, holding that the reduction in the invoice amount having been approved by R.B.I., the original sales price stands modified to this extent and such modified price only should be included as part of export turnover – Held, yes – Revenue plea that, that adjusted export value should be excluded from the export turnover, is rejected Issues Involved:1. Interpretation of tax effect for filing appeals under Section 268A of the Income Tax Act.2. Determining the computation of deduction under Section 80HHC of the Act regarding export turnover.Issue 1: Interpretation of tax effect for filing appeals under Section 268A of the Income Tax Act:The judgment discusses the interpretation of the tax effect for filing appeals under Section 268A of the Income Tax Act. The Revenue questioned whether an appeal should be filed based on the tax effect exceeding Rs.4.00 lakhs. The Court analyzed the CBDT instruction No.05/2008, which introduced Section 268A, stating that appeals should be filed only if the tax effect exceeds the monetary limit specified. The instruction clarified that appeals should be filed solely based on the tax effect in the relevant assessment year. The Court emphasized that the purpose was to avoid burdening courts and tribunals with matters below the monetary limit. It was noted that even in cases involving the same issue for different assessment years, appeals need not be filed if the tax effect is below the limit. The judgment highlighted the distinction between composite and common orders, stating that appeals must be filed for all assessment years if the tax effect exceeds the limit in any year.Issue 2: Determining the computation of deduction under Section 80HHC of the Act regarding export turnover:The judgment addressed the computation of deduction under Section 80HHC concerning export turnover. The case involved bringing proceeds into India within the prescribed time, with the RBI granting an extension until a specific date. The disagreement between the Revenue and the assessee centered on whether post-assessment proceeds should be considered in the total turnover. The assessee argued that post-assessment proceeds should be included if brought in during the financial year. The buyer proposed a deduction in the export price, which was approved by the RBI. The Tribunal concluded that the modified price post-RBI approval should be considered in the export turnover. The Revenue contended that the deduction should be excluded from the export turnover. The Court, based on the facts and Section 80HHC provisions, upheld the Tribunal's decision, ruling in favor of the assessee against the Revenue.In conclusion, the judgment provides a detailed analysis of the interpretation of tax effect for filing appeals under Section 268A of the Income Tax Act and the computation of deduction under Section 80HHC regarding export turnover, ultimately ruling in favor of the assessee on both issues.