2018 (11) TMI 1554 - HC - Income Tax

High Court directs reevaluation of deduction entitlement under Section 80HHC for DEPB license sale.

The High Court allowed the Tax Case Appeal, directing the Assessing Officer to reevaluate the appellant's entitlement to a deduction under Section 80HHC ... Entitled to deduction u/s.80HHC in respect of 90% of income from sale of DEPB license - Held that:- Appeal, filed by the assessee, is allowed and the order passed by the Tribunal is set aside and the matter is remanded to the Assessing Officer to apply the decision in the case of Avani Exports v. Commissioner of Income Tax [2012 (7) TMI 190 - GUJARAT HIGH COURT] and to proceed to grant proper deduction to the assessee under Section 80HHC of the Act. Since the assessment pertains to the year 2003-04, the Assessing Officer is directed to give priority to the matter and conclude the proceedings within a period of three months from the date of receipt of copy of this judgment. No costs. Issues:Interpretation of deduction under Section 80HHC in relation to income from sale of DEPB license for assessment year 2003-04.Analysis:The High Court of Madras considered an appeal against the Income Tax Appellate Tribunal's order regarding the entitlement of the appellant to a deduction under Section 80HHC for 90% of income from the sale of a DEPB license for the assessment year 2003-04. The court framed a substantial question of law based on this issue. The court heard arguments from both the appellant's counsel and the respondent representing the Revenue.The court referred to a previous case, M. Lankalingam vs. The Commissioner of Income Tax, Chennai, where the issue of deduction under Section 80HHC was addressed. The court highlighted a judgment from the Hon'ble High Court of Gujarat in the case of Avani Exports v. Commissioner of Income Tax, which had implications for the interpretation of the relevant provisions. The Supreme Court's decision in CIT v. Avani Exports was also cited, emphasizing the treatment of exporters with turnovers below and above Rs. 10 crores in relation to the deduction under Section 80HHC.Based on the precedents and legal positions established in the aforementioned cases, the High Court concluded that the Tribunal had erred in its decision. The court directed the Assessing Officer to reevaluate the appellant's entitlement to the deduction under Section 80HHC in accordance with the decision in CIT v. Avani Exports. The court emphasized the need for the Assessing Officer to conduct the necessary computations and grant the appropriate deduction to the assessee. The court set aside the orders of the Tribunal and the Commissioner of Income-tax (Appeals), remanding the matter to the Assessing Officer for further action.In light of the above analysis and legal considerations, the High Court allowed the Tax Case Appeal filed by the assessee, setting aside the Tribunal's order and instructing the Assessing Officer to apply the decision in Avani Exports v. Commissioner of Income Tax for granting the proper deduction under Section 80HHC. The court directed the Assessing Officer to expedite the proceedings and conclude the assessment within three months from the date of receiving the judgment copy, without imposing any costs on the parties involved.