TaxTMI 
TaxTMI 
2011 (9) TMI 83
X X X X Extracts X X X X
X X X X Extracts X X X X
....SC) holding, inter alia, that on a plain reading of Section 80 HHC it is clear that in arriving at the profits earned from exports, profits and losses of both manufactured goods and trading goods have to be taken into consideration. If after such adjustment, there is positive profit, the assessee would be entitled to deduction under Section 80 HHC. If there is a loss, he will not be entitled to any deduction. 4. The petitioner filed a return of income in response to the notice under Section 147 of the Act again declaring total income to Rs.6,76,660/- as declared in the original return. The Assessing Officer held that the assessee had suffered loss in export business and, therefore, not entitled to deduction under Section 80 HHC. Deduction under Section 80 HHC was also denied on the ground of interest received and rental income had been included for computing the said deduction. The total income was assessed at Rs.13,72,974/-. Interest under Section 234B of the Act was directed to be levied as per law. 5. The petitioner filed an appeal, which was partly allowed by the Commissioner of Income-Tax (Appeals). The first appellate authority noticed that Section 80 HHC had bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uired to pay advance tax. Thus, liability to pay advance tax is not denied. Though the assessee has paid advance tax is not denied. Though the assessee has paid advance tax as per his own estimate, interest is chargeable on the advance tax payable on the basis of assessed income and not income declared in return of income. Charging of interest being mandatory in nature in view of the decision of the Hon'ble Supreme Court in the case of Anjum Ghaswala, 252 ITR 1, the levy has to upheld. However, the assess, if so advised, may approach appropriate authority for reduction or waiver of the interest charged." 7. The petitioner thereafter filed an application under Section 234B and 234C for waiver of interest before the Commissioner of Income-Tax, which has been rejected by the impugned order dated 22nd February, 2010. The Commissioner of Income-Tax has held that the request for waiver of interest is not covered either under CBDT circulars dated 23rd May, 1996, 30th January, 1997 or under the Circular No. 2/2006 dated 17th January 2006. 8. The contention raised by the petitioner is that the findings recorded by the Commissioner that the petitioner's case is not covered by CB....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cannot by any stretch of imagination be construed as "may". There are sufficient indications in the scheme of the Act to show that the expression "shall" used in sections 234A, 234B and 234C is used by the Legislature deliberately and it has not left any scope for interpreting the said expression as "may". This is clear from the fact that prior to the Amendment brought about by the Finance Act, 1987, the Legislature in the corresponding section pertaining to imposition of interest used the expression "may" thereby giving discretion to the authorities concerned to either reduce or waive the interest. The change brought about by the Amending Act (Finance Act, 1987) is a clear indication of the fact that the intention of the Legislature was to make the collection of statutory interest mandatory. In this connection, we may usefully refer to the judgment of this court in Jaywant S. Kulkarni v. Minochar Dosabhai Shroff, AIR 1988 SC 1817, wherein this court held that when the Legislature changes the expression "may" to "shall" by amendment of the statute, it is clear that it intended to make the provision mandatory from the existing directory provision. Therefore, the question of the Comm....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Chief Commissioner of Income-tax /Director General of Income-tax deem fit. However, no reduction or waiver of such interest shall be ordered unless the assessee has filed the return of income for the relevant assessment year and paid the entire tax due on the income as assessed except the amount of interest for which reduction or waiver has been requested for. The Chief Commissioner of Income-tax or the Director-General of Income-tax may also impose any other conditions deemed fit for the said reduction or waiver of interest. 2. The class of incomes or class of cases in which the reduction or waiver of interest under section 234A or section 234B or, as the case may be, section 234C can be considered, are as follows: xxx (d) Where any income which was not chargeable to income-tax on the basis of any order passed in the case of an assessee by the High Court within whose jurisdiction he is assessable to income-tax, and as a result, he did not pay income-tax in relation to such income in any previous year and subsequently, in consequence of any retrospective amendment of law or as the case may be, the decision of the Supreme Court in his own case, which event has taken p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her condition, that the retrospective amendment or the decision of the High Court or jurisdictional High Court must be after the end of the relevant previous year, was also withdrawn. As noticed above, there is no decision of the jurisdictional High Court of Delhi on the issue in question. The petitioner was aware that the interpretation placed by him was being contested by the Department/Revenue. The manner or mode of claiming deduction was therefore debatable and was being contested by both sides. The issue was open. The second circular dated 23rd May, 1996 is, therefore, not applicable. 17. Reliance placed by the petitioner on the circular No. 2/2006 dated 17th January, 2006 is also misconceived. As a result of Taxation Law (Amendment) Act, 2005, profits on sale of Duty Entitlement Pass Book Scheme, DEPB credit or Duty Free Replenishment Certificate, DFRC are treated at par with duty draw back for the purposes of proportionate increase of profits derived from exports, subject to conditions/ restrictions as stipulated. This amendment was made with retrospective effect. In view of the retrospective amendment, circular 2/2006 was issued stipulating as under: " xxx 2. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly deduction under Section 80 HHC can be claimed. If there is loss, there cannot be any entitlement. As per the computation made in Form No. 10CCAC, which has been enclosed as annexure B to the petition, the petitioner had business loss of Rs.7,16,188/-, after excluding the income from the export incentives. In these circumstances, it is not possible to accept the contention of the petitioner that the retrospective amendment by Taxation Law (Amendment) Act, 2005 was detrimental and had reduced the claim for deduction made by him under Section 80 HHC as originally claimed. In fact, this aspect has been dealt with and explained vide response given by the Revenue in their reply dated 10th February, 2010 to the application for waiver of interest filed by the petitioner. In the said response, it has been stated as under:- " With retrospective amendment to section 80HHC (5th proviso) you rather stand benefited as you become entitled for deduction of Rs.1,27,292/-* instead of Nil deduction before the said amendment. In the light of the 5th provision inserted to section 80HHC through the retrospective amendment to section 80HHC by IT Amendment Act, 2005 and the decisions of Ld. CIT(A) & Ho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nbsp; (-) 7,24,588/- per explanation (baa) to section 80HHC Adjusted profits of (-)7,24,588/-. business Profits derived from Exports=Profits of business x Export turnover u/s 80HHC(3)(a) Total turnover = (-)7,24,588/- x 14,73,016/- 14,73,016/- = (-)7,24,588/- Add: 90% of export incentives (as per newly inserted 5th proviso To....