TaxTMI 
TaxTMI 
2012 (9) TMI 715
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....he assessee relate to its claim for relief u/s 90 and 91 and the same read as under: "2.1. The Learned Commissioner of Income-tax (Appeals) erred in law in holding that no relief under section 90 ought to be allowed in respect of taxes paid outside India, on the erroneous ground that since the Appellant Company is allowed deduction of 100% under the provisions of Section 80HHE, no income is double taxed. 2.2. The Learned Commissioner of Income-tax (Appeals) erred in law and on facts in concluding that the decision of the ITAT reported in 82 ITD 695 which was in respect of relief under section 91 was applicable to the Appellant Company for the year under appeal in respect of relief for taxes paid under section 90." 5. We have heard the arguments of both the sides on this issue and also perused the relevant material on record. Although the ld DR has submitted that these issues involved in ground no. 2.1 and 2.2 of the assessee's appeal are squarely covered against the assessee and in favour of the revenue by the order of the Tribunal passed in assessee's own case for AY 1989-90, it is observed that in its order passed for AY 1990-91 vide its order dated 7.12.2006 passed in ITA No.....
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....Y 1990-91 reproduced above, a similar issue has been restored by the Tribunal, to the file of the AO with specific directions after taking into consideration the decision of the Tribunal rendered in assessee's own case for AY 1989-90. As submitted by the learned Counsel for the assessee, the said decision of the Tribunal in AY 1990-91 has been subsequently followed by the Tribunal consistently up to AY 1996-97 while restoring a similar issue to the file of the AO. Keeping in view the decision of the Tribunal rendered in the earlier years i.e. AY 1990- 91 to 1996-97, we set aside the impugned order of the Ld. CIT (A) on these issues and restore the matter to the file of AO for deciding the same afresh as per the same directions as given in the Tribunal's order for earlier year. Ground no. 2.1 and 2.2 of the assessee's appeal are accordingly treated as allowed for statistical purposes. 7. In ground no.3, the assessee has challenged the action of the Ld. CIT (A) in holding that taxes paid outside India are not deductible under the provisions of sec.37(1) and r.w.s 40(a)(ii) and section 2(43) of the Income-tax Act, 1961. 8. As agreed by the learned representatives of both the ....
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.... case of South East Area Shipping Co. (P) Ltd. (supra); and hence, we decide this issue in favour of the revenue by following this judgment of Hon'ble Madras High Court. This ground of the assessee is rejected." 9. As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to that of AY 1993-94, we respectfully follow the order of the coordinate Bench of the Tribunal for AY 1993-94 and uphold the decision of the Ld. CIT (A) that the taxes paid by the assessee outside India are not deductible under the provisions of sec. 37(1) r.w.s 40(a)(ii) and section 2(43). Ground no.3 of the assessee's appeal is accordingly dismissed. 10. The issue raised in ground no.4 relates to assessee's claim for deduction u/s 80HHC which has been restricted by the AO as well as by the Ld. CIT (A). 11. During the year under consideration, the assessee company had made export of electronic hardware and deduction u/s 80HHC was claimed at Rs. 9,28,62,297/- by taking only the total turnover of one unit namely Electronic Hardware Technology Park from which the said export was made. Accordingly the AO, while computing deduction u/s 80HHC, the to....
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....overall figures at the assessee level keeping in view the manner and method of computation provided specifically in sub-section 3 of section 80HHC. The other view that is taken on this issue is that the purpose of formulae given in sub-section 3 of section 80HHC is to compute the profit eligible for deduction u/s 80HHC on prorata basis where only consolidated figures are available in the absence of separate books of account. It was held that when separate books of account are maintained by the assessee in respect of the concerned unit and profit eligible for deduction u/s 80HHC can be worked out directly on the basis of such separate books of account, the same needs to be preferred than the formulae given in sub-section 3 which works out such profit only on prorata basis. The latter view has been taken inter alia by the Hon'ble Madras High Court in the case of CIT vs. Rathore Brothers (supra) and the same being in favour of the assessee has been followed inter alia by the coordinate Bench of this Tribunal in its decision rendered in the case of Mico Agencies vs. DCIT by the order dated 29.8.2002 passed in ITA No.4205/M/1995. Respectfully following the said decision of the coordinat....
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.... 1997-98. As per the amendment made in section 10B, which is similar to the amendment made in section 10A, by the Income Tax (Second Amendment) Act, 1998 w.e.f. 1.4.1999, the tax holiday was extended to ten years. Relying on the said amendment, the assessee claimed benefit of exemption u/s 10B for AY 1999-2000, 2000-2001 and 2001-2002 which was disallowed by the Assessing Officer. On appeal, the Ld. CIT (A) as well as Tribunal however allowed the claim of the assessee for exemption u/s 10B for AY 1999-2000, 2000-2001 and 2001-2002. On further appeal preferred by the revenue, Hon'ble Karnataka High Court upheld the decision of the Tribunal holding that the order passed by the Tribunal as well as by the first appellate authority was strictly in accordance with law as well as the spirit and object of the amending provisions of section 10B. The learned DR in this regard has submitted that the assessment years involved in the case of M/s. DSL Software Ltd (supra) were 1999-2000 onwards when the amended provisions inserted w.e.f. 1.4.1999 were applicable. He has contended that the assessment year involved in the present case is however 1998-99 and the amended provisions not being there o....
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....decided on merit instead of sending it back to the Ld. CIT (A) for adjudication. We find merit in this contention of the learned Counsel for the assessee and now proceed to consider and decide this issue on merits. 19. As rightly submitted by the learned Counsel for the assessee, the issue involved in ground no.6 relating to computation of deduction u/s 80HHE is similar to the one involved in ground no.4 relating to computation of deduction u/s 80HHC inasmuch as the deduction u/s 80HHE was computed by the assessee taking the relevant financial data only of the concerned unit namely System Integration (overseas) Division from which export of software out of India was made. The AO and CIT (A) however adopted the relevant financial data of all the businesses of the assessee together to workout the profit eligible for deduction us/ 80HHE on prorata basis which, according to them, was in accordance with the provisions of sub-section 3 of section 80HHE. While deciding a similar issue in the context of computation of income u/s 80HHC as involved in the ground no.4 of the assessee's appeal, we have already considered a similar controversy. As noted by us in the said context, there are dec....
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....er of the Tribunal passed in assessee's own case for AY 1989-90, it is observed that in its order passed for AY 1990-91 vide its order dated 7.12.2006 passed in ITA No.2973/B/1994, the coordinate Bench of this Tribunal has restored similar issues relating to assessee's claim for relief u/s 90 and 91 after dealing with the arguments of both the sides in paragraph no. 14 and 15 of its order which read as under: "It is submitted by the ld. Counsel that this issue is covered against the assessee by the Tribunal in its order for Assessment Year 1989-90 but it is submitted that this issue needs reconsideration in the light of the decision in the case of CIT vs. Best & Crompton Engg. Ltd. as reported in 156 Taxman 216. It is further submitted that this issue has not been examined in the case where there is a Double Taxation Avoidance Agreement (DTAA) with two countries that is New Zealand and Japan. Our attention was drawn to DTAA with New Zealand and reported in 166 ITR (St.) 90 Clause 2(a) of Article 23 and it is submitted that as per DTAA with these two countries, the assessee company should be given deduction of the entire taxes paid in these two countries on the income earned....
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....dia are not deductible under the provisions of sec.37(1) and r.w.s 40(a)(ii) and section 2(43) of the Income-tax Act, 1961. 27. As agreed by the learned representatives of both the sides at the time of hearing before us, the issue involved in the ground no.3 of the assessee's appeal is squarely covered in favour of the Revenue and against the assessee by the decision of the Tribunal in assessee's own case for AY 1993-94 rendered vide its order dated 17.1.2007 in ITA No.4688/MM/1997 wherein a similar issue was decided against the order for the following reasons given in para 16 of its order. "We have considered the rival submissions, perused the materials on record and have gone through the judgments cited by both sides and relied upon by authorities below. In the case of Smith Kline and French (India) Ltd. 219 ITR 561, it was held by Hon'ble Apex Court tat sur-tax under Companies (Profits) Sur-tax Act, 1964 is tax on profits within the meaning of section 40(a)(ii); and hence not an allowable deduction. In the case of CIT vs. Kerala Lines Ltd 201 ITR 106, the issue involved was similar i.e. regarding deductibility of amount paid by the assessee by way of income tax at foreign po....
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.... issue has already been considered by us in the appeal of the assessee for AY 1998-99 wherein a similar claim made by the assessee has been held to be not allowable on the ground that the relevant amended provisions were not in the statute on the first day of that assessment year. In so far as the AY 1999-2000 is concerned, the said amendment made w.e.f. 1.4.1999 was very much in the statute on the first day of the relevant assessment year and the assessee in our opinion therefore was entitled to claim exemption u/s 10A relying on the said amendment as held by the Hon'ble Karnataka High Court in the case of M/s. DLS Software Ltd (supra). We therefore direct the AO to allow the claim of the assessee for exemption u/s 10A for AY 1999-2000 and allow the ground no.4 of the assessee's appeal. 31. As regards ground no.5 of the appeal of the assessee for the AY 1999-2000 it is observed that the issue involved therein relating to computation of deduction u/s 80HHE is similar to the one involved in ground no.6 of the assessee's appeal for AY 1998-99 which has been decided by us in paragraph no. 19 of this order. Following our decision in AY 1998-99, we decide this issue in favour of the as....
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.... way of income tax at foreign ports is not deductible under section 37 of I.T. Act. It was further held by Hon'ble Madras High Court that since, once, it is held that income tax payment made by the assessee at the foreign ports is not allowable deduction u/s 37 of the Act, it would really be unnecessary to consider whether those amounts shall not be deductible u/s 40(a)(ii) of the Act. The facts in the present case are similar to the facts in the case of CIT vs. Kerala Lines Ltd (supra); and hence, respectfully following this judgment of Hon'ble Madras High Court, this issue is decided in favor of the revenue. Regarding the Tribunal judgment rendered in the case of ITO vs. South East Asia Shipping Co. (P) Ltd. (supra), we find that in this case, the issue was decided in favour of the assessee on the basis that the tax levied by different countries is not tax on profits; but necessary condition precedent to earning of profits; and therefore, it was held in this case that section 40(a)(ii) is not applicable. We are of the considered opinion that since, judgment of Hon'ble Madras High Court rendered in the case of Kerala Lines Ltd. (supra) is against the assessee, the same has to be ....
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....isen in the accounting year, although the liability may have to be quantified and discharged at a future date. It was also held that it should also be capable of being estimated with a reasonable certainty, although the actual quantification may not be possible. We are of the considered opinion that since the valuation was done by the assessee on the basis of actuarial valuation, it cannot be said that the liability was not determined with a reasonable certainty. We are of the considered opinion that this issue is also covered in favor of the assessee by this judgment of Hon'ble Apex Court in the case of Bharat Earth Movers (surpa); and respectfully following the same, this issue is decided in favour of the assessee. This ground of the assessee is allowed." 40. As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to AY 1996-97, we respectfully follow the decision of the coordinate Bench of this Tribunal for AY 1996-97 and delete the disallowance made by the AO and confirmed by the Ld. CIT (A) on this issue. Ground no.3 is accordingly allowed. 41. Now we shall take up the appeal of the assessee for AY 2001-200....