AI Drafter 
TaxTMI 
TaxTMI 
2015 (5) TMI 191
X X X X Extracts X X X X
X X X X Extracts X X X X
....oked to disallow the amounts in respect of concluded assessments for AY 1999-2000 in the assessee's case. 3. The admitted facts are that the assessee is an exporter entitled to the benefits of Section 80HHC. Its assessment was finalized for AY 1999-2000 when the returns were processed under Section 143(1). The search operations were conducted in the assessee's premises on 18.06.2003. In the meanwhile, on 01.06.2003, provisions of Chapter XIV were brought into force with effect from 01.06.2003. In the circumstances, search operations were to be and were conducted in accordance with its provisions. 4. Based upon the materials collected, the Assessing Officer (AO) issued notice under Section 153A to the assessee on 31.05.2005. In response, the assessee, through a letter, intimated on 27.08.2005 that it stood by the original returns which had been processed under Section 153(1). However, the AO thereafter proceeded to finalize the assessment under Section 153A. Whilst doing so, he disallowed certain amounts in the sense that all the deductions permissible under Section 80HHC and granted originally (to the tune of Rs. 11,17,71,086/-), the deduction actually permitted pursuant to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o in sub-section (1B),] derived by the assessee from the export of such goods or merchandise : Provided that if the assessee, being a holder of an Export House Certificate or a Trading House Certificate (hereafter in this section referred to as an Export House or a Trading House, as the case may be,) issues a certificate referred to in clause (b) of sub-section (4A), that in respect of the amount of the export turnover specified therein, the deduction under this sub-section is to be allowed to a supporting manufacturer, then the amount of deduction in the case of the assessee shall be reduced by such amount which bears to the 74[total profits derived by the assessee from the export of trading goods, the same proportion as the amount of export turnover specified in the said certificate bears to the total export turnover of the assessee in respect of such trading goods]. XXXXXX XXXXXX XXXXXX (2)(a) This section applies to all goods or merchandise, other than those specified in clause (b), if the sale proceeds78 of such goods or merchandise exported out of India are 79[received in, or brought into, India] by the assessee 80[(other than the supporting manufacturer)] in convert....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd of trading goods, the 92profits derived from such export shall,- (i) in respect of the goods or merchandise manufactured 91[or processed] by the assessee, be the amount which bears to the adjusted profits of the business, the same proportion as the adjusted export turnover in respect of such goods bears to the adjusted total turnover of the business carried on by the assessee; and (ii) in respect of trading goods, be the export turnover in respect of such trading goods as reduced by the direct and indirect costs attributable to export of such trading goods : Provided that the profits computed under clause (a) or clause (b) or clause (c) of this sub-section shall be further increased by the amount which bears to ninety per cent of any sum referred to in clause (iiia) (not being profits on sale of a licence acquired from any other person), and clauses (iiib) and (iiic) of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee : 93[Provided further that in the case of an assessee having export turnover not exceeding rupees ten crores during the previous year, the profits computed under cl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rtificate, being the Duty Remission Scheme calculated in the manner as may be notified by the Central Government :] 94[Provided also that in case the computation under clause (a) or clause (b) or clause (c) of this sub-section is a loss, such loss shall be set off against the amount which bears to ninety per cent of- (a) any sum referred to in clause (iiia) or clause (iiib) or clause (iiic), as the case may be, or b) any sum referred to in clause (iiid) or clause (iiie), as the case may be, of section 28, as applicable in the case of an assessee referred to in the second or the third or the fourth proviso, as the case may be, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee.] Explanation.-For the purposes of this sub-section,- (a) "adjusted export turnover" means the export turnover as reduced by the export turnover in respect of trading goods ; (b) "adjusted profits of the business" means the profits of the business as reduced by the profits derived from the business of export out of India of trading goods as computed in the manner provided in clause (b) of sub-section (3) ; (c) "a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... based on two classes, first, whose assessments have become final and secondly, whose assessment are pending, definitely violates Article 14 of the Constitution of India as there is no rationale nexus with the object of the amendment, and, therefore, such classification fails the test of Article 14 of the Constitution, being a case of 'palpable arbitrariness'. 13. We fully agree with the submissions made by the learned counsel for the petitioners that the burden was upon the Revenue to prove that the restrictions imposed by the amending Act are reasonable. We find that the Revenue has failed to discharge that burden by pointing out the reason for making classification based on the above two aspects which have no reasonable connection with the object of amendment. XXXXXX XXXXXX XXXXXX 19. After hearing the learned counsel for the parties and after going through the decisions cited at the bar, we are of the view that although in taxing statute laxity is permissible and after giving a benefit to the assessee based on some specific conditions, such benefit can definitely be curtailed but the same must be effective from a future date and not from an earlier point of tim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rongly interpreted by the Tribunal, the aggrieved party should move higher judicial forum for correct interpretation. As pointed by the Apex Court in the case of Pritvi Cotton Mills Ltd (supra), the legislature does not possess or exercise power to reverse the decision in exercise of judicial power. Thus, we are of the view that the principles laid down in the case of R. C. Tobacco (P) Ltd. (supra) has no application to the facts of the present case. The impugned amendment granting benefit restricting it to a class of assessee whose turnover is less than Rs. 10 Crore is permissible prospectively but the way it has been enacted, it takes away an enjoyed right of a class of citizen who availed of the benefit by complying with the requirements of the then provisions of law. 25. On consideration of the entire materials on record, we, therefore, find substance in the contention of the learned counsel for the petitioners that the impugned amendment is violative for its retrospective operation in order to overcome the decision of the Tribunal, and at the same time, for depriving the benefit earlier granted to a class of the assessees whose assessments were still pending although such b....