2016 (7) TMI 1322
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....: 3. Ground Nos 1 & 2 of assessee's appeal and Ground No.2 of Revenue's appeal involve identical issue with regard to denial of deduction u/s 80HHC to the assessee on the ground that deduction u/s 80HHC was denied to the main exporter also, to whom the assessee (a supporting manufacturer) had sold its goods. 3.1. We have heard both the parties on this issue in detail and also gone through the orders of the lower authorities as well as copies of judgment placed before us. The brief background of this case is that assessee is supporting manufacturer, selling its goods to the export house namely M/s. Allana Sons Ltd, who had issued disclaimer certificate in favour of the assessee u/s 80HHC and accordingly, the assessee claimed benefit of deduction u/s 80HHC on the amount of turnover made by the assessee to the export company. During the course of reassessment proceedings, the AO noted that the said export house has been denied the benefit of deduction u/s 80HHC on the ground that the said export house company namely M/s. Allana Sons Ltd. ('here in after referred to as 'ASL' in short) had incurred loss in case the amount of incentive is not included in its export profits. Accordingly....
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....s been resolved in the judgment of Hon'ble Banglore Bench in the case of Shamanur Kallappa & Sons vs. ACIT 23 DTR (Bang)(Trib) 269 which has been subsequently upheld by the Hon'ble Karnataka High Court by vide its order dated 12th January 2015 in ITA No. 10/2009 by holding that deduction u/s 80HHC to the supporting manufacturer is allowable independent of actual allowing of deduction in the hands of main exporter. The third argument made by the Ld. Counsel was that reopening was done in the case of the assessee by the AO on the issue of disallowance u/s 40A(3) only and no issue was raised in the 'Reasons' recorded with respect to deduction u/s 80HHC. The disallowance made u/s 40A(3) has been deleted by the Ld. CIT(A) against which revenue has not filed any appeal. Thus, main issue on which 'Reasons' were recorded has been settled and therefore, no other disallowance would be sustainable as reopening would become bad in law. 3.4. Per contra, Ld. DR relied upon the judgment of Hon'ble Supreme Court in the case of IPCA Laboratories Ltd. v. CIT (supra) and relied upon the order of the AO. We have considered the entire matrix and facts of this case and copies of judgment placed before ....
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.... the Tribunal. Moreover, the very basis of the impugned notice dated 10 January 2005 will not be sustainable. In view of all the above reasons, we set aside the impugned notice date 10th January 2005." 3.6. Thus, it is noted by us that the Hon'ble High Court has not only quashed the reassessment order but also held that deduction u/s 80HHC is actually allowable to ASL. It is further noted by us that it has been held by Hon'ble Gujarat High Court in the case of Avani Exports & Others dated 02.07.2012 that the amendment made by Taxation Laws (Amendment) Act 2005 in section 80HHC to curtail the benefit of u/s 80HHC on the amount of incentive received by the main exporters would not operate retrospective. Thus, if we consider on facts the case of ASL on merits also, it is noted that after including amount of incentives there would arise positive amount of profit. Thus, viewed from any angle, and keeping in view the fact that when deduction u/s 80HHC has been actually allowed in the hands of ASL i.e. export house, therefore, the whole premises of the AO based upon which the deduction was denied to the assessee, ceases to exist. Under these facts and circumstances, we find that Ld. CIT(....
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....essee's appeal are treated as allowed and sole ground raised by the revenue is dismissed. 6. Ground No.3.1. This ground is also identical to ground no. 3.1. of assessee's appeal in A.Y. 2000-01, and accordingly AO is directed to follow our order A.Y. 2000-01. This Ground may be treated as partly allowed for statistical purposes. 7. As a result, appeal of the assessee is partly allowed and appeal of the revenue is dismissed. Now we shall take up appeals of the Assessee & Revenue in the case of Frigerio Conserva Allana Ltd in ITA No.4225/Mum/2011 & ITA No. 5530/Mum/2011 for A.Y. 2002-03 8. It is noted that grounds raised in those appeals are identical to grounds raised in A.Y. 2000-01. No distinction has been brought out by other party before us. Thus, ground nos. 1 & 2 of assessee's appeal are allowed and ground no.3 of assessee's appeal is sent back to the file of the AO with the direction as given above and solitary ground raised by the revenue is dismissed. The AO is directed to follow our order for A.Y. 2000-01. 9. As a result, assessee's appeal is partly allowed and revenue's appeal is dismissed. Now we shall take up appeals of the Assessee & Revenue in the case of Friger....