TaxTMI 
TaxTMI 
2003 (4) TMI 78
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....s and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was entitled to the deduction under section 80HHC in spite of the fact that the audit report in Form No. 10CC-AC required to be filed along with return of income under sub-section (4) of section 80HHC was filed only before the Tribunal?" Question No. 2: Mr. Sumit Chakravarty, learned counsel for the Revenue, in his usual fairness, has pointed out with regard to question No. 2 that section 28(iiia) of the Income-tax Act, 1961, has no manner of application in the present case. In fact, we find from the records that the receipt, which was sought to be brought within the tax net was received out of a transfer of an export licence granted under the Export Control Order, 1977. Whereas clause (iiia) of section 28 relates to profit on sale of a licence granted under the Imports (Control) Order, 1955, framed under the Imports and Exports (Control) Act, 1947. Thus, as rightly contended by Mr. Chakravarty on behalf of the Revenue, the profit out of sale of the export licence granted under the Export Control Order, 1977, cannot be brought within the purview of section 28(iiia). Therefore, t....
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.... not a receipt of an income of a casual nature within the meaning of section 10(3). If the capital receipt cannot be computed to tax under section 45 read with the computation method, an integral part of the charging section, the same cannot be charged to tax under that particular head. If it cannot be charged under that particular head, it cannot be charged under a different head. He relied on the decision in B.K. Roy Pvt. Ltd. v. CIT [1995] 211 ITR 500 (Cal) and Cadell Weaving Mill Co. P. Ltd. v. CIT [2001] 249 ITR 265 (Bom), in support of his above contention. Income, as defined in section 2(24), is an inclusive one. It includes profits and gains, dividend and various other items referred to herein. The receipt out of transfer of the capital asset is either profit or gain. It does not come under any other item of the definition of income as defined in section 2(24). The income is a genus. All receipts are income and chargeable to tax according to the heads under which such receipts become chargeable. The charging heads have been distinctly specified in the Act in six different categories. An income, unless it comes under a particular head, cannot be charged. If a particular r....
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....istic of a capital receipt. Therefore, it would be chargeable under section 45. If it comes under section 45, then it has to be computed in ,he manner provided in section 48, which requires determination of the cost of acquisition in order to work out the gain. This receipt related to the assessment year 1989-90. Until 1995 section 55(2) as it stood did not include any provision for computing the cost of acquisition of a licence, which fell under section 55(2)(b). Since the cost of acquisition could not be determined, therefore, it could not be taxed. We had occasion to hold so in CIT v. General Industrial Society Ltd. [2003] 262 ITR 1 (Cal) -Income-tax Reference No. 36 of 1998 disposed of by us on March 25, 2003. Therefore, in the present case, the sum received on transfer of the licence, a capital asset, cannot be charged to tax as income. In the circumstances, we are unable to persuade ourselves to agree with the contention of Mr. Chakraborty assisted by Mr. Sailen Dutta, learned counsel for the Revenue. We had occasion to obtain support from the decision in B.K. Roy Pvt. Ltd. v. CIT [1995] 211 ITR 500 (Cal); CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294 (SC), including the ....
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....ious decisions, to which we shall be referring at a later stage. The first question to which we would like to address ourselves is with regard to the construction of sub-section (4) of section 80HHC in the light of the facts involved in this case. As pointed out by Mr. Murarka so far as the claim with regard to the export of goods and merchandise an audit report was furnished as it appears from page 28 of the paper book. But no audit report was furnished in respect of the receipt out of transfer of the import licence. The purpose of incorporation of sub-section (4) was to enable the Assessing Officer to ascertain the claim for deduction on the basis of authentication by the auditor that the goods and merchandise was really exported, which is otherwise admissible only on actual basis, a situation which is difficult to determine by the Assessing Officer. But when it is a receipt out of transfer of an import licence which is also otherwise permissible for deduction under section 80HHC, it is not necessary to prove the authenticity of the receipt since no certificate would be necessary to ascertain the addition to export turnover on account of this receipt. This amount may be includ....
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....ry depends upon the intent of the Legislature and not upon the language in which the intent is clothed. The intention of the Legislature is to be ascertained not only from the phraseology of the provision but also by considering its nature, its design and the consequences that would follow from construing it one way or the other. The word "shall" in a statutory provision though generally taken in a mandatory sense, but that does not necessarily mean that in every case it shall have that effect that the statute are to be punctiliously followed and in default the proceeding would be invalid. In CIT v. Jayant Patel [2001] 248 ITR 199 again dealing with section 80J(6A), the Madras High Court had taken the same view. It had gone to the extent that it can be filed even at the appellate stage. In CIT v. Shahzedanand Charity Trust [1997] 228 ITR 292 (P & H), while dealing with section 12A(b) the same view was taken. It was held that filing of audit report along with the return was not mandatory but directory. In Zenith Processing Mills v. CIT [1996] 219 ITR 721 (Guj), while dealing with section 80J(6A) the court took the same view that filing of the audit report along with the return is....
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....ify the defective return has been clearly conferred on the Assessing Officer by sections 139(5) and 139(9) of the Act. This decision has also taken note of the fact that the filing of the certificate is mandatory and it cannot claim deduction unless the certificate is filed. But the court did not subscribe to the opinion that such deduction will not be allowed if the certificate is not filed along with return. The first part of subsection (4) of section 80HHC makes it mandatory and necessary to furnish in the prescribed form the audit report for claiming deduction. But the second part being procedural in nature, requires the assessee to submit a certificate of special audit report along with the return. This is directory in nature as it calls for substantial compliance as observed in the said decision. Thus, it is clear from the various decisions of different High Courts including those of this High Court, particularly, the learned single judge of this court. We do not find any reason to differ with the same. Sub-section (4) of section 80HHC consists of two parts. The first part requires filing of the special audit report for claiming deduction without which the deduction can....