2021 (12) TMI 990

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....ed counsel for the appellant/assessee and Ms.K.G.Usha Rani, learned Junior Standing Counsel for the respondent/Revenue. 4.The assessee, a partnership firm, has filed its return of income for the Assessment Year under consideration, AY 1991-92 on 30.10.1991, declaring Nil income. In the return filed by the assessee, though they had arrived at a net profit before deduction under Section 80HHC of the Act of Rs. 39,91,456/-, claimed the said amount as deduction under Section 80HHC, thereby, declaring a Nil taxable income. According to the assessee, their Total Turnover of the business is Rs. 15,05,302.50/- and their Export Turnover is also the same and derived the ratio of Export Turnover/Total Turnover at one and total profits of the business at Rs. 39,41,456/- and claimed exemption of the full profit under Section 80HHC. Intimation was sent to the assessee under Section 143(1)(a) on 22.05.1992, modifying the deduction allowable at Rs. 29,76,097/-. 5.Aggrieved by the curtailment of the deduction under Section 80HHC, the assessee filed a rectification petition under Section 154 of the Act, which was rejected by order dated 24.07.1992. Aggrieved by such order, the assessee preferred a....

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....It has been brought to our notice that the decision in P.R.Prabhakar (Supra) has been reversed by this Court in the case of P.R.Prabhakar Vs.Commissioner of Income-Tax, (2006) 6 SCC 86, wherein this Court has said that the commission is also to be considered for determining the deduction under section 80HHC of Income Tax Act, 1961. Since the decision relied upon by the High Court dismissing the appeal has been reversed by this Court, the impugned order cannot be sustained and the same is set aside. The matter is remanded back to the High Court for deciding the same on merits, in accordance with law. With the aforesaid observations, the Civil Appeal is disposed of." 10.It cannot be disputed by the Revenue that the decision of the Division Bench of this Court in the case of P.R.Prabhakar (276 ITR 176) was reversed by the Hon'ble Supreme Court in the case of P.R.Prabhakar v. Commissioner of Income Tax, Coimbatore, reported in (2006) 6 SCC 86, wherein, the Court held that the Commission is also to be considered for determining the deduction under Section 80HHC of the Act. The operative portion of the judgment reads as follows : "6.Sub-sections (1) and (3) of Section 80HHC of....

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....usiness 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 (iii-a) (not being profit on sale of a licence acquired from any other person), and clauses (iii-b) and (iii-c) of Section 28, the same proportion as the export turnover bears to the total turnover of 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) 'adjusted total turnover' means the total turnover of the business as reduced by the export....

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.... apply in relation to assessment year 1986-87 and subsequent years." ... 10.Once it is held that the amendment carried out in 1991 by reason of the Finance Act (No. 2), Act, 1991 was prospective in nature, ex facie the High Court committed a serious error in opining that the same being clarificatory in character would apply to the assessment year in question. By reason of the purported clarification issued by the CBDT in term of the said circular, the area of exemption had not been widened. It has, in effect and substance as would appear from para 32.11, been curtailed. 11. By reason of such amendment, Parliament did not intend that the income derived by way of brokerage/commission by the assessee should not be reckoned for the purpose of computing profit or loss earned by a person engaged in the business of export but by reason thereof the deduction to the extent of 10% held to be allowable thereby. We, therefore, cannot accept the submission of Mr. Dutta that the income derived by way of commission and/or brokerage by an assessee carrying on business of export became exigible (sic eligible) to exemption to the extent of 10% for the first time with effect from 1.4.1992. 12....