TaxTMI 
TaxTMI 
2026 (9) TMI 1407
X X X X Extracts X X X X
X X X X Extracts X X X X
.... between the clubbed matters, we find it convenient to pronounce separate Judgments in the bunch of Appeals heard together. To complete the narrative, we observe that in Civil Appeal Nos. 143-144 of 2013 and batch, though the substantive issue between the Revenue and the Assessee is under Sections 28(iiia) to 28(iiie) and 80HHC (Deduction in respect of profits retained for export business) of the Income Tax Act, 1961 ("The Act, 1961"), the arguments in Civil Appeal Nos. 143-144 of 2013 and batch have been advanced on the exercise of power by the C.I.T. under Section 263 of the Act, 1961. Further, the impugned judgments refer to and rely upon the decision of the Delhi High Court in CIT v. Nagesh Knitwears P. Ltd. (2012) 345 ITR 135., which considered and decided issues arising under both Section 80HHC and Section 263 of the Act, 1961. Vide a separate judgment of the even date in Civil Appeal Nos. 143-144 of 2014 and batch, we affirm the view taken in Nagesh Knitwears P. Ltd. (supra) on the exercise of power by the C.I.T. under Section 263 of the Act, 1961. Therefore, the issue raised by the Assessee under Sections 28(iiia) to 28(iiie) and 80HHC of the Act, 1961, in these Appeals is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Chemicals Ltd. (1998) 233 ITR 497., North East Gases Pvt. Ltd. v. CIT (1996) 220 ITR 372., and CIT v. Paras Oil Extraction Ltd. (1998) 230 ITR 266. 4. The Assessee, assailing the Order dated 24.03.2004, filed Appeal No. 174/2004-05 before the C.I.T. (Appeals)-III ("the CIT(A)"). On 13.02.2006, the CIT(A) allowed the Assessee's Appeal, holding that quota-sale proceeds are deductible under Section 80HHC of the Act, 1961, and that interest on margin money is exempt under Section 10A of the Act, 1961, and allowed both claims in full. The findings of the CIT(A) are as follows: A. On Sale of Export Quota: The CIT(A) relied on the CBDT Instruction/Office Memorandum dated 23.02.1998 ("CBDT O.M."), which provided that the premium on the transfer of export quotas is equated with export incentives under Sections 28(iiia), (iiib), and (iiic), i.e., profits on the sale of import licences, cash assistance, and duty drawback of the Act, 1961. Where income is considered for exemption under Section 10A, then it is eligible for deduction under Section 80HHC because Section 10A(4)(iii) omits Section 80HHC from the list of prohibited Chapter VI-A deductions under the Act, 1961. Reliance is p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 260A of the Act, 1961, the Revenue filed ITA No. 1057 of 2008 before the High Court of Delhi. The Appeal was admitted on the following substantial questions of law:- "Whether ITAT was correct in law in deleting the addition made by the Assessing Officer by disallowing Assessee's claim under Section 10A of the Act out of income earned on sale of export/import quota holding that the assessee was alternatively entitled to deduction under Section 80HHC of the Act? Whether ITAT was correct in law in deleting the addition made by the Assessing Officer by disallowing Assessee's claim under Section 10A of the Act on interest on margin money by holding that the assessee was alternatively entitled to deduction under Section 80HHC of the Act?" 7. The impugned Judgment, referring to the decisions in CIT v. Nagesh Knitwears P. Ltd.(supra), CIT v. M/s Mereena Creations (2011) 330 ITR 199., and CIT v. Shri Ram Honda Power Equip (2007) 289 ITR 475., answered the questions in favour of the Revenue and against the Assessee. 8. Hence, the Civil Appeals. 9. Mr. Santosh Krishnan, learned Counsel for the Assessee, argues that the Assessee's case has been rejected by refe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the courts in interpreting statutory provisions, nor can they impose on taxpayers a burden greater than what the Statute itself envisages. 10. Arijit Prasad, learned Senior Counsel for the Revenue, argues that the Claim is substantially based on the CBDT O.M. The binding nature of the CBDT O.M. on the Courts of law is no longer res integra. The relied-upon Judgment has considered the scope and application of Sections 28(iiia) to (iiic) and 80HHC of the Act, 1961. The findings in the relied-upon Judgment are not open to challenge and strictly follow the literal construction of the relevant provisions. The Act, 1961 deals with total income derived, as per the Act, 1961, and tax payable thereon. The Appellant's argument runs counter to the basic scheme for deriving or determining the Assessee's total taxable income. 11. It is apposite to refer to the findings of the relied-upon Judgment by the High Court as follows: A. In classifying the consideration earned from the transfer of export quota rights, it was held that such receipts do not fall within any clause of Sections 28(iiia) to (iiie) of the Act, 1961. Quota permits allocated by the AEPC are not import lic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urt declares the law on a question arising for consideration, it is impermissible for any Court or Tribunal to direct that the Executive Circular be given effect in preference to the view expressed by the Constitutional Court. B. Administrative Circulars and clarifications issued by the Central or State Governments merely reflect the Executive's understanding of statutory provisions. Such Circulars are not binding on the courts. Under the constitutional framework, only the Judiciary can interpret statutory provisions. The Executive does not have this power. C. Any Administrative Circular or clarification that runs contrary to statutory provisions or to the judicial declaration thereof has no force in the eyes of the law. D. Accepting the contention that the Revenue is precluded from challenging an interpretation contrary to its Circulars would extinguish the Revenue's valuable right of appeal. Because an assessee who benefits from a Circular will not appeal, precluding the Revenue from appealing would prevent the High Courts and the Supreme Court from ever adjudicating the question. Such an outcome would directly undermine the law declared by the Supr....