Commissioner Of Income Tax v. M/S Nahar Spinning Mills Ltd.5/%1./%

ITA No. 47 of 2002} 1] IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH ITA No. 47 of 2002|Date of decision: 20[th]May, 2020 Nahar Spinning Mills Ltd. .. Appellant Vv Commissioner of Income Tax (Central), Ludhiana .. Respondent CORAM:HON'BLE MR. JUSTICE AJAY TEWARIHON'BLE MR. JUSTICE AVNEBEESH JHINGHON'BLE MR. JUSTICE AVNEBEESH JHING Present:Mr. Sanjay Bansal, Senior Advocate with|Mr. Amit Prasad, Advocate for the appellant.Mr. Amit Prasad, Advocate for the appellant. Mr. Rajesh Katoch, Senior Standing Counsel andMs. Pridhi Jaswinder Sandhu, Junior Standing Counsel forthe revenue. AVNEESH JHINGAN, J. The assessee is in appeal under Section 260A of the IncomeTax Act, 1961 (for short, ‘the Act’) against the order dated 5.9.2001 passedby the Income Tax Appellate Tribunal, Chandigarh (for short, ‘theTribunal’). Following substantial questions of law have been claimed: “1. Whether on the facts and in the circumstances of the casethe CIT has jurisdiction to revise an assessment made by theAO allowing the deduction from computation of taxation ofprofits of the Industrial Undertaking u/s 80-I of the Act inrespect of the amounts of duty draw back received for themanutactured goods exported by it? 2? Whether on the facts and circumstances of the case and on ITA No. 47 of 2002|2] 4 true and correct construction of section 8Q-I of the I.T. Actand correct understanding on the Apex Court's decision in thematter of Sterling Foods as reported in 237 ITR 579 theTribunal did not err in law in disallowing the exemption inrespect of duty draw back while computing the tax free profitu/s 8O-I of the IT. Act 2?and correct understanding on the Apex Court's decision in thematter of Sterling Foods as reported in 237 ITR 579 theTribunal did not err in law in disallowing the exemption inrespect of duty draw back while computing the tax free profitu/s 8O-I of the IT. Act 2? 3. Whether the assessment order dated 25.8.92 made by theAQ for the Asstt. Year 1989-90 was erroneous andprejudicial to the interest of the revenue so as to invitejurisdiction u/s 263 of the Act to revise it?”AQ for the Asstt. Year 1989-90 was erroneous andprejudicial to the interest of the revenue so as to invitejurisdiction u/s 263 of the Act to revise it?” With regard to question No. 2 claimed, learned counsel for therevenue relied upon the decision of this Court in ITA No.151 of 1999— Commissioner of Income Tax v. M/s Nahar Spinning Mills Ltd.5/%1./%/ on 9.11.2010 in the case of the assessee itself deciding the followingquestion in favour of the revenue: “Whether on the facts and in the circumstances of the case,the Ld. ITAT was right in law in upholding Orders of the Ld.CIT (A) that Deduction u/s 80-I is admissible even on theExport Incentive and Cash Compensatory Assistance onExport even though the receipt of which is not attributable toconduct of any Manufacturing Activities by the respondent.”the Ld. ITAT was right in law in upholding Orders of the Ld.CIT (A) that Deduction u/s 80-I is admissible even on theExport Incentive and Cash Compensatory Assistance onExport even though the receipt of which is not attributable toconduct of any Manufacturing Activities by the respondent.”Learned counsel for the appellant is not in a position to disputethat question No. 2 as claimed is covered against the assessee. Hence, question No. 2 dealing with merits of the controversy isdecided against the assessee. ITA No. 47 of 2002}3] The only issue surviving and addressed is with regard toinvoking jurisdiction under Section 263 of the Act. Hence, question No. 2 dealing with merits of the controversy isdecided against the assessee. ITA No. 47 of 2002}3] The only issue surviving and addressed is with regard toinvoking jurisdiction under Section 263 of the Act. The facts are that the assessment year involved is 1989-90. Thereturn was filed on |.1.1990 and processed under Section 143(1) of the Acton 26.2.1990. Notice under Sections 147/148 of the Act was issued on28.9.1990 and in pursuance to the notice, return was filed on 9.11.1990. Theassessment order was passed on 25.8.1992. The assessee was engaged inmanutacture of garments and exported thereof, as also exporting of tradedgarments (i.e. purchased and exported). The Assessing Officer allowed thededuction under Section 80-I only qua the manutactured goods exportedout of India. Appeal was filed claiming deduction under Section 80-I onthe export of traded goods. Further contending that labelling and packing ofthe goods bought from market tantamounts to manufacture and thereforededuction under Section &Q-I of the Act be allowed. The 1[&(]AppellateAuthority relying upon the decision of the previous year in the case of theassessee held that the assessee is entitled to deduction under Section 80-[on the goods manufactured and exported. Aggrieved of the order, the appealwas filed by the revenue before the Tribunal and the assessee filed crossobjections. In the meantime, on 9.3.1995, notice under Section 263 of theAct was issued on the ground that the Assessing Officer erred in allowingdeduction under Section 80-I on duty draw back received on manufacturedgoods. The contention of the assessee that the said issue was subject-matterof appeal before the 1[&(]Appellate Authority was rejected vide order dated23.3.1993. The assessment order was set aside directing the Assessing!Officer to withdraw the relief allowed under Section 80-I on duty drawback on goods manufactured and exported out of India. The appeal filed ITA No. 47 of 2002|4] against the revisional order was dismissed by the Tribunal on 5.9.2001,hence the present appeal. Learned counsel for the appellant argued that the revisional authority had no jurisdiction to revise the order of assessment as the issue ofdeduction under Section 80-I on duty draw back was subject-matter ofappeal. He places reliance upon explanation to Section 251 of the Act, thesame reads as under: AExplanation.--In disposing of an appeal, the Commissioner(Appeals) may consider and decide any matter out of theproceedings in which the order appealed against was passed,notwithstanding that such matter was not raised before theCommissioner (Appeals) by the appellant.” Further Explanation I(c) to Section 263(1) of the Act is reliedupon. The same is also quoted: AExplanation I (c)where any order referred to in this sub-section and passed by the Assessing Officer had been thesubject matter of any appeal filed on or before or after the 1[&(]day of June, 1988, the powers of the Principal Commissioneror Commissioner under this sub-section shall extend and shallbe deemed always to have extended to such matters as hadnot been considered and decided in such appeal.” Learned counsel for the revenue defended the orders stating that the issue before the |[&(]Appellate Authority was not with regard todeduction under Section 80-I on duty draw back, rather it was seized of theissue “whether deduction under Section S80-I is available on the goodspurchased from market and exported out of India? ITA No. 47 of 2002}>] Learned counsel for the appellant contended that the issue withregard to deduction on incentive as a whole was before the l[&(]AppellateAuthority and could not be taken up in revision. He places reliance upon thedecision of Gujarat High Court inCommissioner of [Incom/tax V.iMehsana District Co/op. Milk Producers Union Ltd.» (2003) 130Taxman 235 (Guj.).. Learned counsel for the revenue defended the orders stating that the issue before the |[&(]Appellate Authority was not with regard todeduction under Section 80-I on duty draw back, rather it was seized of theissue “whether deduction under Section S80-I is available on the goodspurchased from market and exported out of India? ITA No. 47 of 2002}>] Learned counsel for the appellant contended that the issue withregard to deduction on incentive as a whole was before the l[&(]AppellateAuthority and could not be taken up in revision. He places reliance upon thedecision of Gujarat High Court inCommissioner of [Incom/tax V.iMehsana District Co/op. Milk Producers Union Ltd.» (2003) 130Taxman 235 (Guj.).. The contention raised by learned counsel for the appellant lacksmerit. There is no dispute on the fact that the Assessing Officer hadirestricted deduction under Section 80-I only qua the goods manutacturedand exported. It is a matter of record that the Assessing Officer whilerestricting the deduction under Section 80-I allowed deduction on duty drawback in respect of the goods manufactured and exported. The l[&(]AppellateAuthority noted the contention of the assessee that the dispute was that theassessee claimed deduction under Section 80-I on the goods bought frommarket and exported. The Appellate Authority held that the assessee isentitled to deduction under Section 80-I proportionately on the goodsmanutactured and exported. The dis-allowance of deduction under Section80-I on the goods purchased from market and exported was upheld. The Tribunal rightly observed that the issue whether deductionunder Section 80-I is available on duty draw back on manufactured goodswas never specifically dealt in appeal. There was no occasion for raising theissue asthe deduction was allowed by the Assessing Officer. There is no quibble that the Commissioner (Appeals) as per theexplanation to Section 251 of the Act can consider the matter arising out ofthe proceedings in which the appeal is filed irrespective of the fact that thesaid matter has not been raised by the appellant. There is also no dispute ITA No. 47 of 2002160] that as per explanation 1(c) to Section 263(1), the revision cannot be doneof the issue which has been considered and decided in appeal. In the presentcase, the issue whether the assessee was entitled to deduction under Section80-I of the Act on duty draw back with regard to goods manufactured andexported was neither considered nor decided in appeal. The reliance on certain part of the order by learned counsel forthe appellant is not well founded. The said observations were vis-a-vis theproportionate deduction under Section 80-I qua the goods manutacturedand exported. The reliance on the decision of Gujarat High Court in Mehsana District Co/op. Milk Producers Union Ltd.7Scase (Supra)doesnot enhance the case of the assessee, as already discussed, the issue takenup in revision was not subject matter of appeal. The appeal is dismissed. (AVNEESH JHINGAN) (AJAY TEWARIT)JUDGE JUDGE 20[th]May, 20204B Whether speaking/reasoned:Yes/NoWhether reportable:Yes/No