Commissioner Of Income Tax,Chennai v. M/S.k.h. Arind Private Ltd.,K.h. House

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 06.07.2018 CORAM THE HONOURABLE MR. JUSTICE M.M.SUNDRESHANDTHE HONOURABLE MR. JUSTICE N.ANAND VENKATESH T.C.(A). NO.277 OF 2010 Commissioner of Income Tax,Chennai... Appellant vs. M/s.K.H. Arind Private Ltd.,K.H. House, No.2, Thiru Narayana Guru Road,Choolai, Chennai - 112... Respondent Appeal filed under Section 260A of the Income Tax Act, 1961against the order of the Income Tax Appellate Tribunal "B"Bench,Chennaidated09.10.2009passedinI.T.A.No.1572/Mds/2007. Against the order of the Commissioner ofIncome Tax (Appeals)XII, 121, Mahatma Gandhi Road,Chennai-600 034, dated 22.01.2007 passed in ITA.No.168/06-07preferred against the Assessment order for the year 2003-04dated 15.03.2006. For Appellant :Mr.Karthik Ranganathan,Sr. Standing CounselFor Respondent :Mr.A.S.Sriramanfor Mr.S.Sridhar JUDGMENT (Judgment of the Court was delivered by M.M.SUNDRESH, J.) The Revenue has come up with this appeal against the orderof the Tribunal by formulating the following substantialquestions of law: "1.Whether on the facts and in the circumstancesof the case, the Tribunal was right in holding thatthe assessee is entitled for deduction u/s 80HHC withrespect to profit on sale of DEPB license https://hcservices.ecourts.gov.in/hcservices/ entitlements? 2.Whether on the facts and circumstances of thecase, the Tribunal was right in holding when net lossof Rs.10.18 lakhs was arrived from the sale of DEPBlicense of Rs.2.57 crore? 2.Heard the learned counsels appearing for the parties. 3.Insofar as the first substantial question of law isconcerned, it is submitted by both the counsel that the issuehas already been held in favour of the asessee in Commissionerof Income Tax Vs. Avani Exports ((2015) 58 taxmann.com 100(SC)), wherein the Apex Court was pleased to hold that theproviso cannot be complied with with retrospective effect. Thefollowing paragraphs would be apposite: "4.Against the High Court judgment these SLPs arefiled by the Union of India. Mr.Mukul Rohtagi, learnedAttorney General for India submits that once theprayer made was to severe the aforesaid two conditionsas onerous and ultra vires, the High Court should havecouched the reliefs in terms of that prayer only,instead of stating that the operation of the Sectionwould be given effect to prospectively only and theseconditions would not operate retrospectively. At thesame time, he accepts that the legal position would bethat those exporters with turnover of rupees less thanRs.10 corres and other like the respondents with turnover of more than Rs.10 corres would be at par andboth would be entitled to the benefits. 5.We find that in essence the High Court hasquashed the severable part of third and fourth provisoto Sec.80HHC (3) and it becomes clear therefrom thatchallenge which was laid to the conditions containedin the said proviso by the respondent has succeeded.However, to make the position crystal clear, wesubstitute the direction of the High Court with thefollowing direction: "Having seen the twin conditions and since80HHC benefit is not available after 1.4.05, weare satisfied that cases of exporters having aturnover below and those above 10 cr. should betreated similarly. This order is insubstitution of the judgment in Appeal." 6.With the aforesaid clarification all these SLPsincluding that of assessees filed against the judgmentof M.P.High Court are disposed of." 4.In view of the above, the first substantial question oflaw is answered against the Revenue inasmuch as the assessmentyear is 2003-2004 and the amendment came in the year 2005. 5.Coming to the second question of law, the Tribunal hasmade reliance upon the earlier decision of the Special Bench. Itis submitted by both the counsel that even the said substantialquestion of law has been answered against the Revenue by theApex Court in Topman Exports Vs. Commissioner of Income Tax((2011) 79 CCH 0881 ISCC). 6.With the aforesaid clarification all these SLPsincluding that of assessees filed against the judgmentof M.P.High Court are disposed of." 4.In view of the above, the first substantial question oflaw is answered against the Revenue inasmuch as the assessmentyear is 2003-2004 and the amendment came in the year 2005. 5.Coming to the second question of law, the Tribunal hasmade reliance upon the earlier decision of the Special Bench. Itis submitted by both the counsel that even the said substantialquestion of law has been answered against the Revenue by theApex Court in Topman Exports Vs. Commissioner of Income Tax((2011) 79 CCH 0881 ISCC). 6.In view of the same, both the substantial questions of laware answered against the Revenue. Accordingly, both the Tax CaseAppeals stand dismissed. No costs. Sd/- Assistant Registrar(CO) //True Copy// Sub Assistant RegistrarmmiTo1.The Income Tax Appellate Tribunal,"B" Bench, Chennai.2.The Commissioner of Income Tax (Appeals)XII, 121, Mahatma Gandhi Road, Chennai-600 034.3.The Income Tax Officer,Company Ward II (1) Chennai.4.The Joint/Additional Commissioner of Income TaxCompany Range II5.The Assistant Registrar,Income Tax Appellate Tribunal,III Floor, Rajaji Bhawan,Besant Nagar, Chennai-90 T.C.(A).No.277 of 2010 NA(Co)cs/20/07/18