E Amount Of Rs.552.60 Lakhs As Profits Of Business And Treared Rhem As v. M/S. Bangalore[Clothing ][Co.,] Mumbail And A Decision Of The Division[Bench ] Of[This ][Court In] Aurobinda Pharma Ltd. V

IN THE HIGH COURT FOR THE STATE OF AT HYDERABAD WEDNESDAY ,THE EIGHTEENTH DAY OF DECEMBERTWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE THE CHIEF JUSTICE ALOK ARADHEAND THE HONOURABLE SRI JUSTICE J. SREENIVAS INCOME TAX TRIBUNAL APPEAL NO: 136 OF 2008 Appeal filed under Section 260,4 of the [lncome ][Tax ][Act, ][1961 against ][the]Order dated 28.O2.2OO7 [passed ]in ITA No. 142lHYDlO3 [for the ][Assessment ][year]1999-2000 on the file of the lncome Tax Appellate Tribunal [Hyderabad Bench ]['B']Hyderabad preferred against the Order dated 02.12.2002 [passed ][in.Appeal ][No-]065/DC-3(4)/C|T(A)-|V/02-03 on the file of the [Commissioner ][of ][lncome ][Tax](Appeals)'- lV, Hyderabad preferred against the Order dated [26.03.2002 ][passed ][in]-PAttlCtn No. U-32 on the file of the Assistant Commissioner [of lncome ][Tax ][Circle ]3(4), Hyderabad. Between: M/s. Ushodaya Enterprises Ltd., Rep. by [its ][Managing Director, ][6-3-570']Eenadu Compound, Somajiguda, Hyderabad [- ][500 082.] ...Appellant AND The Asst. Commissioner of Income Tax, Circle 3 [(4) ][Hyderabad.] ...ResPondent Counsel for the Appellant : Mr. M. [Sridhar ][representing] M/s. CKR Associates Counsel for the Respondent : [Mr. J.V. ][Prasad, ][Sr. ] [for ][lncome Tax] The Court delivered the following: THE HON'BLETHE CHIEF IUSTICE AIOKHE AND HEHBLEUSTI.SREVASI.T.T .A.No.136 of 2008 JUDGMENT, [,?tr ][ihe ] [lan'bb ][ttte ][CbieJ ]lastue Alok Aradbe) MIi\{.Sridhar, learned counsel represents M/s. CKRAssociates for: the appellant. Mr. J.\'.Prasad, learned Senior Standing Counsel for Income Tax f)epartment appears for the respondent 2. This appeal under Secrion 260A of the Income Tax Act, 1961 (fc,r short the 'Act) has been fiied agamst orderdated 28.02.2007, passed by the Income Tax Appellate Tribunal,Bench 'B', Hyderabad (for short [.the ]Tribunal) inI.T.A.No.142 /Ijryd/03. JThe subject matter o[ the appeal pertains to the assessmentyear 1.999-200Ctyear 1.999-200Ct 4The appeal was admirred on the following substandalquestion of law:question of law: "\X/hether the ITAT is correct in law in intelpretingand applying the ptovisions of clarses (baa) ofexplanation U/s.80HHC of IT Act only to interestincome of Rs.7,92,836/- ['rgnotng ]the other receipt ofRs.552.60 lakhs comprising of as many as about 40items of income?"and applying the ptovisions of clarses (baa) ofexplanation U/s.80HHC of IT Act only to interestincome of Rs.7,92,836/- ['rgnotng ]the other receipt ofRs.552.60 lakhs comprising of as many as about 40items of income?" 5. Facts grving rise to filing of this appeal in a nutshell are that the assessee company flled the return of incomeor 31.12.1999 for the assessment year 1999-2000. In the returnof income, the assessee had declared the income o[Rs.47,94,40,392/ - before claiming deductions underSection 80HHC and Section 80G of the Act. The assesseeclaimed deduction of Rs.1,12,37,088/- under Section 80HHC ofthe Act, which was computed by treating various [heads ]oflncomeamounting to Rs.552.60 lakhs as profits of [business.]The return of income was processed under Section [143(1) ]of [the]Act. The case of the assessee was selected for scrutiny [and]notices under Sections [143(2) ][and ][142(l) ]of [the ][Act ][were ][issued.]In response to the aforesaid [notices, ]the representative of [the] 5. Facts grving rise to filing of this appeal in a nutshell are that the assessee company flled the return of incomeor 31.12.1999 for the assessment year 1999-2000. In the returnof income, the assessee had declared the income o[Rs.47,94,40,392/ - before claiming deductions underSection 80HHC and Section 80G of the Act. The assesseeclaimed deduction of Rs.1,12,37,088/- under Section 80HHC ofthe Act, which was computed by treating various [heads ]oflncomeamounting to Rs.552.60 lakhs as profits of [business.]The return of income was processed under Section [143(1) ]of [the]Act. The case of the assessee was selected for scrutiny [and]notices under Sections [143(2) ][and ][142(l) ]of [the ][Act ][were ][issued.]In response to the aforesaid [notices, ]the representative of [the] assessee appeared and furnished the information. The assessingofficer, by order dated 26.03.2002, did nor fteat the amount ofRs.552.60 lakhs as profits of business and treared rhem asRs.552.60 lakhs as profits of business and treared rhem asmiscellaneous receipts under Explanation (b"^) of Section80HHC of the Act. The assessing officer, rherefore, reduced90% of Rs.5511.60 lakhs, while compuring the profits of business.The aforesaid deduction claimed by the assessee under Secdon80HHC was reduced to Rs.1,05,55,308/-80HHC of the Act. The assessing officer, rherefore, reduced90% of Rs.5511.60 lakhs, while compuring the profits of business.The aforesaid deduction claimed by the assessee under Secdon80HHC was reduced to Rs.1,05,55,308/- 6. The assessee thereupon filed at appeal before theCommissioner of Income Tax (Appeals) (hereinafter referred toas 'CIT(A)), v,ho by order dared 02.12.2002, inter alia held thatmiscellaneous receipts ought to be reduced by 90oio as perExplanation (baa) of Secdon 80HHC of the Act. Accordingly,the appeal was dismissed. The assessee thereupon filed anappeal before dre Tribunal. The Tribunal, by the impugnedorder dated 28.02.2007, affrmed rhe order passed by the CIT(A)and dismissed the appeal. Hence, this appeal. 7. Learned counsel for the assessee has submitted that [the]Tribunal as well as CIT(A) have mechanically treated the [amount]as receipts on the bare nomenclature of the receipts [without]enquiring whether the same fotms part of the business ptofits [of]the assessee. It is further submitted that the [assessee ][at ][no ]pointof time was given any opportuniry to submit [any ][evidence ][as ][to]whether the amount in question related to export [business. ][In]support of aforesaid submission, [reliance ][has ][been placed ][on ][a]decision of the Bombay Hrgh Court in Comrnissioner [of]Income Tax, Murnbai v. M/s. Bangalore [Clothing ][Co.,]Mumbail and a decision of the Division [Bench ]of [this ][Court in]Aurobinda Pharma Ltd. v. Commissioner of IncomeTa*-8. On the other hand, learned Standing [Counsel ][for ][the]Revenue has supported the order passed [by the authorities under]the Act and submitted that the [assessee ][has failed ][to ][establish]that the amount of Rs.5,52,60,467/- was received [from ][the]t zoo Irn ttrlzoo:; 2 1zot [s1 ][no ][rcxztc] export business. It is also urged that the [matter ][stands]concluded by E.ndings of fact against the assessee 9. We have considered the have considered the rival submissions made sides and have perused the record. We have considered the have considered the rival submissions made by both export business. It is also urged that the [matter ][stands]concluded by E.ndings of fact against the assessee 9. We have considered the have considered the rival submissions made sides and have perused the record. We have considered the have considered the rival submissions made by both 10. The assessee was claiming deducrion under Section80HHC of the ,\ct. Therefore, burden was on the assessee toprove its eligibrlity to claim such deducrion. In the instant case,the assessee had received a sum of Rs.5,52,60,467 /- frcrr. orhersoufces.Howevet, dre assessee did not lead any er,rdence toshow that dre amount in question was received from the exPortbusiness. Therefore, the Tribunal held that a sum ofRs.5,52,60,467/'- cannot be treated as income from exports.Thus, it is evident that Section 80HHC of the Act, in the factsTand circumstances of the case, did not apply. The authoritie,under the Act have, therefore, rghdy treated the aforesaidamount as miscellaneous income and excluded 90ok of the said income in view of Explanarion (baa) of Section 80HHC of the Act. 1'1,. The Ending recorded by the authorities under the Act neither suffers from any inftmity nor can the same be termed [as]Perverse. 12. For the aforementioned reasons, the substantial question of law ftamed by this Court is answered in the [negative ][and]against the assessee. 13. In the result, the appeal fails and is, hereby, dismissed. [No] costs. As a sequel, miscellaneous petitions, pending if any, stand closed sd/. K. SRINIVASA JOINREGRARTION OFFICER /TTRUE COPY// \ To, . The lncome The lncome lncome [Tax Appellate Tribunal Hyderabad.Bench ][lV' ][Hvderabad']['B'Hyderabad'] 1. The lncome The lncome lncome 2. ii;; boil ;;.iiot'.i [5r ][r ][ncom" ][r'itaripe3ls) ][-. ]3. The Assistant [commissio-n'eioi'in"o'iEi'i ][cit"ls;, ][stot' ][Hyderabad']4. One CC to [M/s- ][CKR Associates, Advocale ][lulu\'/l-]5. one CC [to Mr. J.V. ][pta.al","dtl56 ][ilincoh'" ][Tax' Advocate ][toPUCI]6Two CD [CoP'tes]Njb/gh@*2. ii;; boil ;;.iiot'.i [5r ][r ][ncom" ][r'itaripe3ls) ][-. ]3. The Assistant [commissio-n'eioi'in"o'iEi'i ][cit"ls;, ][stot' ][Hyderabad']4. One CC to [M/s- ][CKR Associates, Advocale ][lulu\'/l-]5. one CC [to Mr. J.V. ][pta.al","dtl56 ][ilincoh'" ][Tax' Advocate ][toPUCI]6Two CD [CoP'tes]Njb/gh@* HIGH COURT DATED:1811212024 JUDGMENT lTTA.No.136 of 2008 DISMISSING THE ITTAWITHOUT COSTS 010\