Hi Choice Exports P Ltd v. Income Tax Officer Ward 2

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 437 / 2011 Hi Choice Exports P Ltd ----Appellant Versus Income Tax Officer Ward 2 ----Respondent _____________________________________________________ For Appellant(s) : Mr. Sanjay Jhanwar with Ms. ArchanaFor Respondent(s) : Mr. Sameer Sharma for Mr. Anil Mehta _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE DR. JUSTICE VIRENDRA KUMAR MATHUR Judgment 31/05/2017 1. By way of this appeal, the appellant has assailed thejudgment and order of the tribunal whereby tribunal has partlyallowed the appeal of the assessee as well as allowed the appealof the department. 2.The facts of the case are that the appellant company derivesincome from export of readymade garments. The original return ofincome claiming deduction u/s 80IB and 80HHC of the Act wasfiled on 30.10.2001. Subsequently the reassessment proceedingwere initiated and the case of the appellant was reopened u/s147/148 of the Act. 2.1The appellant claimed the deduction simultaneously u/s80HHC and 80IB of the Act, on the profit of business eligible fordeduction. The Assessing Officer disallowed the said claim andcomputed the deduction u/s 80HHC on the eligible profits after reducing from the same the amount of deduction allowed u/s 80IBof the Act. 2.2During the impugned year had an interest income amountingto Rs.33,595/- on account of FDR’s kept with the bank. The saidFDR’s have been made in favour of AEPC a/c Hi-choice Export Pvt.Ltd. solely and exclusively for the purpose of its business, forobtaining quota being the prerequisite for exporting the garmentsafter borrowing funds from the bank on which interest wascharged by the bank. That the aforesaid income on account ofinterest on FDR being intrinsically linked with the carrying on ofthe business of the appellant, the appellant claimed deduction u/s80IB of the Act. The Assessing Officer excluded the income ofRs.33,595/- on account of interest on FDR from the businessincome of the appellant for the purpose of computation ofdeduction u/s 80IB of the Act, on the ground that the direct nexusbetween the income and industrial undertaking has not beenestablished. 3.This court while admitting the appeal on 9.5.2017 framedfollowing substantial question of law:- "whether Section 80HHC and 80IB of the IT Act,1961 are independent of each other andtherefore deductions under both the secitionson the gross total income is to be computedindependently and not on the reduced balanceafter taking into account the other deduction?" 4.Counsel for the appellant has relied upon the decision of theSupreme Court in Commissioner of Income Tax vs. Mandideep Eng. & PKG. India (P) Ltd. reported in (2007) 292 ITR 1 (SC)wherein it has been held as under:- "Section 80HH and 80-I are independent ofeach other and therefore a new industrial unitcan claim deduction under both the sectionson the gross total income independently." 5.However, counsel for the respondent has pointed out that thesame matter is referred to larger bench. 6.In our considered opinion, the issue is answered in favour ofthe assessee as on today on the basis of decision of the SupremeCourt which has upheld the decision of this court. 7.Subject to the reference to the larger bench, the issue isanswered in favour of the assessee. The appeal stands allowed. (VIRENDRA KUMAR MATHUR),J. (K.S. JHAVERI),J. Brijesh 119.