The Commissioner Of Income-Tax, Karnal v. M/S Sheena Industries

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A No. 331 of 2008 Date of decision : September 16, 2008 The Commissioner of Income-tax, Karnal ...... Appellant through Mr.Sanjeev Kaushik, Advocate v. M/S Sheena Industries ...... Respondent CORAM : HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY TEWARI *** 1. Whether Reporters of Local Newspapers may be allowed to see the judgment ? judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest ? *** AJAY TEWARI, J This appeal has been filed under Section 260A of the IncomeTax Act, 1961 (for short “the Act”) by the revenue proposing the followingquestion of law :- “ Whether on the facts and in the circumstances of thecase, the learned ITAT was right in law in upholding theorder of the CIT (Appeals), directing the AssessingOfficer to allow deduction u/s 80 HHC to the assesseewho is a supporting manufacturer in the same manner, asin the case of direct exporter, treating the supportingmanufacturer at par with direct exporter and ignoring theprovisions of section 80 HHC(1A) read with section 80HHC (3A) read with clause (baa) of explanation to section 80 HHC of the Act.” The respondent-assessee is a partnership firm deriving incomefrom the manufacturing and sale of textile goods to M/S IKEA Trading(India) Ltd (Export House/Trading House) as supporting manufacturer. Theassessee filed return declaring total income as nil on 30.10.2001, which wassubsequently assessed under Section 143(3) of the Act at an income ofRs.2,55,13,910/- by computing deduction under Section 80HHC as per theprovisions of Section 80HHC(1A) read with Section 80 HHC(3A) read withclause (baa) of explanation to Section 80HHC of the Act as the assessee is asupporting manufacturer. The assessee has made total sales amounting toRs.37,63,87,161/- as a supporting manufacturer to M/S IKEA Trading(India) Ltd. It received total export incentives of Rs.2,95,37,033/-, whichincluded duty draw back of Rs.2,94,33,244/-, Duty Entitlement Pass Book(DEPB) premium of Rs.1,03,789/- and claimed deduction under Section80HHC of the Act amounting to Rs.5,14,65,193/- out of the total profits ofRs.6,44,08,903/-. The assessee computed the deduction under Section80HHC of the Act treating itself at par with the direct exporter and reliedupon a judgment of the learned ITAT Delhi-Bench `A' in the case of EasternLeather Products (P) Ltdvs DCIT68 ITD 358 (1998). The Assessing Officer did not accept the contentions of theassessee, as the facts narrated by the assessee were different from those asquoted in the case law cited by it, and re-computed the deduction allowableto the assessee under Section 80HHC of the Act as per the provisions ofSection 80HHC(1A) read with Section 80HHC(3A) read with clause (baa)of explanation to Section 80HHC of the Act, as the assessee is a supportingmanufacturer and allowed deduction of Rs.3,70,48,161/- under Section 80HHC of the Act instead of Rs.5,14,65,193/- as claimed by the assessee. In appeal, the Commissioner of Income Tax (A) held that theassessee was entitled to the deduction under Section 80HHC of the Act as asupporting manufacturer in the same manner as in the case of directexporter. The learned Tribunal before which the matter was carried bythe department in appeal also concurred with the view of the Commissionerand dismissed the appeal. The matter is not res integra. This Court, vide order 7.7.2008passed in ITA No.296 of 2008, The Commissioner of Income Tax, Karnalvs M/S Carpet India, Sector 29 HUDA, Panipat, decided the same questionagainst the revenue. The present appeal is, thus, dismissed in view of thedecision of this Court rendered in the aforesaid case. No costs. ( AJAY TEWARI ) JUDGE September 16, 2008'kk' ( ADARSH KUMAR GOEL ) JUDGE