The Commissioner Of Income Tax,Madurai v. M/S.sri Ramalinga Mills Limited,Ramasamy Nagar,Aruppukottai – 626 159

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 31.03.2021 CORAM: THE HON'BLE MR. JUSTICE M.DURAISWAMYAND THE HON'BLE MRS.JUSTICE T.V.THAMILSELVI T.C.A.Nos.294 to 298 of 2013 The Commissioner of Income Tax,Madurai. ... Appellant in all 5 TCAs Vs. M/s.Sri Ramalinga Mills Limited,Ramasamy Nagar,Aruppukottai – 626 159.... Respondent in all 5 TCAs Appeals preferred under Section 260A of the Income Tax Act,1961, against the common order of the Income Tax AppellateTribunal, Madras, "D" Bench, dated 13.09.2012 in I.T.A.Nos.1390to 1394/Mds/2012 for the assessment year 1999-2000, 2001-02,2002-03, 2003-04 & 2004-05 against the order of Commissioner ofIncome Tax (Appeals)II I/c Madurai in ITA Nos.488/2006-07,337/2008-09, 486 & 03/10-11, 347/09-10 and 487/06-07 dated12.03.12, 12.03.12, 12.03.12, 12.03.12 and 12.03.12 for theAssessment year 1999-2000, 2001-02, 2002-03, 2003-04 and 2004-05respectively (TCA Nos.294/13 to 298/13) `as against the Joint Commissioner of Income Tax,Virudhunagar in PAN/GIR No. , DATED 21.12.2006,27.12.2006 and 27.12.2006 for the Assessment year 1999-2000,2002-03 and 2004-05 (TCA No.294/13, TCA No.296 and 298/13) Assistant Commissioner of Income Tax, Circle-I, Virudhunagarin PAN/GIR No. dated 26.12.2008 Assessment year 2001-02 (TCA No.295/13) Assistant Commissioner of Wealth-Tax, Circle-I, Virudhunagarin PAN/GIR No. dated 31.12.2009 for the Assessmentyear 2003-04 (TCA No.297/13) https://hcservices.ecourts.gov.in/hcservices/ For Appellant : Mr.M.Swaminathan,(in all 5 TCAs) Senior Standing Counsel assisted by Ms.V.Pushpa, Standing CounselFor Respondent: No appearance(in all 5 TCAs) COMMON JUDGMENT (Judgment was delivered by M.DURAISWAMY, J.) Challenging the orders passed in I.T.A.Nos.1390 to1394/Mds/2012 for the assessment years 1999-2000, 2001-02, 2002-03, 2003-04 & 2004-05 on the file of the Income Tax AppellateTribunal, Chennai, "D" Bench, the Revenue has filed the aboveappeal. 2.The above appeals were admitted on the followingsubstantial question of law: “Whether on facts and circumstances of the case,the Tribunal was right in law that the amendment to thethird proviso to Section 80HHC with retrospectiveeffect from 01.04.1998 is violative of Constitution ofIndia when the assessee has not fulfilled theconditions of proviso of Section 80HHC(3)?” 3.When the appeals are taken up for hearing,Mr.M.Swaminathan, learned senior standing counsel appearing forthe appellant – Revenue fairly submitted that the question oflaw that has been raised in the above appeals are covered by thedecision of the Hon'ble Supreme Court reported in [2015] 58taxmann.com 100 (SC) [Commissioner of Income Tax Vs. AvaniExports] wherein the Apex Court held as follows:“1.Amendment to Section 80HHC(3) of the Income TaxAct, 1961 (in short 'the Act') was made by the TaxationLaws (Second Amendment) Act, 2005 with retrospectiveeffect i.e. with effect from Ist April, 1992. By thisamendment certain benefits were in fact extended to theexporters who are entitled to claim according toSec.80HHC of the Act. However at the same time, theamendment also carved out two categories of exporters,namely, those whose export is less than Rs. 10 croresper year and those exporters whose exports turn over ismore than Rs.10 crores per annum. Insofar asentitlement of these benefits to the exporter havingturn over of more than Rs.10 crores p.a. is concerned,two conditions contained in third and fourth proviso tothe said amendment were to be satisfied for claimingthe benefits. Those were: a)he had an option to choose either the dutydrawback or the Duty Entitlement Pass Book Scheme,being the Duty Remission Scheme; and b)the rate of drawback credit attributable to thecustoms duty was higher than the rate of creditallowable under the Duty Entitlement Pass BookScheme, being Duty Remission Scheme. a)he had an option to choose either the dutydrawback or the Duty Entitlement Pass Book Scheme,being the Duty Remission Scheme; and b)the rate of drawback credit attributable to thecustoms duty was higher than the rate of creditallowable under the Duty Entitlement Pass BookScheme, being Duty Remission Scheme. 2. All the respondents in these SLPs, who are theexporters, belong to the second category. They filedthe writ petitions challenging conditions mentioned inthird and fourth proviso to Section 80 HHC(3). In factit was their precise contention that these conditionsare severable and therefore these two conditions shouldbe declared ultra vires and severed. The rationalebehind seeking such a prayer was obvious inasmuch asthe writ petitioners did not want entire Notificationto be declared ultra vires which was to theiradvantage. What they wanted was that the benefit ofamended provision be accorded, without insisting on theaforesaid conditions. 3. The High Court vide impugned judgment hasdecided the issue in favour of the writ petitioners byconcluding as under: "26. On consideration of the entire materialson record, we, therefore, find substance in thecontention of the learned counsel for thepetitioners that the impugned amendment is violativefor its retrospective operation in order to overcomethe decision of the Tribunal, and at the same time,for depriving the benefit earlier granted to a classof the assessees whose assessments were stillpending although such benefit will be available tothe assessees whose assessments have already beenconcluded. In other words, in this type ofsubstantive amendment, retrospective operation canbe given only if it is for the benefit of theassessee but not in a case where it affects even afewer section of the assessees. 27. We, accordingly, quash the impugnedamendment only to this extent that the operation ofthe said section could be given effect from the dateof amendment and not in respect of earlierassessment years of the assessees whose exportturnover is above Rs.10 crore. In other words, theretrospective amendment should not be detrimental toany of the assessees." 4. Against the High Court judgment these SLPs arefiled by the Union of India. Mr. Mukul Rohtagi, learnedAttorney General for India submits that once the prayermade was to severe the aforesaid two conditions asonerous 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 crores and other like the respondents with turnover of more than Rs.10 crores would be at par and bothwould 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 contained inthe said provisos 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 since 80HHCbenefit is not available after 1.4.05, we aresatisfied that cases of exporters having a turnoverbelow and those above 10 cr. Should be treatedsimilarly. This order is in substitution of thejudgment 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 submissions made by the learned seniorstanding counsel for the appellant – Revenue, following theratio laid down by the Hon'ble Supreme Court in the judgmentreported in [2015] 58 taxmann.com 100 (SC) [Commissioner ofIncome Tax Vs. Avani Exports], cited supra, the question of lawthat has been raised in the above appeals is decided against theRevenue. Accordingly, the Tax Case Appeals are dismissed. Nocosts. Sd/-Assistant Registrar(CS IV) //True Copy// Sub Assistant Registrar VA To1. The Income Tax Appellate Tribunal, Chennai, "D" Bench.2. The Commissioner of Income Tax, Chennai.3. The Joint Commissioner of Income Tax, Virudhunagar Range, Virudhunagar.4. The Commissioner of Income Tax (Appeals)-II, Madurai.5. The Assistant Commissioner of Income Tax, Circle-I, Virudhunagar.6. The Assistant Commissioner of Wealth-Tax, Circle-I, Virudhunagar.+1cc to Mr.M.Swaminathan, Advocate, S.R.No.21063T.C.A.Nos.294 to 298 of 2013SR-II (CO)TE (30/04/2021)