$~R-101
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 18th September, 2014
+ ITA 261/2002
M/S INFLUENCE ..... Appellant
Through Mr. P.N. Monga, Advocate with Mr.
Manu Monga, Advocate.
versus
COMMISSIONER OF INCOME TAX .... Respondent
Through Mr. N.P. Sahni, Sr. Standing Counsel
with Mr. Nitin Gulati, Advocate.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE V. KAMESWAR RAO
SANJIV KHANNA, J. (ORAL)
This appeal by the assessee, which relates to assessment year
1993-94, was admitted for hearing vide order dated 7th October, 2002,
on the following substantial question of law:-
"Whether on the facts and in the circumstances
of the case, the Tribunal was correct in law in
rejecting the claim of the assessee for higher
deduction under Section 80-HHC of the Income
Tax Act, 1961, made during the course of
assessment proceedings for the relevant
assessment year?"
2. The facts are in narrow compass and in view of the limited issue,
ITA 261/2002 Page 1 of 6
which arises for consideration, we need not refer to the facts in great
detail.
3. The appellant-assessee, a firm, during the relevant period was
engaged in the business of manufacture and export of goods and
merchandise such as leather jackets, shoes, sweaters, jeans, bed sheet
etc. In the return of income for the assessment year 1993-94 filed on
31st October, 1993, taxable income of Rs.64,92,460/- was declared. In
the computation of taxable income, the appellant-assessee had claimed
deduction under Section 80HHC of the Income Tax Act, 1961 (,,Act,
for short) of Rs.3,57,90,698/-. The return was duly accompanied by
the audit report duly prepared by a Chartered Accountant as required
under Section 44AB and Section 80HHC of the Act.
4. The return was taken up for scrutiny and notice under Section
143(2) was issued. During the course of the assessment proceedings,
but before the assessment order could be passed, the assessee vide
letter dated 25th April, 1995, revised the claim under Section 80HHC
from Rs.3,57,90,698/- to Rs.3,64,68,255/-. The reason given was that
due to oversight, sales of manufactured goods amounting to
Rs.1,55,02,539/- was wrongly taken as traded goods. Thus, the
deduction under Section 80HHC required recomputation. In respect of
manufacturing goods and trading goods, different formulas have to be
applied for computing deduction under Section 80HHC of the Act.
ITA 261/2002 Page 2 of 6
Along with the said letter, the appellant-assessee had filed revised
report of the Chartered Accountant under Sections 80HHC(4) and
80HCC(4A) of the Act.
5. The Assessing Officer did not examine the merits of the claim
and held that the revised computation submitted with the letter cannot
be taken into consideration as time for filing of a revised return under
Section 139(5) had lapsed on 31st March, 1995. As noted above, the
letter written by the appellant-assessee revising the claim under Section
80HHC was dated 25th April, 1995.
6. The aforesaid view has found favour with the Commissioner of
Income Tax (Appeals) as well as the Income Tax Appellate Tribunal.
They have relied upon decision of the Supreme Court in Goetze (India)
Ltd. Vs. Commissioner of Income Tax [2006] 284 ITR 323 (SC).
7. A similar controversy had arisen before the Delhi High Court in
the case of Commissioner of Income Tax Vs. Sam Global Securities
Ltd. [2014] 360 ITR 682 (Delhi), wherein judgment in the case of CIT
Vs. Jai Parabolic Springs Ltd. [2008] 306 ITR 42 (Delhi) was quoted.
In Jai Parabolic Springs Ltd. (supra), decision in Goetze (India) Ltd.
(supra) was distinguished in the following words:-
"In Goetze (India) Ltd. Vs. CIT [2006] 284
ITR 323 (SC) wherein deduction claimed by way
of a letter before the Assessing Officer, was
disallowed on the ground that there was no
provision under the Act to make amendment in
ITA 261/2002 Page 3 of 6
the return without filing a revised return. Appeal
to the Supreme Court, as the decision was upheld
by the Tribunal and the High Court, was
dismissed making clear that the decision was
limited to the power of the assessing authority to
entertain claim for deduction otherwise than by a
revised return, and did not impinge on the power
of the Tribunal."
8. In Sam Global (supra) reference was also made to the decision
of the Supreme Court in National Thermal Power Co. Ltd. Vs. CIT
[1998] 229 ITR 383 (SC). Reliance was placed on an earlier decision
of the Supreme Court in Jute Corporation of India Ltd. Vs. CIT,
[1991] 187 ITR 688 (SC), in which it has been observed:-
"An appellate authority has all the powers which
the original authority may have in deciding the
question before it subject to the restrictions or
limitations, if any, prescribed by the statutory
provisions. In the absence of any statutory provision,
the appellate authority is vested with all the plenary
powers which the subordinate authority may have in
the matter. There is no good reason to justify
curtailment of the power of the Appellate Assistant
Commissioner in entertaining an additional ground
raised by the assessed in seeking modification of the
order of assessment passed by the Income Tax
Officer. This Court further observed that there may be
several factors justifying the raising of a new plea in
an appeal and each case has to be considered on its
own facts. The Appellate Assistant Commissioner
must be satisfied that the ground raised was bona fide
and that the same could not have been raised earlier
for good reasons. The Appellate Assistant
Commissioner should exercise his discretion in
permitting or not permitting the assessed to raise an
additional ground in accordance with law and reason.
ITA 261/2002 Page 4 of 6
The same observations would apply to appeals before
the Tribunal also."
9. This High Court in CIT Vs. Natraj Stationery Products (P) Ltd.,
(2009) 312 ITR 222, had observed that Goetze (India) Ltd. (supra)
would not apply if the assessee had not made a ,,new claim but had
asked for re-computation of deduction. Reference can also be made to
the decision in Commissioner of Income Tax Vs. Rose Services
Apartment India P. Ltd., [2010] 326 ITR 100 (Delhi), wherein a
Division Bench of this Court rejected the contention of the Revenue
that the Tribunal could not have entertained the plea, holding that the
tribunal was empowered to deal with the issue and was entitled to
determine the claim raised.
10. In view of the aforesaid, the question of law is answered in
favour of the appellant-assessee and against the respondent-Revenue,
but with an order of remand as the claim under Section 80HHC will
have to be examined by the Assessing Officer as is requested by the
counsel for the Revenue. The entire claim including the question
whether the assessee was a manufacturer and was entitled to claim
deduction at a higher rate under Section 80HHC can be examined by
the Assessing Officer. We note that the matter relates to assessment
year 1993-94 but notwithstanding the time gap, the assessee will have
to produce and prove their claim along with necessary documents.
ITA 261/2002 Page 5 of 6
The appeal is disposed of without any order as to costs.
SANJIV KHANNA, J.
V. KAMESWAR RAO, J.
SEPTEMBER 18, 2014
NA
ITA 261/2002 Page 6 of 6
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