COMMISSIONER OF INCOME TAX Vs. CHEMMEENS AND G. GANGADHARAN NAIR
LAWS(KER)-2003-7-79
HIGH COURT OF KERALA
Decided on July 01,2003

COMMISSIONER OF INCOME TAX Appellant
VERSUS
Chemmeens And G. Gangadharan Nair Respondents

JUDGEMENT

G. Sivarajan, J. - (1.) These two appeals are filed by the Commissioner of Income Tax, Cochin, against two separate orders of the Income Tax Appellate Tribunal, Cochin Bench in I.T.A. Nos. 610 (Coch)/94 and 484 (Coch) of 1996 in the case of two different assessees in respect of the assessment year 1992 -93. Since a common question of law arises for consideration in these cases, both the appeals are being disposed of by this common judgment. While admitting I.T.A. No. 166 of 2002 notices were ordered on the following three questions of law: (1) Whether, on the facts and in the circumstances of the case the assessee is entitled to any benefit on the export house premia ? (2) Whether, on the facts and the circumstances of the case and in the light of Explanation (baa) to Sec. 80HHC(4A) is not the exclusion of 90 per cent of export premia in accordance with law ? (3) Whether, on the facts and in the circumstances of the case and the 'profits of the business' under Sec. 80HHC(4A) being the profits of the business as computed under the head 'Profits and gains of business or profession as reduced' and considering the limited scope of 'derived from', the assessee is entitled to any exemption on the export house premia ?
(2.) Similarly, while admitting I.T.A. No. 251 of 2002 notice was ordered on the following questions of law for decision of this court: (1) Whether, on the facts and in the circumstances of the case the assessee is entitled to any benefit on the export house premia ? (2) Whether, on the facts and in the circumstances of the case and in the light of the Explanation (baa) to Sec. 80HHC(4A) is not the exclusion of 90 per cent of export premia in accordance with law ? (3) Whether, on the facts and in the circumstances of the case and the profits of the business under Sec. 80HHC(4A) being the profits of the business as computed under the head 'Profits and gains of business or profession as reduced' and considering the limited scope of 'derived from', the assessee is entitled to any exemption on the export house premia ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in directing to recompute the deduction under Sec. 80HHC by ignoring the loss derived from the export of trading goods ? (5) Whether, on the facts and in the circumstances of the case, while computing deduction under Sec. 80HHC the loss derived from the export of trading goods has to be excluded ?
(3.) Though a number of questions are raised in both these appeals all the questions excepting questions Nos. 4 and 5 in I.T.A. No. 251 of 2002 relate to one issue, i.e., whether the export house premium received by the assessee is includible in the profits of the business of the assessee while computing the deduction under Sec. 80HHC of the Income Tax Act, 1961 (for short "the Act")). In the assessment of the respondent -assessees in both these appeals for the year 1992 -93 the Assessing Officer has held that in view of Clause (baa) of the Explanation to Sec. 80HHC of the Act which defines profits of the business as profits of the business as computed under the head "Profits and gains of business or profession" as reduced by ninety per cent of any sum referred to in Clauses (iiia), (iiib) and (iiic) of Sec. 28 or of any receipts by way of brokerage, commission, interest, rent charges, or any other receipts of similar nature included in such profits a portion of the deduction claimed by the assessee cannot be allowed. According to the Assessing Officer export house premium received by the assessee attracted the said clause. In the appeal filed by the respondent -assessee in I.T.A. No. 166 of 2002, the Commissioner of Income Tax agreed with the computation made by the Assessing Officer on the basis of the provisions of Clause (baa) of the Explanation to Sec. 80HHC. This was confirmed by the Appellate Tribunal in further appeal by the assessee. The assessee took up the matter in reference before this court and this court by judgment dated June 19, 1998, in I.T.R. No. 36 of 1996 G. Gangadharan Nair v/s. : [1999]238ITR685(Ker) set aside the order of the Tribunal and remitted the matter to the Tribunal for fresh decision. The Tribunal thereafter considered the appeal and by following its own decision in the case of United Marine Exports v/s. Deputy CIT, [2000] KLJ 622, held that the assessee had not rendered any service to the export house and therefore the export incentives received by the assessee from the export houses cannot be excluded from the profits of the business.;


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