- (1.) We have heard Sri Shambhoo Chopra, the learned counsel for the appellant and Sri Rahul Agrawal, the learned counsel for the assessee. For facility, the facts in ITA No.86 of 2003 is being taken into consideration.
(2.) The assessee is a manufacturer and exporter of gold jewellery and is also doing job work. For the assessment year 1997-98, the returns were processed under Section 143 (3) of the Income Tax Act. The Assessing Officer treated the receipt of job charges as part of the "total turnover" in the business of manufacture and export of jewellery. The Assessing Officer computed the net profits at Rs.48,31,251/- against which a deduction of Rs.40,83,526/- was claimed under Section 80 HHC. While examining the records, it was found that the order under Section 143 (3) of the Act was erroneous and prejudicial to the interest of revenue, inasmuch as the Assessing Officer had not made proper inquiries before quantifying the allowable deductions under Section 80 HHC of the Act. The Commissioner of Income Tax was of the opinion that job charges is not part of turnover. The Commissioner of Income Tax, accordingly passed an order under Section 263 of the Act setting aside the assessment order on the ground that it was prejudicial to the interest of the revenue and directed the Assessing Officer to pass a fresh assessment order. The assessee, being aggrieved, filed an appeal before the Tribunal, which was allowed and the order passed by the Commissioner of Income Tax under Section 263 of the Act was set aside. The department, being aggrieved by the order of the Tribunal, has filed the present appeal under Section 260A of the Act, which was admitted on the following questions of law:- "1. Whether, on the facts and in the circumstances of the case, ITAT was correct in law and on the facts in holding that job charges are integral part of main business and charges received for job undertaken cannot be held as similar to word "Charges" provided in sub-clause (baa) of sub-section (4B) of Section 80 HHC. 2. Whether on the facts and in the circumstances of the case, ITAT was correct in law and on facts in relying upon the ITAT Cochin Bench decision of the case of ACIT vs. Herbal Isolates (P) Ltd. which is not applicable in the facts of the present case and, thereafter cancelling of the order passed under Section 263 for the assessment year 1997-98 and 1998-99 altogether ignoring the decision of the Hon'ble Bombay High Court in CIT vs. K.K. Doshi & Co.,2009 245 ITR 859 before arriving at the above finding. 3. Whether on the facts and in the circumstances of the case, ITAT was correct in law and on facts directing to include job receipts in total turnover particularly when such job receipts were earned for rendering services within country and have no nexus with export activity."
(3.) The core issue in this appeal is how export incentive under Section 80 HHC (3) of the Act is to be computed. Section 80 HHC has been the subject matter of frequent amendments. The said section was inserted in 1983 and, since then, the section has undergone a series of amendments till 2005. Therefore, while considering the applicability of Section 80 HHC, it is necessary to keep in mind the applicability of section as it existed in that relevant assessment year.;