Back
2011 Supreme(Cal) 1085
High Court Of Calcutta
B.Bhattacharya, Sambuddha Chakrabarti, JJ.
Duncans Industries Limited – Appellant
Versus
Commissioner Of Income-Tax – Respondent
I.T.A. No.775 of 2004
Decided on : Aug 12, 2011
Debi Pal, J.P.Khaitan, Somok Bose, A.K.Dey, Dipak Kumar Shome, Ranjan Sinha
After the amendment to sub-section (3) of Section 80HHC of the Income-tax Act, 1961, separate computation of profits of different businesses of the assessee is not permissible for the purpose of calculating the deduction under Section 80HHC.
Headnote:
INCOME TAX ACT - Section 80HHC - Deduction for profits derived from export of goods or merchandise - Separate computation of profits of different businesses - Amendment to sub-section (3) of Section 80HHC - Whether separate computation permissible after amendment.
Fact of the Case:
The assessee, a public limited company, carried on two separate businesses - garden tea business and purchased tea business. For the assessment year 1991-92, the assessee claimed deduction under Section 80HHC of the Income-tax Act, 1961 in respect of the profits derived from the export of tea from both businesses. The Assessing Officer computed the deduction by aggregating the profits, export turnover, and total turnover of all the businesses of the assessee. The assessee contended that the deduction should be computed separately for each business as the two businesses were distinct and separate.
Finding of the Court:
The Income-tax Appellate Tribunal held that the deduction under Section 80HHC should be computed by aggregating the profits, export turnover, and total turnover of all the businesses of the assessee. The Tribunal relied on the amended provision of sub-section (3) of Section 80HHC, which came into effect from 1st April 1991.
Issues: 1. Whether the Tribunal was justified in holding that the deduction under Section 80HHC should be computed by aggregating the profits, export turnover, and total turnover of all the businesses of the assessee? 2. Whether the Tribunal was justified in upholding the determination of the deduction under Section 80HHC at Rs. 4,73,57,023/- as made by the Assessing Officer as against the appellant’s claim of Rs.6,22,61,946/- in respect of the purchased tea business and Rs.26,56,930/- in respect of the garden tea business?
Ratio Decidendi: The Court held that after the amendment to sub-section (3) of Section 80HHC, there is no scope for separate computation of profits of different businesses of the assessee for the purpose of calculating the deduction under Section 80HHC. The Court relied on the decision of the Supreme Court in IPCA Laboratory Ltd. vs. Deputy Commissioner of Income-tax, Mumbai, wherein it was held that the term “profit” in Section 80HHC means a positive profit worked out after taking into consideration the losses, if any.
Final Decision: The Court dismissed the appeal and answered both the questions formulated by the Division Bench in the affirmative and against the assessee.
Bhaskar Bhattacharya, J.
1. THIS appeal under Section 260A of the Income-tax Act, 1961 is at the instance of an assessee and is directed against an order dated 23rd June, 2004, passed by the Income-tax Appellate Tribunal, "C" Bench, Kolkata in Income-tax Appeal bearing ITA No.1220 (Kol) of 1997 for the Assessment Year 1991-92 and thereby dismissing the appeal filed by the assessee.
2. BEING dissatisfied, the assessee has come up with the present appeal. The facts giving rise to filing of the appeal may be summed up thus:
a) The assessee is a public limited liability company within the meaning of the Companies Act, 1956 and the present appeal arises out of the assessment made under the Income-tax Act, for the Assessment Year 1991-92 for which the relevant previous year was the financial year ended on March 31, 1991. The assessee was amalgamated with M/s. Chand Chhap Fertilizers and Chemicals Limited with effect from January 01, 1994 pursuant to an order dated September 13, 1994 passed by this Court. The amalgamated company was renamed as Duncans Industries Limited with effect from November 01, 1994. b) The assessee carried on the business of inter alia, growing and manufacturing tea in its own tea estates (hereinafter referred to as the "garden tea business"). Such tea was sold by the assessee not only in the domestic market but also by way of export outside India. c) Apart from the said garden tea business, the assessee carried on a separate business of exporting tea purchased by it (hereinafter referred to as the "purchased tea business"). In respect of the said separately purchased tea business, the assessee maintained separate books of account. d) During the previous year ended on March 31, 1991, the assessee earned a profit of Rs.6,14,65,671/- in the purchased tea business which was separately disclosed in its accounts. e) In respect of the profit derived by the assessee from the exports of the aforesaid garden tea business and purchased tea business respectively, according to the assessee, it is entitled to deduction under Section 80HHC of the Act and as the two business were separate and distinct, the assessee claimed that the amount of deduction under Section 80HHC was required to be separately computed in respect of each of such businesses. f) The total turnover of the purchased tea business amounted to Rs.37,36,62,392/- and according to the assessee, it was entitled to deduction under Section 80HHC in respect of the entire profit of the purchased tea business which after making disallowance under the provisions of the Act amounted to Rs. 6,22,61,946/-. g) According to the assessee, the total turnover of the garden tea business was Rs.66,35,11,666/- of which the export turnover was Rs.2,91,07,747/-. The profit of the garden tea business amounted to Rs.6,05,64,776/- and accordingly, the assessee claimed deduction under Section 80HHC in respect of the garden tea business computed in the following manner: 6,05,764,776 X 2,91,07,747/66,35,11,666= Rs.26,56,930/-. h) The Chartered Accounts, while issuing the report in Form No.10CCCAC under Section 80HHC (4), took note of the fact that the purchased tea business and garden tea business were two distinct and separate businesses and accordingly, were separately computed and certified the quantum of deduction for each of the said business at Rs.6,22,61,946/- for purchased tea business and Rs. 26,56,930/- in respect of the garden tea business. The assessee in its return of income for the Assessment Year 1991-92 accordingly claimed deduction under Section 80HHC in respect of the aforesaid two amounts aggregating to Rs.6,49,18,876/-. i) The Assessing Officer by order dated March 18, 1994 accepted that the purchased tea business was a separate one and computed the profits thereof at Rs.6,25,02,070/- as against Rs.6,22,61,946/- returned by the assessee. However, instead of computing the deduction under Section 80HHC separately in respect of the purchased tea business and gard
