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September, 24th 2014

                                   Date of decision: 18th September, 2014

+                         ITA 261/2002

      M/S INFLUENCE                          ..... Appellant
               Through  Mr. P.N. Monga, Advocate with Mr.
               Manu Monga, Advocate.


      COMMISSIONER OF INCOME TAX               .... Respondent
              Through     Mr. N.P. Sahni, Sr. Standing Counsel
              with Mr. Nitin Gulati, Advocate.



      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


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

ITA 261/2002                                          Page 6 of 6
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