COMMISSIONER OF INCOME TAX -X Vs. KULTAR EXPORTS

JUDGEMENT

(1.) The revenue, in this appeal under Section 260A of the Income Tax Act (hereafter "the Act"), challenges the order of the Income Tax Appellate Tribunal (hereafter the "ITAT") on the ground that it erred in allowing the assessee to belatedly appeal against the orders of the Assessing Officer (hereafter "the AO"), on the basis of a judgment of the Gujarat High Court pronounced subsequent to the AO's orders, in which the provision underlying the assessment was held unconstitutional.

(2.) The assessee/respondent in this case filed returns claiming deduction under Section 80HHC of the Act. In view of the Taxation (Amendment) Act, 2005, Act No. 55 of 2005 dated 28.12.2005 (hereafter "the amendment"), a modification was introduced in the working of deductions under the third proviso to Section 80HHC (3) introduced with retrospective effect from 1.4.1998 as well as the fifth proviso introduced with retrospective effect from 1.4.1992.

(3.) Section 80HHC allows deductions to assessees who are exporters, to the extent of the profits derived from export of goods or merchandise. Section 80HHC (3) provides for the manner of computing the profits deductible. The third proviso, which was introduced by retrospective amendment, essentially required the profit computed for an assessee with export turnover greater than Rs. 10 crores, to be further increased by an amount which bears to 90% of the sum in Section 28(iiid), the same proportion as the Export Turnover bears to the Total Turnover of the business, provided the assessee could prove certain requirements with necessary evidence. In accordance with this amendment, the AO completed reassessment proceedings for the three assessment years (i.e. AYs 2001-02 and 2002-03 by orders dated 19.9.2007 and AY 2003-04 by order dated 1.3.2006) under Section 148 of the Act.