COMMISSIONER OF INCOME-TAX Vs. SIDDHARTH TUBES LTD

JUDGEMENT

(1.) THE appellant has filed this appeal against the order passed by the Income -tax Appellate Tribunal, Indore, dated May 30, 2002, in appeal I.T.A. No. 216/Ind of 2000 for the assessment year 1995 -96. The appeal has been admitted by this Court on the following question of law: Whether on the facts and in the circumstances of the case and in law, the Income -tax Appellate Tribunal was justified in holding that the refund of excise duty amounting to Rs. 1,63,38,856 is includible in the profits computed for the purpose of deduction under Sections 80HH and 80I of the Income -tax Act, 1961?

(2.) THE assessee -company is engaged in the business of manufacture of steel pipes and steel tubes and cold rolled formed sections. It filed return of the income for the assessment year 1995 -96 on November 30, 995, showing income of Rs. 9,24,490. After examining the books of account and other relevant documents, the Assessing Officer completed the assessment under Section 143(3) on March 27, 1998, on the total income of Rs. 85,23,550. After passing the order, the Assessing Officer noted that there was a mistake apparent on record and initiated rectification proceedings under Section 154. The order was rectified and assessment was made on a total income of Rs. 2,39,99,231. The Commissioner of Income -tax observed that for the relevant period the assessee -company received export incentive of Rs. 2,87,64,294 in the sale of export entitlement, an excise duty refund which had not been excluded while computing deduction under Sections 80HH and 80I of the Act. It was observed that job work receipts of Rs. 55,37,429 were not included in the total turnover for computation of deduction under Section 80HHC of the Act. He, therefore, set aside the order of the Assessing Officer in suo motu exercise of the power of revision and remitted the matter to the Assessing Officer for recalculation of the deductions.

(3.) LEARNED Counsel for the Department has placed heavy reliance on the decision of the apex court in CIT v. Sterling Foods : 1999ECR481(SC) . In the said decision claim was made with regard to the import entitlement earned by the assessee on which claim for deduction under the provisions of Section 80HH was being made. It was observed by the apex court that since it relates to the profits derived from the industrial undertaking, such a claim was not admissible. Learned Counsel for the assessee, per contra, has referred to the statement to point out that the controversy before the apex court was quite different and has no bearing over the issue raised in the present case and the Tribunal has, therefore, rightly distinguished the said case.