COMMISSIONER OF INCOME TAX Vs. SALUJA EXIM LTD.

JUDGEMENT

(1.) This order shall dispose of I.T.A. Nos. 581 to 583 of 2009 which have been decided by the Income-tax Appellate Tribunal, Chandigarh Bench "A", Chandigarh (for brevity "the Tribunal") by a common order dated September 30, 2008 in respect of the assessment years 2002-03 and 2003-04. The Revenue has approached this Court challenging the aforesaid order claiming that the following substantial questions of law would arise for determination of this Court:

(2.) It is appropriate to mention that assessment was finalized under Section 143(3) of the Income-tax Act, 1961 (for brevity "the Act"). However, the Commissioner of Income-tax exercising power under Section 263, has taken the view that the Assessing Officer while computing book profits chargeable to tax under Section 115 JB of the Act, has reduced the profits of export business without any justification. According to the Commissioner, "eligible profits of business" as computed in accordance with the provision of Section 80 HHC (1B) was alone to be reduced to the extent of 50 per cent. only. After issuing show-cause notice, the Commissioner cancelled the assessment framed under Section 143(3) by the Assessing Officer on the limited issue of recomputing the "book profit" after excluding only eligible profits of business computed in accordance with the provisions of Section 80HHC(1B) of the Act.

(3.) Aggrieved by the order of the Commissioner, the Assessee approached the Tribunal challenging the invocation of power under Section 263 by the Commissioner in addition to the direction issued by him to the Assessing Officer for recomputing the "book profits" in accordance with the provisions of Section 80HHC(1B) of the Act, making them eligible to the extent of 50 per cent. The Tribunal placed reliance on the judgment delivered by Special Bench in the case of Deputy CIT v. Syncome Formulations (I) Ltd.,2007 292 ITR 144 and Asst. CIT v. Ajanta Pharma Ltd.,2008 21 SOT 101. It is appropriate to mention that in those decisions, the Tribunal has considered the issue relating to computation of "book profit" for the purposes of Section 115JB and in relation to Clause (iv) of the Explanation to Section 115JB of the Act. It has been observed that the amount referred to therein is the amount of profit eligible for deduction under Section 80HHC irrespective of the percentage of the profits that are eligible for deduction ultimately. The Mumbai Bench of the Tribunal in the case of Ajanta Pharma Ltd., (2008) 21 SOT 101 (Mum) has held that amount to be reduced in terms of Clause (iv) of the Explanation to Section 115JB(2) is not governed by Sub-section (IB) of Section 80HHC in the absence of any reference to it in Clause (iv) of the Explanation to Section 115JB(2) of the Act. The Tribunal after making reference to the aforesaid judgment observed in para 11 as under: