COMMISSIONER OF INCOME TAX Vs. JINDAL FINE INDUSTRIES

JUDGEMENT

(1.) IN this reference at the instance of the Revenue, the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short "the Tribunal"), vide its order dated November 16, 1994, passed in R. A. No. 52/Chandi/1994 arising out of I. T. A. No. 201/Chandi/1992 has referred the following question of law under Section 256(1) of the Income Tax Act, 1961 (for short "the Act"), for the assessment year 1988 -89:

(2.) BRIEFLY noticed, the facts are that the original assessment was made on June 19, 1989, by the Assessing Officer and deduction under Section 80HHC of the Act was allowed at Rs. 17,12,765 as per the audit report. The Commissioner of Income Tax ("the CIT"), invoking the powers under Section 263 of the Act, came to the conclusion that since the business carried on by the assessee did not consist exclusively of exports outside India of the goods or merchandise to which Section 80HHC applied, the deduction had to be allowed to the assessee as per Section 80HHC(3)(b) of the Act on a pro rata basis. The Commissioner of Income Tax allowed deduction to the assessee under Section 80HHC at Rs. 8,28,105 as against the deduction of Rs. 17,12,765 allowed by the Assessing Officer and held that deduction had been allowed in excess to the extent of Rs. 8,84,660. Accordingly, he recomputed the assessable income at Rs. 16,32,360 by adding the aforesaid amount of Rs. 8,84,660. The assessee took the matter in appeal before the Tribunal who vide its order dated January 31, 1994, allowed the appeal holding that the Commissioner of Income Tax was not justified in resorting to the provisions of Section 263 and withdrawing the deduction of Rs. 8,84,660.

(3.) IT is apposite to refer to Section 80HHC of the Act as stood at the relevant time which reads thus: