COMMISSIONER OF INCOME TAX Vs. CARPET INDIA

JUDGEMENT

(1.) THIS order shall dispose of ten income -tax appeals; seven, filed by the Revenue, namely, ITA Nos. 544, 603, 604, 619, 620, 621 and 622 of 2007, and three filed by the assessees, namely, ITA Nos. 576 and 628 of 2007 and 21 of 2008, as they involved a common question of law which, in essence, is whether a supporting manufacturer can claim deduction under s. 80HHC of the IT Act at par with a direct exporter.

(2.) THE assessees, who are supporting manufacturers, are receiving export incentives as duty drawback and claimed deduction of this amount, under s. 80HHC of the IT Act, 1961 (for short hereinafter referred to as "the Act"). The assessees are deriving income from manufacturing and sale of textile goods as supporting manufacturers. In the returns of income, the assessees are claiming deduction under s. 80HHC of the Act, claiming themselves at par with the direct exporter on the basis of the judgment of the Tribunal, Delhi Bench "A", in Eastern Leather Products (P) Ltd. vs. Dy. CIT (1999) 65 TTJ (Del) 603 : (1999) 68 ITD 358 (Del).

(3.) IN ITA. Nos. 544, 603, 604, 619, 620, 621 and 622 of 2007, the AO did not accept the assessees' prayer and held that the assessees could not be treated at par with the supporting manufacturer. In appeals filed by the assessees before the CIT(A), the assessees' contention was accepted and it was held that the assessees were entitled to deduction under s. 80HHC of the Act in the same manner as in the case of a direct exporter. Reliance was placed upon Eastern Leather Products (P.) Ltd. vs. Dy. CIT (supra) and Sharda Exports vs. ITO in ITA No. 254 of 2001.