COMMISSIONER OF INCOME TAX Vs. HASWANI ARTS

JUDGEMENT

(1.) This appeal has been filed by the appellant-Revenue under Section 260A of the Income Tax Act, 1961 (for short, hereinafter referred to as 'Act') being aggrieved by the order of learned Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur dated 25.08.2006, whereby the learned ITAT deciding the appeals of the Revenue being Appeal No.618/JDPR/2004 for Assessment Year 2002-03 and Appeal No.Appeal No.619/JDPR/2004 for Assessment Year 2002-03 held that the Commissioner of Income Tax (Appeals) was justified in holding that the income surrendered by the assessee during the assessment year on account of increased valuation of closing stock during the course of a survey under Section 133-A of the Act conducted at the business place of the assessee, was also eligible for deduction under Section 80-HHC of the Act as there was no dispute that the assessee had satisfied all the relevant conditions for grant of such deduction from its gross total income during the relevant assessment year on account of export of handicraft items manufactured and sold by it during the relevant previous year.

(2.) While admitting the present appeal of the Revenue, a coordinate bench of this Court framed the following substantial question of law under Section 260A of the Act: -

(3.) Learned counsel for the appellant- Revenue, Mr. K.K. Bissa, relying upon the decision of Punjab & Haryana High Court in the case of National Legguard Works Vs. Commissioner of Income-Tax (Appeals) & Anr., 2007 288 ITR 18 submitted that since the assessee has surrendered the alleged excess stock of Rs.10,49,066/- for Assessment Year 2002-03, therefore, the assessee is not entitled to said deduction to the extent prescribed under Section 80HHC (1B) of the Act. He further submitted that the since the assessee has failed to prove that it made the realization of the convertible foreign exchange for the sale of such excess stock by him during the relevant assessment year, it was not entitled to the deduction under Section 80HHC to that extent.