ITA No. 975 of 2008 (O&M) 1 IN HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 975 of 2008 (O&M) Date of decision: 2.5.2017 Nexo Industries Private Limited Appellant Vs. Commissioner of Income Tax, Ludhiana ..Respondent CORAM: HON BLE MR. JUSTICE AJAY KUMAR MITTAL HON BLE MR. JUSTICE RAMENDRA JAIN Present: Mr. S.K. Mukhi, Advocate with Mr. Jaswinder Singh, Advocate for appellant. Mr. Z.S. Klar, Senior Standing counsel for respondent. Ajay Kumar Mittal,J. 1. appellant-assessee has filed instant appeal under Section 260A of Income Tax Act, 1961 (in short, Act ) against order dated 2.1.2008, Annexure A.3, passed by Income Tax Appellate Tribunal, Chandigarh Bench , Chandigarh (in short, Tribunal ) in ITA No.100/CHANDI/2017 and ITA No.142/CHANDI/2007, for assessment year 2003-04, claiming following substantial questions of law:- I. Whether excise duty rebate/refund, which is given under Central Excise Act is not export incentive as it is not given under any Export Promotion Scheme of Government? 1 of 5 ::: Downloaded on - 23-05-2017 10:10:48 ::: ITA No. 975 of 2008 (O&M) 2 II. Whether on true and correct interpretation of provision of Section 80HHC claim be declined in pursuance to retrospective amendment in Act relatable to option to be made amongst duty draw back and DEPB after conclusion of event? III. Whether on true and correct interpretation of provision of Section 80IB, claim of excise Duty rebate/refund, which is given under Central Excise Act and not under any Export Promotion Scheme, is eligible claim? 2. few facts relevant for decision of controversy involved as narrated in appeal may be noticed. assessee is engaged in business of manufacturing of fasteners and exporting goods. It filed its return of income on 30.11.2003 at amount of ` 3,55,62,970/- alongwith audited financial statements under Section 44AB of Act. case was taken up for scrutiny. After examining matter, income of assessee was assessed at ` 5,09,19,102/- vide order dated 24.2.2006, Annexure A.1. Aggrieved by order, assessee filed appeal before Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 12.10.2006, Annexure A.2, appeal was partly allowed. Not satisfied with order, both assessee and revenue filed appeals before Tribunal. Vide order dated 2.1.2008, Annexure A.3, Tribunal dismissed both appeals. Hence instant appeal by appellant-assessee. 3. We have heard learned counsel for parties. 4. It was not disputed by learned counsel for parties that in view of order of even date passed in ITA No.271 of 2010 (Nexo Industries Private Limited Vs. Commissioner of Income Tax, 2 of 5 ::: Downloaded on - 23-05-2017 10:10:49 ::: ITA No. 975 of 2008 (O&M) 3 Ludhiana) relating to claim for deduction under Section 80IB of Act in respect of refund of excise duty where matter has been remanded to Assessing Officer to readjudicate after affording opportunity of hearing to assessee, issue in present case relating to deduction under Section 80IB of Act is to be sent back for fresh decision in accordance with law. Ordered accordingly. 5. Adverting to deduction under Section 80HHC of Act, it may be noticed that Assessing Officer while relying upon amendment by Taxation Laws (Second Amendment) Act, 2006 with retrospective effect had held that assessee was not entitled for deduction under Section 80HHC of Act as claimed. In view of amended provisions of Section 80HHC and insertion of clause (iiid) and (iiie) to Section 28 of Act as amended by Taxation Laws (Amendment) Act, 2005, assessee had to justify its claim in view of provisions of Section 28(iiid) and to prove that it had necessary and sufficient evidence to establish that it had option to choose either duty draw back or duty entitlement passbook scheme being Duty Remission Scheme and that rate of draw back credit attributable to customs duty was higher than credit allowable under Duty entitlement Pass Book Scheme being duty Remission Scheme. Insertion of conditions in third and fourth provisos to Section 80HHC by Taxation Laws (Second Amendment) Act, 2005 with retrospective effect was challenged before this Court in Guru Nanak Exports, Phagwara vs. Assistant Commissioner of Income Tax, Jalandhar, CWP No.11328 of 2009 decided on 3.10.2012. It was held that amendment was prospective and was invalid to extent of being made retrospective. Supreme Court considering similar 3 of 5 ::: Downloaded on - 23-05-2017 10:10:49 ::: ITA No. 975 of 2008 (O&M) 4 issue regarding constitutional validity of provisions held same to be prospective in nature in Commissioner of Income Tax and another vs. Avani Exports and others, (2015) 119 DTR Judgments 352. In present case, Tribunal also had declined claim of assessee under Section 80HHC of Act by taking into consideration amended provisions which have been held to be prospective. relevant findings recorded by Tribunal in this regard read thus:- We have given our careful consideration to rival contentions. In our considered view, claim of assessee has been disallowed by Assessing Officer for want of evidence. Assessing Officer has decided this issue vide Paras 3.6 to 3.6.3. Assessing Officer has referred to amended provisions of Section 80HHC and insertion of clause (iiid) and (iiie) to Section 28 of Income Tax Act 1961 as amended by Taxation Laws (Amendment) Act, 2005. In para 3.6.3, Assessing Officer has recorded finding of fact that assessee has failed to bring necessary evidence on record for justification of its claim into account increase of 90% of export incentive on account of Excise Duty Rebate/Refund for purpose of calculation of deduction under Section 80HHC. Commissioner of Income Tax(A) has also confirmed view of Assessing Officer vide para 5.4 of his order. 6. In view of above, it is considered appropriate that matter is referred back to Assessing Officer for examining matter afresh in respect of claim under Section 80HHC of Act as well. Accordingly both issues relating to deduction under Section 80HHC and also under Section 80IB of Act shall be readjudicated by Assessing Officer keeping in view latest case law on point after 4 of 5 ::: Downloaded on - 23-05-2017 10:10:49 ::: ITA No. 975 of 2008 (O&M) 5 hearing assessee by passing speaking order in accordance with law. appeal stands disposed of in manner indicated hereinbefore. (Ajay Kumar Mittal) Judge May 02, 2017 (Ramendra Jain) gs Judge Whether speaking/reasoned Yes Whether reportable Yes 5 of 5 ::: Downloaded on - 23-05-2017 10:10:49 ::: Nexo Industries Private Limited v. Commissioner of Income-tax, Ludhiana