CPT V24P7-Art1 (Content).pmd - Taxmann

Direct Tax Laws
it allowed leniency in the payment of demands
in such years over a period of five years. This
was when the amendment would have actually
benefited 60,000 out of the 65,000 exporters.
So much of leniency was practically extended
to the exporters numbering only 5,000.
The first facet of the objection to such an
amendment has been that the High Court
answered in the affirmative and quashed
retrospective effect to bring uniformity in the
grant of benefits to one and all exporters in
the previous period to the year 2005. So the
amendment can take effect only from prospective
date, i.e., from 1.4.2006.
Interestingly the Court then went into the manner
in which such retrospective amendment was
made, as it noticed that the need for amendment
was felt after a decision by the Delhi Tribunal
in P & G Enterprises (P.) Ltd. v. Dy. CIT [2005]
93 ITD 138. Therein both the Assessing Officer
and the Commissioner of Income-tax (Appeals)
held that DEPB receipts would fall under clause
28(iv) and not under section 28(iiia). Hence,
first DEPB amount was excluded as any other
receipt of similar nature from the profits of
the business as per Explanation (baa) and later
on proportionate benefit under the first proviso
to sub-section (3) of section 80HHC was denied
by the AO/CIT(A) as it covered only items
falling under clauses (iiia), (iiib) and (iiic) of
section 28. The assessee claimed that no exclusion
is provided for clause (iv) of section 28.
TRIBUNAL’S RULING
3. The Tribunal in the next course held that
had the Legislature intended to exclude 90 per
cent of sum referred to in section 28(iv), it
could easily include the same alongside clauses
(iiia), (iiib) and (iiic) of section 28. Thus, deliberate
omission to include clause (iv) of section 28
alongside clauses (iiia), (iiib) and (iiic) in the
Explanation (baa) clearly suggested that the
Legislature never intended to exclude 90% of
DEPB sums. Sh. K C Singhal (JM) then in the
Bench held that 90% of DEPB receipts assessable
under section 28(iv) could not be excluded
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from the profits of business computed under
the head “Profits and gains of business or
profession” for the purpose of computing profits
of business under clause (baa) of the Explanation
to section 80HHC(4B).
GOVERNMENT INTRODUCES SERIES OF
AMENDMENTS TO SECTION 80HHC AND
SECTION 28
4. It is at this point of time that the Government
introduced series of amendments to section
80HHC and section 28 to have separate clauses
for DEPB/DERC and their treatment for section
80HHC benefit. This was done to get over the
interpretation given by the Delhi Bench of the
Tribunal (supra) and to make an entry for exclusion
of DEPB as well from the exclusion clause (baa)
of the Explanation to section 80HHC(4B).
OBJECT OF AMENDMENTS TO SECTION
80HHC AS PER GOVERNMENT
5. The object of the amendment to section
80HHC, as it appeared from the statements of
the Finance Minister while moving the bill,
was to get rid of the alleged wrong decision
of the Tribunal interpreting the then provision
of the Statute in a way which was beneficial
to the assessees, which according to the Finance
Minister, was never the intention of the
Legislature. To corner this position the High
Court pointed in the following words:
“If such be the position, the Revenue has
definitely right to challenge the decision
of the Tribunal as a wrong one before the
higher forum; but on a plea of delay in
disposal of appeal if filed, without
challenging the decision of the Tribunal
before High Court or Supreme Court, the
Revenue cannot curtail such benefits by
proposing amendment, incorporating a new
provision in the Statute from an anterior
date. According to the existing law enacted
by the Parliament itself, wrong orders passed
by a Tribunal should be challenged by the
aggrieved party before the appropriate High