Commissioner of Income Tax vs Chemifine

The decision rendered in this appeal shall also govern disposal of other connected appeal being I.T.A. No. 35/2000 as both the appeals involve a common question of law.

This is an appeal filed by the Commissioner of Income Tax (the Revenue) u/s 260A of the Income Tax Act, 1961, against an order dated May 16, 2000, passed in I.T.A. Nos. 215 and 216/IND/98. The appeal was admitted for final hearing on the following substantial question of law:

Whether, on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal is justified in holding that the deduction as per the proviso to Section 80HHC has to be calculated independently without setting off the same against the loss worked out as per Clauses (a), (b) and (c) of Sub-section (3) of Section 80HHC relying on their own earlier order dated February 26, 1999, in I.T.A. Nos. 510 and 1026/IND/97 in the case of Alphine Solvex Ltd. v. Deputy CIT even though the same was not accepted by the Department and against which appeal u/s 260A of the Income Tax Act before the M.P. High Court is still pending for decision?

Heard Shri R.L. Jain, learned senior Counsel with Miss Vibha Mandlik, learned Counsel for the appellant, and Shri G.M. Chaphekar, learned senior Counsel with Shri D.S. Kale, learned Counsel for the respondent.

Having heard learned Counsel for the parties and having taken note of the submissions we are inclined to remand the case to the Tribunal by setting aside of the order impugned herein in so far as it relates to the issue sought to be urged in this appeal.

In our view the need to remand has arisen due to the decision of the Supreme Court reported in IPCA Laboratory Ltd. Vs. Deputy Commissioner of Income Tax, Mumbai, which was rendered subsequent to the impugned order of the Tribunal and on which heavy reliance was placed by learned Counsel for the appellant for deciding the issue in favour of the Revenue. In our view keeping in consideration the law laid down by the Supreme Court, it is necessary for the Tribunal to examine the factual issues keeping in view the law so laid down coupled with all other legal issues arising therefrom and then decide the appeal afresh. This Court is possessed with power to remand the case u/s 260A ibid. The remand of the case would not in any way cause prejudice to parties as they will get opportunity of hearing. Moreover, the factual issues involved would also be taken note of by giving categorical finding so as to appreciate the controversy in its proper perspective and keeping in view the law laid down in IPCA Laboratory Ltd. Vs. Deputy Commissioner of Income Tax, Mumbai, which came pending appeal.

Accordingly and in view of the aforesaid discussion we do not wish to burden our order by narrating the entire facts as the same is not necessary. Accordingly, the appeal succeeds and is allowed. The impugned order is set aside. The case is remanded to the Tribunal for deciding the appeal afresh only in so far as the issue involved in this appeal is concerned keeping in view the aforesaid observations made as also the observations made in our order dated February 20, 2006, passed in I.T.A. No. 62 of 2000. Let the appeal be decided within three months from the date of the parties appearance. Parties to appear on March 20, 2006. No costs.

C.C. as per rules.