IS ROGINI GARMENTS GOOD LAW IN MUMBAI

[CA_Ramesh]

Friends, I need some help please.

In Roginin Garments, Honourable Special Bench in Chennai has held that relief under section 80-IA should be deducted from profits before computing relief under section 80-HHC.

However, in Gorej Agrovet, Honourable Mumbai High Court has said this:

"14. Mr.Pardiwala further submitted that
reopening of the assessment based on the
construction of Section 80IB (13) read with Section
80IA(9) is also without any merit because, in the
present case, it is admitted by the respondents in
their affidavit in reply (at page 92 of the
petition) that the assessee had not exported goods
manufactured in the industrial units eligible for
deduction under Section 80IB. Once it is admitted
that the goods manufactured in the industrial units
eligible for deduction under Section 80IB have not
been exported, then Section 80IB(13) read with
Section 80IA(9) would have no application in the
computation of deduction under Section 80HHC. In
other words, where the goods exported were not
manufactured in the industrial unit on which 80IB
has been claimed, the question of excluding the 80IB
deduction while computing 80HHC deduction does not
arise at all. Accordingly, Mr.Pardiwala submitted
that in absence of any reason for reopening the
assessment, the notice issued under Section 148 of
the Act is liable to be quashed and set aside."

"20. The next contention of the revenue is
that in the regular assessment, the Assessing
Officer has not discussed the provisions of Section
80IB(13) read with Section 80IA(9) of the Act and if
those provisions were taken into consideration,
there would be negative profit and consequently
deduction under section 80HHC could not be granted.
This argument is also without any merit because, in
the affidavit in reply filed on behalf of the
revenue it is admitted that the assessee had not
made exports of the goods manufactured in the
industrial units eligible for deduction under
Section 80IB. If the goods manufactured in the
units availing deduction under Section 80IB were not
exported, then obviously the goods manufactured in
those units would not be taken into account for
computation of deduction under section 80HHC. In
that event, the question of applying the principles
laid down in Section 80IA(9) while computing the
deduction under section 80HHC does not arise at all."

Friends, does this mean that Rogni Garment cannot apply in Mumbai or can be the two are read together in some way. I am puzzled.

I am having matter before Honourable Mumabi Tribunal and I do not know what to argue or how to argue this point.

Please help,

Ramesh.

[probal_shome]

Hi,

My view is that there is no conflict between the two decisions. The High Court has not held that relief under section 80-IA should not be deducted from the profits for purposes of section 80-HHC. It only said that if the undertaking claiming relief under section 80-IA was different from the undertaking claiming relief under section 80-HHC. there is no scope to apply s. 80-IA (9). By inference, this means that if the same undertaking was claiming both reliefs, s. 80-IA (9) would apply.

Therefore, tacitly, Godrej Agrovet approves the principle of Rogini Garments.

It is surprising that the issue of separate undertakings claiming separate reliefs was not considered by the Special Bench. In fact, even Godrej is not referred to. Perhaps, the issue never arose on the facts there.

Regards,

Probal.

[harish]

I wonder why the following Special bench has been constituted on the same subject despit Rogini

Section 80HHC r.w.s. 80IA
M/s Atul Intermediates.

Ahmedabad ITA No. 2318/Ahd/2006

A.Y. 2003 – 04 Whether on the facts and circumstances of the case, deduction u/s 80HHC to be allowed is to be computed on the profit by reducing deduction u/s 80IA of the Income Tax Act. 

[probal_shome]

I was wondering the same thing. We need to check the date on which this reference was made. If the reference was after the Rogini judgement, then maybe they want to refer to 5 judge bench. However, if the reference was before the judgement, then it may have been done in oversight and may now be dismissed as infructuous. My guess is that it must be the latter.

regards,

Probal.

[harish]

If it the Ahmedabad ref was later I wonder why matter in Rogini went ahead in the first place.

[tusharhemani]

Hon'ble the President has withdrawn the SB reference and the said matter (Atul Intermediates) has been heard and going to be decided against by the DB by following the SB Chennai.

regards

tushar hemani

[admin]

Thanks for the update. It is greatly appreciated.

Admin.