IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN FRIDAY, THE 13TH FEBRUARY 2009 / 24TH MAGHA 1930 ITA.No. 63 of 2008() -------------------- ITA.247/COCH/1999 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT: ----------------------------- THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) SRI.JOSE JOSEPH, SC FOR IT RESPONDENT(S): RESPONDENT ------------------------- B. PARAMESWARAN BHARATHAN, QUILON EXPORT ENTERPRISES, KOLLAM. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 13/02/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. .................................................................... I.T. Appeal No.63 of 2008 .................................................................... Dated this the 13th day of February, 2009. JUDGMENT Ramachandran Nair, J. The following questions are raised by the Revenue in this appeal filed by it: 1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in directing to recompute the deduction under Section 80HHC by ignoring the loss derived from the export of trading goods? 2. Whether, on the facts and in the circumstances of the case, while computing deduction under Section 80HHC the loss derived from the export of trading goods has to be excluded? 3. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in allowing deduction of legal expenses incurred for defending a case before Supreme Court against the take over of cashew factories by Government? Standing Counsel submitted that first two questions are covered by decision of the Supreme Court in IPCA LABORATORY LTD. V. DEPUTY COMMISSIONER OF INCOME TAX reported in (2004) 266 ITR 521 and A.M.MOOSA V. COMMISSIONER OF INCOME 2 TAX reported in (2007) 294 ITR 1. We notice that the third question pertains to assessee's claim for deduction of legal expenses incurred. Since no substantial amount is involved, we do not think we should issue notice in the appeal on this question. Since first two questions are covered by decision of the Supreme Court, we set aside the orders of the Tribunal and remand the case back to the Assessing Officer for issuing notice to the assesee and for recomputing eligible deduction under Section 80 HHC after reckoning loss as well based on the two decisions of the Supreme Court. We make it clear that since we allow the appeal partly without issuing notice to the assessee, assessee should be heard before revising assessment in terms of the directions of the Supreme Court as stated above. Appeal is allowed to the above extent. C.N.RAMACHANDRAN NAIR Judge K.SURENDRA MOHAN Judge pms