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[2008] 305 ITR 335 (Madras) HIGH COURT OF MADRAS Commissioner of Income-tax v. Asma Exports* P.D. DINAKARAN AND P.P.S. JANARTHANA RAJA, JJ. T.C.(A). NOS. 721 AND 722 OF 2007 JUNE 20, 2007 Section 143(1)(a) of the Income-tax Act, 1961 - Assessment - Prima facie adjustment The question of relief under section 80HHC is a debatable issue and the same does not fall within the purview of prima facie adjustment under section 143(1)(a). CASE REVIEW CIT v. Nameel Leathers and Uppers [2005] 273 ITR 350 (Mad.)followed & relied upon. Mrs. Pushya Sitaraman for the Appellant. JUDGMENT P.D. Dinakaran, J.-The above tax case appeals are directed against the common order of the Income-tax Appellate Tribunal dated February 11, 2005, made in I.T.A. Nos. 346 and 347/Mds/1999 for the assessment years 1995-96 and 1996-97, respectively. The Revenue is the appellant. The relevant assessment years are 1995-96 and 1996-97. The assessee is an exporter of readymade garments. The assessee claimed deduction under section 80HHC for both the assessment years 1995-96 and 1996-97. The Assessing Officer, while making the prima facie adjustment under section 143(1)(a) of the Act, set off the business loss arrived at under section 80HHC(3) and accordingly by assessment orders dated October 30, 1996, restricted the deductions to Rs. 11,29,091 and Rs. 5,03,209 for the assessment years 1995-96 and 1996-97, respectively. Against the said assessment orders dated October 30, 1996, the assessee preferred appeals before the Commissioner of Income-tax (Appeals), who by a common order dated November 24, 1998, allowed the appeals accepting the contention of the assessee that the Assessing Officer while exercising the power under section 143(1)(a) ought not to have set off the business loss arrived at under section 80HHC(3) and restricted the deduction to Rs. 11,29,091 and Rs. 5,03,209 for the assessment years 1995-96 and 1996-97, respectively, even without giving an opportunity to the assessee and calling for the evidence and objections from the assessee as contemplated under section 143(2)(i) and (ii) and that the Assessing Officer ought not to have deducted the notional loss from the export profit and…

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