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Issues Involved:
1. Computation of Deduction under Section 80HHC. 2. Charging of Interest under Sections 234B and 234C. 3. Rectification Proceedings under Section 154. Issue-Wise Detailed Analysis: 1. Computation of Deduction under Section 80HHC: The primary issue was whether the loss computed under clauses (a), (b), or (c) of sub-section (3) of Section 80HHC should be ignored for the purpose of computing the deduction under the proviso to Section 80HHC(3). The assessee argued that the loss should be ignored and the deduction should be allowed as computed by the assessee, referencing various Tribunal orders and the Special Bench decision in Lalsons Enterprises v. DCIT. The assessee's counsel contended that the proviso to sub-section (3) is an independent provision and should be interpreted as such. The Department, however, argued that the Supreme Court's decision in IPCA Laboratories Ltd. v. DCIT, which mandates that both profits and losses must be considered under Section 80HHC, should prevail. The Tribunal concluded that the Supreme Court's decision in IPCA Laboratories Ltd. overrides the Special Bench's decision in Lalsons Enterprises, holding that the losses cannot be ignored and must be set off against the profits for computing the deduction under Section 80HHC. Consequently, the Tribunal upheld the CIT(A)'s decision, rejecting the assessee's claim. 2. Charging of Interest under Sections 234B and 234C: The assessee contended that interest under Sections 234B and 234C could not be charged without a specific order in the assessment order. The Tribunal noted that the Assessing Officer had directed to "charge interest" and had computed and charged the interest in the Income Tax Computation Form ITNS 150, which formed part of the assessment order. The Tribunal held that this computation constituted a part of the assessment order, validating the charge of interest. The Tribunal also referenced the plenary powers of the first appellate authority, as established in CIT v. Kanpur Coal Syndicate, affirming that the CIT(A) had the authority to modify the assessment order to include the charge of interest. 3. Rectification Proceedings under Section 154: The issue here was whether the Assessing Officer was correct in rectifying the order under Section 154 to enhance the interest liability under Section 234B without giving credit for tax paid under MAT under Section 115JA/115JAA. The Tribunal considered the Circular No. 763, which explains the rationale for MAT credit, and noted that the issue of chargeability of interest was highly debatable and thus beyond the scope of rectification under Section 154. The Tribunal referenced differing judicial opinions, including the favorable view for the assessee taken by the Madras High Court in CIT v. Holiday Travels (P.) Ltd., and the contrary view by the Karnataka High Court in Kwality Biscuits Ltd. v. CIT. The Tribunal concluded that the issue was contentious and open to debate, and thus, the rectification under Section 154 was not justified. The Tribunal set aside the decision of the authorities below and allowed the assessee's appeal on this count. Conclusion: In summary, the Tribunal dismissed the appeal concerning the computation of deduction under Section 80HHC, upholding the CIT(A)'s decision in line with the Supreme Court's ruling in IPCA Laboratories Ltd. However, the Tribunal allowed the appeal regarding the rectification proceedings under Section 154, setting aside the authorities' decision due to the contentious nature of the issue. The Tribunal also upheld the charge of interest under Sections 234B and 234C as validly included in the assessment order.
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