2007 (9) TMI 461 - AT - Income Tax

Summary

Issues involved: Appeal against allowing deduction u/s 80HHC read with section 115JB.

The judgment of the Appellate Tribunal ITAT Bangalore pertained to an appeal by the revenue challenging the decision of the Commissioner of Income-tax (Appeals) in allowing the claim of deduction under section 80HHC, read with section 115JB. The main contention raised was regarding the eligibility of the assessee for the deduction under section 80HHC from the profits computed under section 115JB, specifically in relation to the treatment of DEPB claim and the computation of book profit under the Companies Act. The revenue argued that the decisions of the Kerala High Court and ITAT Mumbai supported their case, while the assessee relied on a Special Bench decision of the ITAT Mumbai to support their claim for deduction under section 80HHC.

The revenue contended that the order of the CIT(A) was erroneous as it did not consider the radical changes between sections 115J and 115JA vis-a-vis section 115JB, and that the assessee's claim for deduction under section 80HHC was flawed due to the non-consideration of the DEPB claim. They also argued that the computation of book profit as per the Companies Act should not be used to arrive at eligible profits for deduction under section 80HHC when computing income under section 115JB. Additionally, they cited decisions of the Kerala High Court and ITAT Mumbai in support of their position.

On the other hand, the assessee argued that the issue was settled by a Special Bench decision of the ITAT Mumbai, which clarified the confusion regarding the computation of export business deduction under section 80HHC. They maintained that the eligible profits for deduction under section 80HHC remained as claimed in their returns, and supported the order of the CIT(A) in this regard.

The Tribunal, after considering the arguments presented, held that the issue raised by the revenue was already settled by the ITAT Special Bench decision in the case of Bhushan Steel & Strips Ltd. The Tribunal emphasized that in cases of minimum alternate tax assessment, the deduction under section 80HHC should be computed based on the adjusted book profit, as the regular profits were substituted by book profit under sections 115J, 115JA, and 115JB. Therefore, the Tribunal upheld the order of the CIT(A) in favor of the assessee, noting the absence of any material presented by the revenue to counter the decision.

In conclusion, the appeal of the revenue was dismissed, affirming the decision of the CIT(A) to allow the deduction under section 80HHC in the context of minimum alternate tax assessment.