2001 (1) TMI 919 - AT - Income Tax

Summary

Issues:
- Appeal filed by the Department for the assessment year 1991-92 regarding the deduction under section 80HHC before setting off losses.

Analysis:
The Department filed two appeals, delayed by four days, challenging the decision of the Commissioner of Income-tax (Appeals)-XII, Calcutta, regarding the allowance of deduction under section 80HHC before setting off losses. Despite the absence of the assessee and no application for adjournment, the Appellate Tribunal decided to proceed based on the material on record and submissions by the Departmental Representative. The Department sought condonation of delay, which was granted due to a reasonable cause. The Tribunal entertained the appeals on their merits.

Upon reviewing the orders of the authorities below, it was noted that the Assessing Officer had allowed deductions under section 80HHC to the assessee at Rs.20,07,388 after considering written submissions. Subsequently, the Assessing Officer issued two orders under section 154, stating that the deduction under section 80HHC was excessive as it should only apply to taxable profits. The first appellate authority, through a common order, upheld the assessee's contention that the deduction should be based on profits earned during the relevant assessment year, not considering set off of losses. The Commissioner of Income-tax (Appeals) also emphasized that profits for section 80HHC deduction should be computed as per rule 18BBA in Form No. 10CCA, citing a precedent from the Income-tax Appellate Tribunal, Delhi Bench.

The Tribunal concurred with the Commissioner's reasoning, concluding that the Assessing Officer's actions in reducing the deduction under section 80HHC by factoring in losses were not a mistake apparent from the record. Therefore, the Tribunal upheld the decision of the Commissioner of Income-tax (Appeals) and dismissed the Department's appeals. As a result, the Department's appeals were rejected, affirming the allowance of deduction under section 80HHC based on the profits of the year without considering set off of losses.