2008 (7) TMI 1034 - AT - Income Tax

Summary

Issues involved: Appeal by assessee u/s 80HHC deduction computation and appeal by revenue against the same.

Assessee's Appeal u/s 80HHC Deduction Computation:
The issue revolved around the computation of deduction u/s 80HHC after reducing deduction u/s 80IA of the Act in accordance with section 80IA(9) of the Act. The Assessing Officer had allowed deduction u/s 80HHC at a certain amount but reduced it by the deduction allowed u/s 80IA, resulting in a lower deduction. The assessee contended that there is no statutory requirement to reduce u/s 80IA deduction before allowing u/s 80HHC deduction. The Tribunal noted that the Mumbai Bench consistently held that u/s 80IA deduction should not be reduced while allowing u/s 80HHC deduction. The Tribunal also referred to a decision by the Hon'ble Madras High Court which overruled a Special Bench decision supporting the assessee's argument. Consequently, the Tribunal allowed the assessee's appeal, emphasizing that u/s 80IA deduction should not be reduced from u/s 80HHC deduction.

Revenue's Appeal:
The revenue's appeal primarily focused on the exclusion of excise duty and sales tax from the total turnover while allowing deduction u/s 80HHC. The Tribunal had previously dismissed a similar ground in a previous assessment year for the same reasons. Therefore, the Tribunal upheld the decision and dismissed the revenue's appeal regarding the treatment of excise duty and sales tax in the computation of deduction u/s 80HHC.

Conclusion:
The Tribunal allowed the assessee's appeal regarding the computation of deduction u/s 80HHC, emphasizing that u/s 80IA deduction should not be reduced from u/s 80HHC deduction. Additionally, the revenue's appeal concerning the treatment of excise duty and sales tax in the deduction calculation was dismissed based on previous decisions.