2007 (3) TMI 145 - HC - Income Tax

Export - Revenue contended that the short term capital losses should be deducted from the profits for the purpose of computation of deduction u/s 80HHC -Held that the revenue contention was not correct and set aside

Summary

Issues:
1. Whether the short-term capital loss should be deducted from the profits for the computation of deduction under Section 80 HHC for the assessment year 1990-91.

Analysis:
The case involves an appeal by the Revenue against the Tribunal's order regarding the deduction of short-term capital loss for the purpose of computing deduction under Section 80 HHC. The Income Tax Officer initially deducted the capital loss from the business income for Section 80 HHC computation. However, the Commissioner of Income Tax (Appeals) agreed with the assessee that the deduction should be re-computed without considering the capital loss. The Revenue then appealed to the Tribunal, which dismissed the appeal based on a previous decision related to a different issue in the same assessee's case.

The Revenue contended that the Tribunal erred in its interpretation that the income from business for Section 80 HHC should be computed as per Section 28 of the Income Tax Act and that the capital loss should be excluded. Reference was made to a previous order related to a different issue. The Apex Court decision in IPCA Laboratory Ltd. v. Deputy CIT was cited, emphasizing the need to consider Section 80 AB for working out deductions under Section 80 HHC. Section 80 B(5) defining 'gross total income' was highlighted as relevant before making deductions under Chapter VI-A.

In light of the Apex Court decision and the interpretation of Section 80 HHC with reference to Section 80 AB and Section 80 B(5), it was concluded that the computation of income should be in accordance with the Act before applying deductions under Chapter VI-A. Consequently, the contentions of the Revenue were rejected, and the appeal was dismissed, confirming the Tribunal's order. The questions raised were answered against the Revenue, with no costs imposed.