2012 (5) TMI 212 - HC - Income Tax

Simultaneous deduction u/s 80HHC and 80IB - on the ground that 100% deduction had not been claimed on the profits when such allowance is not permissible under both the provisions in accordance with section 80-IA(9) of the Act read with section 80-IB(13). - held that - the contention of the revenue that the profits and gains permitted to be deducted under Section 80-IA should be deducted out of the profits of the business and thereafter the profits and gains from export business is to be calculated, as otherwise it would amount to double benefit, is contrary to the scheme of the aforesaid statutory provisions as well as Clause (baa) to Explanation (ii) to Section 80-HHC. When once it is held that Sections under the heading C - deductions in respect of certain incomes are independent of each other and the assessee is entitled to claim deduction under more than one Section, the deduction has to be necessarily in the profits and gains arrived at after making the claims in terms of the oforesaid Section. However, the overall claim under both Sections has to be restricted to the total profits and gains of such eligible business from gross total income. - Decided in favor of assessee.

Summary

Issues:
Interpretation of provisions under Section 80-IB and Section 80HHC for deduction eligibility.

Analysis:
The High Court of Karnataka addressed the issue of whether a deduction can be allowed under both Section 80-IB and Section 80HHC when 100% deduction had not been claimed on profits. The court referred to the case of CIT v. Millipore India (P.) Ltd. where it was highlighted that deductions under Chapter VI-A of the Income Tax Act are limited to the profits and gains of the eligible business. The court emphasized the independence of Sections falling under the heading "'C' - deductions in respect of certain incomes" and clarified that new industrial units can claim deductions under both sections on gross total income independently. It was noted that profits and gains eligible for deductions under Section 80-IA cannot be claimed again under any other provisions under the same heading. The court highlighted that deductions should be computed at the time of allowing them, not at the time of computing them. The judgment emphasized that the overall claim under both sections must be limited to the total profits and gains of the eligible business from the gross total income.

In conclusion, the High Court ruled in favor of the assessee based on the interpretation of the provisions and the principles outlined in the CIT v. Millipore India (P.) Ltd. case. The appeal by the revenue challenging the Tribunal's decision to grant relief to the assessee was dismissed, affirming the decision to allow deductions under both Section 80-IB and Section 80HHC in accordance with the statutory provisions and legal principles discussed in the judgment.