2008 (3) TMI 223 - HC - Income Tax

Whether the relief u/s 80-IA should be deducted from profits and gains of business before computing relief u/s 80HHC - view has been followed repeatedly by different High Courts in a number of cases against which no special leave petitions were filed, meaning thereby that the Department has accepted the view taken in these judgment - both the sections are independent therefore, the deductions could be claimed under both sections on the gross total income

Summary

Issues:
1. Whether relief under section 80-IA should be deducted before computing relief under section 80HHC.

Analysis:
The High Court of Madras, in the judgment delivered by K. Raviraja Pandian J., considered two appeals filed by a partnership firm engaged in the manufacture and export of hosiery garments for the assessment years 2002-03 and 2003-04. The main issue in question was whether the relief under section 80-IA should be deducted from profits and gains of business before computing relief under section 80HHC. The counsel for both sides argued in favor of the assessee, citing a previous decision of the Supreme Court in Joint CIT v. Mandideep Engineering and Packaging Industries P. Ltd. The court referred to the decision of Madhya Pradesh High Court in J. P. Tobacco Products P. Ltd. v. CIT and the subsequent dismissal of special leave petitions by the Supreme Court, along with similar decisions by other High Courts, to support the assessee's claim.

The court highlighted that the Department had accepted the view taken by various High Courts on the issue, as evidenced by the dismissal of special leave petitions against those judgments. Consequently, the court found no merit in the appeal and dismissed the civil appeal, allowing the appeals filed by the assessee. The judgment emphasized that the Department could not take a contrary view in the present case when it had accepted the consistent interpretation of the law by different High Courts. Therefore, the relief under section 80-IA was held to be deductible before computing relief under section 80HHC, in line with the established legal precedents.

In conclusion, the High Court of Madras ruled in favor of the assessee, allowing the appeals and closing the connected miscellaneous petitions. The judgment underscored the importance of consistency in legal interpretation and the significance of precedent in tax matters, ultimately upholding the deduction of relief under section 80-IA before computing relief under section 80HHC based on established legal principles and decisions.