2019 (3) TMI 1070 - HC - Income Tax

Rectification u/s 154 - deduction allowed under 80IA requires to be reduced from the profits and gains for the purpose of computing the deduction under Section 80HHC - HELD THAT - Tribunal was perfectly justified in rejecting the Revenue s Appeal on the ground that a debatable issue could not have been the subject matter of proceedings u/s 154 and that the Assessing Authority by invoking Section 154 providing for the rectification of a mistake apparent on the face of the record, could not restrict the benefit of deduction under Section 80IA and 80HC of the Act. It is true that the question of law as to whether the relief under Section 80IA should be deducted from the profits and gains by the business before computing the relief under Section 80 HC or not, is a question which is still open and has been referred to a Larger Bench of this Court in the case of MM Forgings 2002 (3) TMI 10 - MADRAS HIGH COURT and the matter is also said to be pending before the Hon ble Supreme Court in the case of Micro Labs. 2015 (12) TMI 708 - SUPREME COURT Since in the present case, the said benefit of deduction was restricted by invoking Section 154 of the Act, we are satisfied that no substantial question of law arises for our consideration.

Summary

Issues:
- Appeal under Section 260A of the Act challenging the Tribunal's order for the Assessment Year 1999 to 2000.
- Validity of rectification under Section 154 for deduction under Section 80IA and 80HHC.
- Whether a debatable issue can be subject to proceedings under Section 154 of the Act.

Analysis:
The High Court of Madras addressed the appeal filed by the revenue challenging the Tribunal's order for the Assessment Year 1999 to 2000. The primary issue revolved around the validity of the rectification under Section 154 concerning the deduction under Section 80IA and 80HHC. The Tribunal had dismissed the Revenue's Appeal, citing the issue as debatable due to conflicting decisions by different benches and a pending matter before a Larger Bench and the Supreme Court. The Court acknowledged the debatable nature of the issue and upheld the Tribunal's decision, emphasizing that a debatable issue cannot be subject to proceedings under Section 154 of the Act.

The Court further elaborated that the Assessing Authority, by invoking Section 154 for rectification, could not restrict the benefit of deductions under Section 80IA and 80HC. It noted that the question of whether the relief under Section 80IA should be deducted from profits before computing the relief under Section 80HC remains open and is pending before higher judicial authorities. However, in the present case, the Court found that since the benefit of deduction was curtailed through Section 154, no substantial question of law merited consideration. Consequently, the Court dismissed the Revenue's Appeal, emphasizing that no costs were to be awarded in this matter.