2020 (2) TMI 956 - HC - Income Tax

Deduction u/s 80HHC - turnover of all independent businesses to be clubbed - HELD THAT - Claim not available on the division/unit wise profits of the business and the same is available only on the entire business profit without differentiating between the units engaged in the export and the units engaged in the domestic sales. See DEVRAJ R. AGARWAL VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX 2016 (7) TMI 1563 - GUJARAT HIGH COURT

Summary

Issues:
1. Interpretation of Section 80HHC of the Income Tax Act regarding deduction calculation based on entire/global turnover of the business.
2. Application of previous decisions on unit/division wise profits for deductions under Section 80HHC.

Issue 1: Interpretation of Section 80HHC:
The High Court was tasked with determining whether the Income Tax Appellate Tribunal correctly held that for calculating the deduction under Section 80HHC of the Income Tax Act, the entire/global turnover of the business should be considered, without differentiating between units engaged in export activities and those engaged in domestic activities. The Tribunal referred to the decision of the Special Bench in the case of International Research Park Laboratories Ltd. vs. ACIT and the Kerala High Court decision in CIT(A) vs. Jose Thomas to support its stance. It emphasized that the turnover for computing the deduction should include all aspects of the business, rejecting the appellant's argument for separate consideration of units. The High Court, in line with the Tribunal's decision, dismissed the appeal, upholding the view that the entire turnover of the assessee must be taken into account for Section 80HHC deductions.

Issue 2: Application of Previous Decisions:
The Court also considered whether the Tribunal erred in not following the decision of the coordinate Bench in a previous case involving the same assessee, where deductions under Section 80HHC were granted on unit/division wise profits. The appellant contended that the Tribunal should have followed the precedent set in the earlier case. However, the Tribunal differentiated the current scenario from the previous decisions, emphasizing that the units could not be separated as they were part of the same business. The Tribunal highlighted that the previous decisions cited by the appellant were not applicable to the current situation and relied on the Special Bench decision and other relevant judgments to support its ruling. The High Court affirmed the Tribunal's decision, stating that the view taken was consistent with the law and dismissed the appeal, upholding the order of the CIT(A) in disallowing the claim of the assessee. The Court referenced the decision in Devraj R. Agarwal to reinforce the Tribunal's decision, ultimately ruling in favor of the Revenue and against the assessee.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the importance of considering the entire turnover of the business for deductions under Section 80HHC and rejecting the appellant's plea for unit-wise calculations. The Court's analysis was based on legal precedents and interpretations of relevant provisions, ultimately leading to the dismissal of the appeal in favor of the Revenue.