2024 (2) TMI 489 - AT - Income Tax

Deduction u/s 80HHC as arriving on the book profit u/s 115JA of the Act after allowing the carry forward loss and unabsorbed depreciation - HELD THAT - We respectfully follow the direction of the Hon ble Apex Court in the case of Bhari Information Technology Systems Pvt. Ltd. 2011 (10) TMI 19 - SUPREME COURT and Syncome Formations (I) Ltd. 2007 (3) TMI 288 - ITAT BOMBAY-H The assessee is in appeal, against the order of the CIT(A), before the Tribunal which, following the judgment of the Special Bench of the Tribunal in the case of Syncome Formulations (I) Ltd . took the view that the MAT scheme which includes Section 115JA did not take away the benefits given under s. 80HHC. The entire issue related to additional ground are remitted back to the file of Ld. AO for the computation u/s 80HHC after considering the judgment of Hon ble Apex Court (supra) and Special Bench of Mumbai Tribunal (supra). Needless to say, the assessee should get a reasonable opportunity of hearing in the set aside proceedings.

Summary

Issues Involved:
1. Deduction under Section 80HHC in the computation of book profit under Section 115JA/115JB.
2. Specific directions for recomputation by the AO.
3. Additional grounds of appeal.
4. Interest under Section 244A.

Summary:

Issue 1: Deduction under Section 80HHC in the computation of book profit under Section 115JA/115JB
The assessee claimed a deduction under Section 80HHC amounting to Rs. 20,35,75,401 out of book profit after claiming brought forward loss and unabsorbed depreciation, reducing the profit to nil. The AO rejected this computation. The Tribunal observed that the assessee's additional ground was not adjudicated in the final order, leading to the appeal being recalled. The Tribunal followed the Supreme Court's decision in CIT vs. Bhari Information Technology Systems Pvt. Ltd. and the Special Bench of Mumbai ITAT in DCIT vs. Syncome Formations India Ltd., which held that deductions under Section 80HHC should be computed based on adjusted book profits under Section 115JA/115JB.

Issue 2: Specific directions for recomputation by the AO
The CIT(A) accepted the Special Bench and Supreme Court orders but did not provide specific directions to the AO for recomputation. The Tribunal directed the AO to recompute the deduction under Section 80HHC by considering adjusted book profits for MAT purposes, following judicial directions.

Issue 3: Additional grounds of appeal
The assessee raised four additional grounds of appeal, including considering adjusted book profits instead of income under normal provisions for computing deductions under Section 80HHC, recomputing deductions without regard to Section 80HHC(1B), and allowing deductions for brought forward business loss or unabsorbed depreciation. The Tribunal remitted these grounds back to the AO for recomputation, ensuring the assessee gets a reasonable opportunity of hearing.

Issue 4: Interest under Section 244A
The assessee requested directions to compute interest under Section 244A on the refund amount pursuant to the ITAT order. The Tribunal noted that this ground was not pressed as it is consequential.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, directing the AO to recompute the deductions under Section 80HHC as per judicial directions and ensuring the assessee gets a reasonable opportunity of hearing. The order was pronounced in the open court on 7th February, 2024.