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Issues:
1. Interpretation of section 80HHD for deduction computation. 2. Treatment of business units independently for deduction under section 80HHD. 3. Jurisdiction of Commissioner of Income-tax under section 263. Analysis: Issue 1: Interpretation of section 80HHD for deduction computation The Commissioner of Income-tax observed that the assessee, a hotel business, computed the deduction under section 80HHD separately for each hotel unit, which was deemed erroneous. The Commissioner held that the deduction should be calculated for the entire business as a whole, not unit-wise. The disagreement arose regarding the interpretation of "profits of the business" in section 80HHD(3). The Commissioner's view was that the deduction should consider the total turnover of the entire business, not separately for each unit. The assessee contended that the term referred to the business of the approved hotel only. However, the Tribunal upheld the Commissioner's interpretation, emphasizing that the deduction should be based on the business as a whole, not individual units. Issue 2: Treatment of business units independently for deduction under section 80HHD The assessee's representative argued that each unit of the hotel approved by the Department of Tourism should be considered separately for the purpose of section 80HHD. They highlighted that different units may have varying approvals and entitlements to deductions under different sections. The representative contended that only approved units should be included for section 80HHD deduction calculation. However, the Tribunal rejected this argument, stating that the deduction is applicable to the entire business and not to individual units, even if separately approved. Issue 3: Jurisdiction of Commissioner of Income-tax under section 263 The Commissioner invoked jurisdiction under section 263, deeming the Assessing Officer's orders both erroneous and prejudicial to revenue interests. The departmental representative supported this decision, emphasizing that even on a debatable point, the Commissioner can invoke section 263. The Tribunal agreed with the Commissioner's decision, stating that the orders were indeed both erroneous and prejudicial. They clarified that the mere prejudice to revenue empowers the Commissioner to take corrective action under section 263, even if the error is not apparent. In conclusion, the Tribunal upheld the Commissioner's orders, dismissing the appeals filed by the assessee for both years. The judgment clarified the interpretation of section 80HHD, emphasizing the computation of deductions based on the entire business rather than individual units, and affirmed the Commissioner's jurisdiction under section 263 to rectify errors prejudicial to revenue interests.
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