1989 (7) TMI 167 - AT - Income Tax

Summary

Issues:
- Appeal against CIT's order regarding deduction under s. 80HHC for asst. yr. 1984-85.
- Interpretation of s. 80HHC and s. 80AB for deduction calculation.
- Application of s. 80AB to deduction under s. 80HHC.
- Determination of income from export business for deduction under s. 80HHC.

Analysis:
The appeal before the Appellate Tribunal ITAT Delhi-C pertained to the CIT's order regarding the deduction under s. 80HHC for the assessment year 1984-85. The CIT had set aside the assessment concerning the deduction and directed the IAC(A) to restrict the said deduction within the limits prescribed by s. 80AB. The Tribunal heard arguments from the assessee's counsel and the Departmental Representative and examined the relevant material presented.

The crux of the issue revolved around the interpretation and application of s. 80HHC and s. 80AB for calculating deductions. The CIT had applied s. 80AB to govern the deduction under s. 80HHC, contending that the overall limit prescribed by s. 80AB applies to the admissible deduction. However, the Tribunal disagreed, emphasizing the incompatibility between s. 80AB and s. 80HHC. While s. 80AB governs deductions based on specific income from a particular source, s. 80HHC allows deductions based on export turnover, not income from the export business. The Tribunal highlighted that s. 80HHC operates in a distinct field and cannot be subject to s. 80AB.

The Tribunal further addressed the calculation of income from exports to determine the deduction under s. 80HHC. The assessee argued that certain receipts did not represent net income, and the corresponding expenditure needed to be considered to ascertain the actual income. The Tribunal agreed with this contention, indicating that the assessment needed to determine the export profit before allowing the deduction under s. 80HHC, ensuring that the deduction does not exceed the export profit. Consequently, the Tribunal allowed the appeal, setting aside the CIT's order and restoring the assessment made by the IAC(A).

In conclusion, the Tribunal's judgment clarified the distinction between s. 80HHC and s. 80AB, emphasizing that s. 80AB cannot govern the deduction under s. 80HHC due to their inherent incompatibility. The Tribunal underscored the need to determine the export profit accurately before allowing the deduction under s. 80HHC, ensuring compliance with the statutory provisions.