1993 (3) TMI 179 - AT - Income Tax

Summary

Issues:
1. Deduction under section 80HHC
2. Deduction under section 80-I

Issue 1: Deduction under section 80HHC:
The case involved a dispute regarding the deduction under section 80HHC of the Income-tax Act, 1961. The assessee, engaged in developing computer software, claimed a deduction based on the profits and gains of its business. However, the Assessing Officer reduced the deduction amount by considering the fees received from foreign enterprises, leading to a lower deduction. The CIT (Appeals) upheld this decision, stating that the relief under section 80HHC was only applicable to export of goods or merchandise, not consultancy services. The ITAT disagreed with this interpretation, emphasizing that the deduction under section 80HHC should be calculated based on the profits of the business and not reduced by fees eligible for deduction under section 80-O. The ITAT set aside the lower authorities' orders and directed the Assessing Officer to recompute the deduction under section 80HHC solely based on the business profits.

Issue 2: Deduction under section 80-I:
The second issue involved the eligibility of the assessee for a deduction under section 80-I of the Act. Similar to the previous deduction dispute, the Assessing Officer reduced the deduction amount by considering the fees received from foreign enterprises. The CIT (Appeals) held that the assessee could not derive double benefit from the same receipt. However, the ITAT disagreed with this reasoning, stating that the Income-tax Act does not prohibit deductions under multiple sections of Chapter VI-A if the pre-conditions are satisfied. The ITAT emphasized that as long as the assessee meets the prescribed conditions, they are entitled to the deductions. The ITAT allowed the assessee's claim and directed the Assessing Officer to recompute the deductions under section 80-I of the Act.

This judgment clarifies the principles governing the computation of deductions under sections 80HHC and 80-I of the Income-tax Act, emphasizing that deductions should be based on the profits of the business and not reduced by fees eligible for deduction under other sections.