2008 (12) TMI 266 - AT - Income Tax

Summary

Issues Involved:
The issues involved in this case are the calculation of deductions under sections 80-IB and 80HHC, the interpretation of s. 80-IA(9A) in relation to s. 80HHC, and the impact of multiple deductions on the same income.

For the calculation of deductions under sections 80-IB and 80HHC:
The Department contended that the deduction under s. 80HHC should be calculated on the gross total income as reduced by the deduction allowed under s. 80-IB. However, the assessee claimed deductions independently on the ground that both sections were mutually exclusive.

Interpretation of s. 80-IA(9A) in relation to s. 80HHC:
The Department raised concerns that the deduction under s. 80-IA should be deducted from the profits and gains of the business before computing relief under s. 80HHC. The Special Bench of the Tribunal held that relief under s. 80-IA should be deducted from the profits and gains of the business before computing relief under s. 80HHC.

Impact of multiple deductions on the same income:
The Department argued that the deduction under s. 80-IA should be limited to avoid multiple deductions on the same income. However, the Madras High Court and Tribunal, Mumbai, held that deductions under s. 80-IA and 80HHC should be computed independently, ensuring that the total deduction does not exceed 100 per cent of the eligible profit.

Regarding the judicial precedent:
The Tribunal, Delhi, considered the decisions of the Madras High Court and the Special Bench of the Tribunal in reaching its decision. The Madhya Pradesh High Court emphasized that a Tribunal cannot hold a decision of the jurisdictional High Court as per incuriam or sub silentio. The Andhra Pradesh High Court also highlighted the limited application of the rule of per incuriam.

Outcome:
Ultimately, the Tribunal followed the decision of the jurisdictional High Court in the case of SCM Creations and decided in favor of the assessee, dismissing the appeal filed by the Department.