2014 (6) TMI 178 - AT - Income Tax

Allowability of deduction u/s 80HHC of the Act Deduction u/s 80IB of the Act not deducted Held that - Following The Asstt. Commissioner of Income-Tax Versus M/s. Transasia Bio-Medicals Limited 2014 (5) TMI 987 - ITAT MUMBAI - the reasonable construction of section 80-IA(9) would be that where the deduction is allowed u/s 80-IA(1), then the deduction computed under other provisions under heading C of Chapter VI-A have to be restricted to the profits of the business that remain after excluding the profits allowed as deduction u/s 80-IA, so that the total deduction allowed under the heading C of Chapter VI-A does not exceed the profits of the business thus, the assessee is eligible for deduction u/s 80HHC of the Act Decided against Revenue.

Summary

Issues:
Challenge to impugned order dated 7th June 2012 for assessment year 2004-05 regarding deduction u/s 80HHC without reducing deduction u/s 80IB.

Analysis:
The appellant challenged the order passed by the Commissioner (Appeals) for the assessment year 2004-05, questioning the direction to allow deduction u/s 80HHC without reducing the deduction u/s 80IB. The appellant argued that the issue had been decided in their favor by the Tribunal for previous assessment years and was also supported by a decision of the Jurisdictional High Court. The Departmental Representative acknowledged that the issue was settled in favor of the appellant by the Jurisdictional High Court despite contrary decisions by other High Courts.

The Tribunal reviewed its previous orders in the appellant's case for earlier years and the decision of the Jurisdictional High Court, which supported the appellant's position. The Tribunal noted that the deduction under section 80HHC can be allowed without reducing the deduction under section 80IB, based on the decision of the Jurisdictional High Court. The Tribunal highlighted the specific language of section 80-IA(9) of the Income-tax Act, emphasizing that it restricts the allowance of deduction and not the computation of deduction under other provisions. The Tribunal concluded that the appellant was eligible for the deduction under section 80HHC as per the decision of the Jurisdictional High Court.

Based on the judicial precedence set by the Tribunal and the binding decision of the Jurisdictional High Court, the Tribunal dismissed the grounds raised by the Revenue against allowing the deduction under section 80HHC without reducing the deduction under section 80IB. Consequently, the Revenue's appeal was dismissed, and the order was pronounced in the open court on 19th May 2014.