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2014 (10) TMI 176 - AT - Income TaxReduction of profits from deduction u/s 80HHC Computation of book profits u/s 115JB - Held that - The AO has not allowed benefit of deduction u/s.80HHC while computing book profits as per the provisions of sec.115JB - For the purpose of 115JB, the profits of business as per the provisions of section 80HHC should be computed on book profits following the decision in Ajanta Pharma Ltd. vs CIT 2010 (9) TMI 8 - SUPREME COURT - for the purposes of sec. 115JB the relief will be computed as per the provisions of sec.80HHC(3)/80HHC(3A) - provisions of sec. 80HHC(1B) will not be applicable for the purposes of computation of eligible profits for sub-clause(iv) to explanation-1 to sec.115JB(2) of the I.T. Act, 1961- assessee is eligible to reduce profits as computed u/s.80HHC(3) for the purposes of computation of book profits u/s. 115JB the AO is directed to reduce profits as computed u/s. 80HHC(3) after giving effect to the order for the purpose of sub-clause(iv) to explanation-1 to sec.115JB Decided against revenue.
Issues Involved:
1. Deduction under section 80HHC of the Income Tax Act. 2. Computation of book profits under section 115JB of the Income Tax Act. 3. General grounds of appeal by the Revenue. 4. Cross-objections by the assessee regarding the eligibility for deduction under section 80HHC. 5. Additional grounds of Cross-objections by the assessee. Detailed Analysis: 1. Deduction under section 80HHC of the Income Tax Act: The primary issue in the appeals by the Revenue for all three assessment years was whether the assessee was eligible for deduction under section 80HHC in respect of profit from DEPB. The Tribunal noted that the Hon'ble Supreme Court had already decided this issue and directed the Assessing Officer to pass a consequential order. As a result, the Tribunal found that the basis of the CIT(A)'s orders had become non-existent and dismissed this ground of appeal by the Revenue as infructuous. 2. Computation of book profits under section 115JB of the Income Tax Act: The second issue pertained to whether the appellant was eligible to reduce profits computed under section 80HHC(3) for the purpose of computing book profits under section 115JB. The Tribunal upheld the CIT(A)'s decision, which referenced the Supreme Court's ruling in Ajanta Pharma Ltd. vs. CIT, confirming that for section 115JB, the relief should be computed as per the provisions of section 80HHC(3) without applying the restrictions of section 80HHC(1B). The Tribunal dismissed the Revenue's appeal on this issue for all three years. 3. General grounds of appeal by the Revenue: The Revenue's general grounds of appeal, which sought to uphold the Assessing Officer's order and set aside the CIT(A)'s order, were dismissed by the Tribunal due to the lack of specific pleas or arguments presented by the Departmental Representative during the hearing. 4. Cross-objections by the assessee regarding the eligibility for deduction under section 80HHC: The assessee's cross-objections included several issues that the CIT(A) had allegedly not decided, such as the exclusion of turnover from trading business, excise duty, sales tax, and the reduction of 90% of interest and rent income from business income. The Tribunal found that these issues were not part of the remand by the Tribunal to the CIT(A) and thus upheld the CIT(A)'s decision, dismissing the cross-objections. 5. Additional grounds of Cross-objections by the assessee: The assessee raised additional grounds at the time of hearing, including the validity of reassessment proceedings and the charging of interest under sections 234B and 234C due to retrospective amendments in the law. The Tribunal noted that these issues were not part of the remand to the CIT(A) and therefore dismissed the additional grounds of cross-objections. Conclusion: In summary, the Tribunal dismissed the appeals filed by the Revenue and the cross-objections filed by the assessee for all three assessment years under consideration. The Tribunal upheld the CIT(A)'s decisions on the eligibility for deduction under section 80HHC and the computation of book profits under section 115JB, following the Supreme Court's rulings on these matters. The general and additional grounds of appeal and cross-objections were dismissed due to the lack of specific arguments or their irrelevance to the remand proceedings.
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