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2018 (7) TMI 955 - HC - Income TaxEntitled to claim deduction u/s. 80IA - claim on the total income after excluding profits ( deduction ) derived from export business of the two new industrial undertakings where 80HHC claim is allowed - Held that - For the period prior to Assessment Year 1999-2000, the appellant would be entitled to claim deduction under Section 80IA of the Act on its entire profits without excluding the deduction available under other heads of Chapter VI A Part C of the Act. Our above view is fortified by the fact that an identical fact situation, in Rochiram & Sons (2004 (7) TMI 75 - RAJASTHAN HIGH COURT) and General Optics (Asia) Ltd. (2008 (12) TMI 191 - MADRAS HIGH COURT) have held that prior to Assessment Year 1999-2000, the benefit of Section 80IA of the Act is available without exclusion of the deduction claimed under Section 80HHC of the Act. Even on being specifically asked, the Revenue was not able to inform us whether the above two decisions have been appealed to the Apex Court and the result thereof, if any. - Decided in favour of the appellant assessee Applicability of provisions of Section 80IA(9A) for assessment years 1997-98 and 1998-99 - Held that - s held by the Supreme Court in DCIT Vs. Core Health Ltd. 2008 (2) TMI 8 - SUPREME COURT OF INDIA that when a provision is introduced with effect from a particular date, then it would not have retrospective effect unless it is expressly stated to be so. In this case, sub-section 9A of Section 80IA of the Act was introduced w.e.f. 1st April, 1999. Thus, it cannot have retrospective effect to impact the assessment the subject Assessment Year 1997-98.- Decided in favour of the appellant assessee
Issues Involved:
1. Whether the Tribunal was right in law in taking the view that the assessee is entitled to claim deduction under Section 80IA on the total income after excluding profits derived from export business where 80HHC claim is allowed. 2. Whether the Tribunal was right in law in applying the provisions of Section 80IA(9A) for assessment years 1997-98 and 1998-99. Issue-wise Detailed Analysis: 1. Deduction under Section 80IA and 80HHC: - Facts: The appellant, engaged in the manufacture of industrial gums, claimed deductions under both Section 80IA and Section 80HHC for its two new factories at Ahmedabad. The Assessing Officer restricted the deduction under Section 80IA by excluding the amount claimed under Section 80HHC, relying on the Supreme Court decision in Escorts Ltd. v/s Union of India. - Tribunal's Decision: The Tribunal upheld the Assessing Officer's decision, concurring with the CIT(A)'s reliance on the Escorts Ltd. case to prevent double deductions. - High Court Analysis: The High Court noted that prior to the amendment on 1st April 1999, there was no provision in Section 80IA or 80HHC indicating the priority or restriction on deductions. The Court emphasized that fiscal statutes should be interpreted literally and that the deductions claimed were less than the gross total income. The Court also referenced decisions from the Rajasthan and Madras High Courts, which allowed similar deductions before the amendment. The High Court concluded that the appellant was entitled to claim deductions under both sections without exclusion, provided the total deduction was less than the gross total income. - Conclusion: The High Court answered the first question in the negative, favoring the appellant and allowing the deductions as claimed. 2. Applicability of Section 80IA(9A): - Facts: The amendment introducing Section 80IA(9A) was effective from 1st April 1999. The appellant contended that this amendment was prospective and should not apply to earlier assessment years. - Tribunal's Decision: The Tribunal applied the amended provisions for the assessment years 1997-98 and 1998-99. - High Court Analysis: The High Court observed that the amendment was explicitly prospective. It noted that the Finance Bill initially proposed retrospective application, but the final Act made it prospective. The Court referenced the Supreme Court's decision in Sasoon J. David & Co. Pvt. Ltd. and emphasized that fiscal statutes should be read as enacted. The Court also cited a CBDT circular stating the amendment's prospective effect, binding on the Revenue. - Conclusion: The High Court answered the second question in the negative, favoring the appellant and ruling that the amendment did not apply retrospectively. Final Judgment: - Both substantial questions of law were answered in the negative, in favor of the appellant. The appeal was allowed, permitting the appellant to claim deductions under Sections 80IA and 80HHC without the restrictions imposed by the Assessing Officer and upheld by the Tribunal.
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